When I was younger, I used to save all the money I earned from babysitting and mowing lawns in a piggy bank on my bedside table. Watching my savings grow was exciting, but I knew it was time to put my money in a place where it could grow even more. Opening a bank account was the next step in my journey to financial independence, and it can be for you too. It’s a great way to learn about managing money, saving, and being responsible with your finances.
What Are UTMA and UGMA Accounts?
In most states, unless you are 18 or over, you will not be able to open your own bank account. An adult (usually one or both of your parents) has to do this on your behalf. UGMA and UTMA are special accounts that allow parents or guardians to invest on your behalf. Once you are an adult (determined by the law of the state you live in) the account is transferred to your control. To learn more visit https://investor.vanguard.com/accounts-plans/ugma-utma
How to Choose the Right Teen Bank Account
Start by researching different banks and the types of accounts they offer for teens. Look for accounts specifically designed for teenagers, and also consider UTMA or UGMA accounts if that’s an option for you.
Things to think about:
- Fees and Charges: Make sure the account doesn’t have a lot of fees.
- Debit Cards: Do they offer debit cards? You will need access to your money. Here too, pay attention to fees / charges and limits.
- ATM Coverage: Can you easily deposit or withdraw money?
- Interest Rates: Find out if the account offers interest on your savings.
- Accessibility: Check if you can manage your account online or with a mobile app. Having an app to deposit checks is super convenient!
- Parental Controls: Your parents may consider this more important than you do. Some accounts let your parents set spending limits and monitor your transactions.
What Documents Do You Need to Open a Teen Bank Account?
Before going to the bank, make sure you have all the necessary documents. You’ll usually need:
- Proof of Identity: Your passport, birth certificate, or student ID.
- Proof of Address: A utility bill, school enrollment letter, or any official document with your address.
- Social Security Number (SSN): This is used for tax identification and verification.
- Parent/Guardian Identification: Your parent or guardian’s driver’s license or passport.
For UTMA/UGMA accounts, you might also need:
- Custodian’s SSN: The social security number of the person managing the account.
Steps to Open a Teen Bank Account
While some banks let you open an account online, it’s often better to go to the bank in person for your first account. This way, you can ask questions and get a better understanding of the process.
At the bank:
- Talk to a Banker: Explain that you want to open a teen account or a UTMA/UGMA account and provide your documents.
- Fill Out the Application: You’ll need to fill out a form with your personal information.
- Sign Agreements: Both you and your parent or guardian will need to sign some papers.
How to Fund Your Account
You’ll usually need to make an initial deposit to open the account. This amount varies by bank but is usually between $25 and $100. Decide how much you want to start with and bring cash or a check. The bank also transfer some money in from your parent’s account if they have an account at the same bank.
Setting Up Online and Mobile Banking
Once your account is open, set up online and mobile banking. This will help you keep track of your money and make managing your account easier.
Steps include:
- Register for Online Banking: Create a username and password.
- Download the Mobile App: Get the bank’s app on your phone.
- Link to Parent Account (if applicable): Some banks let your parents link their account to yours to monitor it.
Learn About Banking Basics
Take some time to learn the basics of banking. This includes:
- Using a Debit Card: How to make purchases, withdraw money, and keep your card safe.
- Reading Statements: How to read your bank statements and keep an eye out for any unauthorized transactions.
- Saving and Budgeting: Tips for saving money and creating a budget.
For UTMA/UGMA accounts, understand how these accounts work and how your parent or guardian will manage the assets until you’re an adult.
Monitor and Review Your Account Regularly
Regularly check your account activity. This will help you develop good financial habits and spot any issues early.
Regular check-ins can include:
- Monthly Reviews: Go over your bank statement each month.
- Setting Goals: Set financial goals, like saving for a big purchase or college.
- Addressing Issues: Talk about any overdrafts, fees, or suspicious activity right away.
Conclusion
Opening a bank account is a huge step towards financial independence. By choosing the right account, learning the basics, and regularly monitoring your activity, you’ll be on your way to managing your money responsibly. I’m super excited to go into my top 3 banks for teens in my next article. Until then …
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