Good habits start early – especially when it comes to finances. We've heard from teens and have answers to the most common questions they asked about money, so we compiled and answered them here.
By getting your teen to save now, it can put them in a better position for tomorrow.
Save between 10 to 30 percent of your paycheck or allowance.
What's most important: Saving something and simply getting into the habit of saving money.
Don't expect to make tons of interest on a savings account. Compare interest rates at different financial institutions.
What's most important: But also take into consideration other aspects like convenience and fees.
It's a certificate of deposit which is a type of deposit account that has a set interest rate, which is often higher than a savings account, and has a fixed time of withdrawal (typically 12 months or greater).
What's most important: You need to leave the money in the account until the withdrawal period is over, or you will be charged a fee or penalty.
Good credit is something that pays off every day, but can often seem overly complex or unattainable. It's important your teen starts with the fundamentals.
Consider a secured credit card or co-signer
Pay your bills on time and pay more than the minimum amount due
Don't apply for credit frequently
What's most important: Keep your credit safe by ordering free reports from the major credit bureaus and report any inaccuracies or potential fraud.
Credit card interest rates are at an all-time high. The average rate for a credit card is around 17% (as of August 2018), but penalty rates can be much higher.
What's most important: Shop around. Most credit unions are able to offer lower interest rates because they are not-for-profits.
The legal age to quality for a credit card on your own is 18.
Whats most important: If you want a credit card before you're 21, you need to have your own steady source of income or a co-signer.
Look for cards with low interest rates and little to no fees.
What's most important: Do you research and read the fine print. Find out the penalties for a late payment, associated fees and requirements when it comes to payment due dates.
An authorized user is someone who is granted full access to another person's credit card account, but are not legally responsible for paying the balance or associated fees.
What's most important: To help a teen begin to build credit, parents can consider adding a teen to their credit card account as an authorized user. First check with individual lenders as not all lenders report authorized signers to the credit bureaus.
A checking account is a primary tool for managing money. Developing responsible habits early on will help your teen for the long term.
At BECU, when you turn 13, you can have access to a BECU checking account. Teens can login using BECU Online Banking, download the BECU Mobile App, and start receiving monthly e-statements.
Having the "next big talk" is as important as any other life challenge, and we're here to help you and your teen along the way. We've created The Money Talk guide, using real-life examples, to make it easier for parents to help their teens get familiar with finances and jump into adulthood with a sense of financial independence.
By the end of the talk, your teen will have a better understanding of how to:
Spend within their means
Build a strong savings account early
Manage debt responsibly
Set goals by planning ahead