Instead of Spending, Teenagers Can Turn to Saving
by Samantha Cueto
When Should Teens Start a Savings Account?
When’s the best time to think about a savings account? As soon as you start earning! Teenagers need to consider opening up a savings account, to keep their money safe, and watch their savings grow. According to an ING Direct study, 83% of teenagers admit that they are clueless when it comes to how to manage money.
Looking to Earn Some Cash This Summer?
Some teens can receive an allowance, in return for completing household chores. According to the American Academy of Pediatrics, 3 in 5 teenagers receives an allowance.
Some parents may consider the prospect of chores as something that is more of a family responsibility than an optional task. Therefore, this may not be an option for some teenagers, since it depends on their parent’s perspective.
However, while school is out, perhaps you can take on extra work around the house. Additional chores, extra dollars!
Teens can babysit, tutor neighborhood children, or walk a neighbor’s dog. Look for other opportunities in your neighborhood, like washing cars, mowing a neighbor’s lawn, and offering cool refreshments to anyone passing by. Some other typical teen summer jobs include:
- Mother’s helper
- Camp counselor
- Golf Caddy
- Life Guard
- Food service
Having a summer job, regardless of how much you earn, has other benefits. Taking a summer job can teach responsibility, help develop good work habits, as well as adding to your life experience. Now that you have some cash, a good place to keep it is in the bank.
Opening Your First Savings Account
Teens need to keep in mind that they may have to pay additional fees if they do not maintain a minimum balance in their account. Make sure you understand all the fees before opening a saving account. There are lots of banks, offering several different options which can be overwhelming and a bit confusing to a teenager. Ask a parent to help. Not all banks offer the best deals for someone just getting started saving, but here are three options I researched:
- Capital One 360 Savings Account has no minimum balance or deposit that can come with most banks. Which is a great option for a teenager just starting to save. The interest rate is only 0.75% per year, which may sound small but will have money growing in no time.
- The Barclay Dream Account is an online banking account option that will earn the most interest. If deposits are made continuously for six consecutive months, there will be a 2.5% bonus on the interest earned. If no money has gone through withdrawal for six consecutive months, another 2.5% bonus will also be added on the interest earned. It also promises no monthly service fees and no minimum deposit to open the account.
- All of Ally Bank’s accounts can be opened as a custodial account, meaning that a parent will have control over the account until the child turns 18. Ally Bank doesn’t require a minimum balance when opening an account and there are no monthly fees. The interest rates vary depending on which account a teenager and their parent decide to choose.
Samantha Cueto is a teenager herself. She is a rising sophomore at Dominican Academy in Manhattan.