Money Smart Teens
There are right and wrong ways to handle money—we intend to teach you the right way. We want to teach you essential lessons that will help you build a lifetime of financial success. In this section, you will learn about banking and financial services, budgeting, and the importance of building a credit history.
Unit 1: Open a Checking Account
Opening a Checking Account
One of the most important steps you can take now towards effectively managing money is opening a checking account. A checking account offers easy access to your money and provides many benefits for paying bills.
Here are a few benefits of having a checking account:
- Convenience. If you use checks, you don’t have to carry cash when making purchases. And since you cannot send cash through the mail, checks offer an easy way to pay bills and track expenses. Also, you can access your checking account by using an ATM or by using your debit card for purchases.
- Budgeting. A checking account will also help you with budgeting. When you use your check register to record expenses, you’re keeping track of where your money was spent—now you have a tally of income and expenses.
- Proof of Payment. Checks provide written proof that you made a payment to someone or a business. Each time you write a check that clears your account—when the money is taken from your account and added to the payee’s account—there will be a record should something occur while paying bills or making purchases.
Using Debit Cards Wisely
Debit cards look like credit cards and are accepted anywhere credit cards are accepted, but the money comes directly from your checking account.
Signs of Smart Debit Card Use
- Memorize and protect your PIN using a strong password—a combination of letters and numbers—and do not carry your PIN in your pocket, purse, or wallet.
- Immediately record purchases and withdrawals in your check register to avoid overdraft fees.
- Sign the back of your card so others cannot use your card for purchases.
- Keep receipts to check against your statements.
- Use your bank or credit unions’ ATM machines to avoid fees.
- Immediately report lost or stolen cards.
Avoiding ATM Fees
There are no ATM fees when you use machines from your bank, but the fees can be steep when you use machines outside your bank network. Fees range from $2 to $5 per transaction from banks or a minimum of $4 every time you use an ATM to withdrawal cash from non-network banks. To avoid fees avoid using machines outside your checking network.
- If you use a so-called “foreign” ATM, you can expect to pay two fees. Your banks will charge a fee because it has to process a transaction from some other bank’s ATM. And the bank that owns the ATM will charge a fee – called a surcharge – because it has to process a transaction from someone who’s not a customer.
The nonsufficient funds or NSF fee is one of the most expensive fees you’ll encounter. Good management of your checking account will keep you from overdrawing. Develop a system so you won’t forget to deduct ATM or check card debits. If you are concerned that you may have less than perfect bookkeeping skills, apply for overdraft protection at the bank. You’ll pay a fee for the service, but it’s a lot less than an NSF fee.
- Non-sufficient funds (NSF) is a term used to indicate that a check cannot be honored because insufficient funds are available in the account. In simplified terms, a check has been presented for clearance, but the amount written on the check exceeds the available balance in the account. It is often referred to as a bad check, or a “bounced” check.