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What your teen needs to know about checking accounts

July 27, 2000

What your teen needs to know about checking accounts



Teaching your Child | By Lisa Tedrick Prejean

One of the most important things to teach teens about checking accounts seems elementary.

"The first thing you need to tell them is just because you have an infinite amount of checks doesn't mean you have an infinite amount of money," says Bob Sill, an independent stockbroker for Dortch Securities in Hagerstown.

Guy Grove, who teaches a work study program at North Hagerstown High School, says one of the most common mistakes he sees students make is writing checks for money they don't have.

They need to understand that a bank is a depository for their money. They have to make an initial deposit. Then they can write a check.

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"Probably the vast majority of our students and graduates don't have exposure to this information unless the parents teach them," Grove says.

And sometimes parents don't feel adequate in this area, says Stephen L. Hummel, vice president of branch administration for Hagerstown Trust.

"I think people have basically learned banking by osmosis," Hummel says.

It's becoming more important for young people to have a checking account because many businesses employing teens are encouraging them to opt for direct deposit, Hummel says.

And in order to have direct deposit, you have to have a checking or savings account. A checking account isn't for every teen, Hummel says. A parent needs to decide if the teen is ready for that step.

Many banks allow students to open checking accounts if a parent or guardian signs for them.

Sill, Grove and Hummel provided these checking account tips for parents of teens:

HEIGHT="6" ALT="* "> When you order checks, see if the bank will let your teen start with number 101. Some businesses are hesitant to accept starter checks numbered less than 100.

HEIGHT="6" ALT="* "> When you write the amount of the check, keep your words and numbers close together so the check is difficult to alter. Draw a wavy line through the rest of the line so nothing can be added.

HEIGHT="6" ALT="* "> Your signature on each check should be the same as the one on your signature card, the card you completed when you opened the account.

HEIGHT="6" ALT="* "> Maintain good records. Be neat. Record every deposit and every check.

HEIGHT="6" ALT="* "> Consider a duplicate checkbook so you have copies of all the checks you write.

HEIGHT="6" ALT="* "> Total the balance each time you make a new entry so you always know how much money you have.

HEIGHT="6" ALT="* "> When you receive the monthly statement from the bank, it will not have record of any checks the bank received after the closing date of the statement. To determine the true balance in your account, you'll need to factor in any outstanding checks. An outstanding check is a check that has not been presented to the bank for payment.

HEIGHT="6" ALT="* "> If you make a mistake, especially on the amount of a check, it's best to write "void" on the check and start over, using another check. However, many banks will accept checks with corrections if you initial the check.

HEIGHT="6" ALT="* "> It's important to manage your checkbook well because if you do so, a bank may be more willing to give you a loan later on.

HEIGHT="6" ALT="* "> Once your account reaches about $500, consider opening an account that earns interest, such as a savings account or a certificate of deposit.

Tell us what you're trying to teach your child. We'll ask an expert for advice. Call Lifestyle Editor Lisa Tedrick Prejean at 301-733-5131, ext. 2340, write to her at P.O. Box 439, Hagerstown, Md. 21741, send a fax to 301-714-0245 or e-mail her at lifestyle@herald-mail.com.

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