Introducing your teen to use bank products smartly

If you’ve only got a minute:

• Encourage your teen to open a savings account and make regular deposits to cultivate good savings habit.
• Besides savings, encourage them to create a budget that outlines their income and expenses to help them understand the importance of prioritising needs over wants, avoiding unnecessary debt.
• The goal is to equip your child with the necessary knowledge and skills to make sound financial choices, develop good money habits, and ultimately achieve financial independence.

Many of us likely have our parents to thank for opening our first savings accounts, a foundational step in our financial journey. Do you recall the moment you took over the account in your name? Or the thrill of receiving your own debit card for the first time?

These moments may seem minor now, but they were significant financial achievements during our teenage years!  

If you have a teenager at home now, have you considered how you can help shape their financial future? In today’s digital age, equipping them with financial literacy is more important than ever.

Here are 5 ways to guide them toward a healthy relationship with personal finances.

1. Open a savings account

A simple savings account can teach your teen essential money management lessons. Here are 2 key lessons:

Understanding the value of money
Encourage your teen to take up a part-time and/or holiday job around ages 15 to 16. The money they earn can be deposited into their savings account, mirroring how adults work to earn a salary. This experience will help your teen understand that money is hard to come by, fostering a sense of responsibility and encouraging them to be more thoughtful about their spending choices in future.

To improve their money management, encourage them to have 2 separate accounts - one for daily transactions and another for savings. This distinction can help them avoid touching their savings and better manage their finances for different objectives.

You can also introduce the "pay yourself first" concept by advising them to set aside at least 10% of their allowance or salary before spending to the savings account. This helps to prioritise savings instead of only saving what is left after their monthly expenses.

Saving towards a goal
A savings account allows your teen to track how long it takes to save for a specific goal, teaching them the value of persistence, consistency and the importance of delayed gratification in achieving larger rewards.

For instance, if they want to buy a new smartphone, encouraging them to set aside their salary or allowance can help them understand how many weeks (or months even!) it takes to accumulate enough money for that coveted item.  

As the saying goes, “Nothing worth having comes easy”; this experience will reinforce the value of hard work and patience.

While your teen’s first savings account may have been a joint account with you. now that they are older and possibly earning some pocket money, it might be good to transition them to their own account.

Consider opening My Account, a digital multi-currency bank account that makes banking simple. This account grows with your teen throughout various life stages.

As they mature, consider switching them to the DBS Multiplier. They can save, spend and invest to unlock higher interest.

2. Digital wallets to manage their own expenditures

One common financial mistake that some of us made in our younger days is underestimating how quickly small expenditures can add up.

To help your teen manage their spending, consider registering them for PayLah! . This digital wallet allows them to track their spending and avoid running out of their monthly allowance too early.

Using a digital wallet can also help to limit your expense since you can set a limit in your Payhlah! wallet. Setting a transfer limit can also help to reduce the impact of scams, should any unauthorised transfers occur.

3. Debit card to encourage spending within their means 

Debit cards are a great way to introduce your teen to the concept of budgets. When they use a debit card, the amount is deducted directly from their account, allowing them to spend only what they have. Start by placing a small amount in the account.

As they become more adept at managing their money, you can gradually increase their daily spending and ATM withdrawal limits.

Additionally, many debit cards offer special benefits and discounts, introducing your teen to the privileges that come with responsible credit card use later on.

4. Transaction alerts as a spending and fraud checking tool

Transaction alerts are another useful way to train your teen to spend mindfully. For instance, they can opt to receive notifications for any local, overseas or online transactions. If the alerts come in too frequently, it’s a cue for them to reassess their spending habits.

Additionally, transaction alerts can help your teen identify fraudulent activity on their cards, allowing them to quickly report any unauthorised transactions to the bank.

In 2023, over 50,000 scams were reported in Singapore, resulting in significant financial losses. With online shopping being the norm these days, teaching your teen about anti-scam measures is critical for their safety online.

Here are some key tips:

Stay informed
Educate them on common scam tactics, such as fake advertisements on social media or unsolicited job offers promising high returns.

Secure practices
Encourage strong password creation and regular updates of personal information with their bank.

Emergency protocols
Make sure they know how to report unauthorised transactions immediately and recognize that banks will never ask for sensitive information via email or SMS.

Read more: How to stay protected from online scams

5. Empowering teens through financial education

The Ministry of Education (MOE) in Singapore has integrated age-appropriate financial concepts into the school curriculum.

Primary school students are introduced to basic concepts like distinguishing between needs and wants, as well as understanding the significance of thrift and savings.

The Food and Consumer Education (FCE) curriculum in Singapore teaches lower secondary students by equipping them with essential money management skills. Through Basic Resource Management, they learn to budget effectively and make informed consumer choices.

Financial literacy is further emphasized in A-level economics, where students assess costs and benefits to make informed decisions.

By integrating these lessons into their education, teens learn to build a strong foundation in financial literacy that prepares them for responsible financial management in the future.

Together with practical tools like transaction alerts, these educational components foster a comprehensive understanding of money matters.

All in all

It is never too early to teach your teen how to use bank products wisely, set aside money for a rainy day while preparing them for potential scams. Your guidance plays a crucial role in shaping their financial future and fostering responsible money habits!

Ready to start?

Check out digibank to analyse your real-time financial health. The best part is, it’s fuss-free – we automatically work out your money flows and provide money tips.

Plan with DBS  Plan with POSB

Speak to the Wealth Planning Manager today for a financial health check and how you can better plan your finances.

Let's Meet

Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.