Why Teens Should Open a Bank Account
Last updated August 17, 2023
Opening a bank account is a key step toward financial independence and security. While this process can sound like a confusing or intimidating one, we believe it’s totally worthwhile to set yourself up for the future! Here are six key reasons you should open a bank account as a teenager or young adult.
*Note: Before making any big financial decisions, we strongly advise you to talk to a parent/guardian or a trusted adult. They can help you make informed choices about building credit and taking on debt that can ensure your financial stability and success in the future.
Having a bank account allows you to manage your own money and make your own financial decisions, which is an important step towards becoming financially independent. Having an active bank account will allow you to see how your money is connected to your everyday needs and purchases. This kind of independence will also be important down the road, as you may look to secure loans for college or buy a car. You will also be able to choose how much money you have in a savings account or credit account, which can help you earn interest and make your money work for you!
Necessity and convenience
When you get a job, you’ll need a bank account so that you can set up direct deposit to receive your paychecks. This makes sure that every cent of your paycheck goes to you! If you use a payday lender or cash-checking business, they will take a percentage of your check just so you can get your own money. With a bank account, you can easily deposit money, withdraw cash, make online purchases, and pay bills without having to rely on cash or money-sharing apps.
By setting up a bank account and using it responsibly, you can start building a credit history. When you build your credit by keeping your bank account balance positive and paying your bills on time, it will become much easier to get a loan or rent an apartment in the future. Using money-sharing apps like Venmo or CashApp does not build your credit score. Those apps may be useful for a quick way to pay back a friend, but the main place your money will work for you is in the bank.
Safety and security
A bank account can provide a safe and secure place to store your money, and it's also insured by the FDIC (a federal agency), which ensures that if a bank or credit union goes out of business, you’ll still get your money back! This is much more secure than having piles of cash which could be stolen or ruined by accident with water or fire. It is also more secure than money-sharing apps which have different levels of insurance than banks.
Budgeting and money management
Having a bank account makes it easier to keep track of your spending and budget your money. Most bank accounts offer online banking and a mobile app that can help you monitor your account activity and make sure you're sticking to your budget. Many banks and credit unions also offer financial education resources and programs that can help you learn more about managing your money and planning for the future. By signing up for a bank account, you can take advantage of these resources and gain valuable financial skills that will benefit you for years to come.
Saving money and preparing for the future
A bank account can help you save money! For example, there are features that allow you to automatically deposit a percentage of each paycheck into your savings account. All savings accounts and some checking accounts will also offer you interest so as your money sits in the account, it will continue to grow! The mobile apps and education programs can also help you set up savings goals and help you reach them. Having a solid history with banks, a positive relationship to your money, and a strong credit score will help you be financially independent in the long run.
Now that you know the reasons to open a bank account, be sure to check out the rest of our FREE financial literacy resources to learn how to be a smart spender and saver! And if you have any job or finance-related questions for us be sure to text #Jobs to 33-55-77. If you're using a mobile device, click here to have the text message set up for you!