Introducing your teen to use bank products smartly
Many of us probably have our parents to thank for opening our first savings account. Do you remember when it was that you took over the account to have it under your name? Or when was the first time you had your own debit card?
Looking back, these might look like part of the growing up journey. But if you remember, they most likely felt like huge financial milestones as a teenager!
If you have a teenager at home now, have you thought about what you can do to shape their financial future and help them develop a healthy relationship with their personal finances?
Savings account to appreciate the value of money
Something as simple and plain vanilla as a savings account has the potential to teach your teen many important money management lessons. Here, we look at 2 of them:
- Value of money
By the time your teen is 15 or 16 years old, you might want to encourage them to take up a holiday job. The amount they earn can be put into their savings account. This is like an adult having to work to earn a salary. In this way, your teen can learn that money is hard to come by and learn to be more prudent on what they choose to spend on later.
- Saving towards a goal
A savings account allows your teen to keep track of how much time it takes to save a specific amount, thus teaching that it takes persistence and some delayed gratification to reach a bigger reward at the end.
For instance, your teen might want to save up for a smartphone. By encouraging him/her to save their part-time job salary, your teen gets a sense of how many weeks (or months!) it takes to earn enough to pay for that long-desired item.
This can have a huge impact in shaping their attitude towards savings in the future.
Your teen’s first savings account would most likely have been a joint account with you. But now that they are a little older and possibly earning some pocket money, it could be the right time to switch them over to their own account.
Here’s where opening My Account could be helpful. My Account is a deposits account that is available to customers of all ages. Imagine an account that grows with your teen throughout his/her life stages. As your teen grows, you can choose to unlock different banking service to suit his or her needs.
Digital wallets to manage their own expenditures
One big money mistake that many of us made in our youth was… forgetting that small expenditures add up. Your teen is likely to be learning that same money lesson now. To help them manage their expenditures, register PayLah! for your teen so they can track their spending and learn how not to burn through their monthly allowance by the third week of the month.
This also trains them to look at the bigger picture, which provides them a headstart in managing their personal finances when they become a full-fledged young adult.
Debit card to encourage spending within their means
Debit cards are a great way to introduce your teen to the concept of budgets. That’s because when they pay with a debit card, the amount is pulled directly from the attached account.
Because they can only spend the money that they have, teach them about budgeting by putting a small amount of money in the account at first. As they get more skilled, you can adjust the in-built daily spend and ATM withdrawal limits, until they’re able to handle larger amounts of money in their account.
Another benefit of introducing the use of debit card is that many of them come with special benefits and discounts, which serves to introduce the privileges one can earn with credit cards, when used responsibly
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 be pinged for any local, overseas, or online transactions. If the alerts start coming in too quickly, that’s a signal for them to pause and be more purposeful in their spending.
Another benefit of transaction alerts: it teaches your teen to detect fraudulent use of their cards, and call the bank about any transactions they didn’t make. With online shopping being the norm these days, this is an essential skillset.
It is never too early to teach your teen how to use bank products wisely and how to set aside money for a rainy day. Don’t underestimate your role in helping them shape their financial future!
Ready to start?
Speak to the Wealth Planning Manager today for a financial health check and how you can better plan your finances.
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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.