Should Parents Create a Joint Bank Account With Their Teenage and Young Adult Children?

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Setting the financial foundation for literacy means parents are advised to begin talking about basic money concepts with their children as early as kindergarten. As kids get older, the conversation will shift to topics like smart spending decisions and an understanding of credit cards. Young adults and teens may want to learn more about bank accounts or express interest in opening up their own account. 

Should parents create a separate joint bank account first? Let’s look at some of the main reasons why parents and teens benefit from sharing a joint bank account together.

View It as a “Finance on Training Wheels” Tool

Noah Schwab, financial advisor at Stewardship Concepts Financial Services, said opening a separate joint bank account for teens and parents to share may act as “finance on training wheels.” Few financial fundamentals are taught in school and opening a separate joint bank account may be a helpful tool in teaching teens to learn financial literacy. 

Schwab recommends funding in the account coming from the teen’s earned money or allowance. Parents hesitant about teens having their own credit cards may opt for teens to use a debit card associated with the joint account instead.

“A debit card with a joint account can be a great way to simulate a credit card,” said Schwab, adding that using a debit card allows for learning how to spend within your means. “A kid should have their own debit card over an authorized user on their parent’s card because it teaches them responsibility and ownership by using their own money.”

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Easier To Monitor Spending Activity

Schwab said a shared joint bank account gives young adults responsibility in ownership, but with the oversight from their parents. As teens learn how to spend with their means and use their own money, parents are better able to monitor their spending activity through this account. 

Let’s use the example that a parent starts to recognize bad spending habits from their teen on this account, such as too many visits to fast food drive-thrus. Parents have the opportunity to educate their kids on why these are bad spending habits and to alter these habits. This may lead to a discussion about budgeting and spending money wisely that helps teens learn more about financial responsibility. 

Build a Relationship With a Bank

Most parents have solid relationships with their banks. Sharing a joint bank account allows young adults to start building their own relationship with a bank early on as well. 

Leslie Thompson — CFA, CPA and chief investment officer at Spectrum Wealth Management — said a joint bank account may be an opportunity for teens to build a relationship with a bank before they reach adulthood. This is especially true if the teen is making regular deposits into the account and maintaining a positive balance.

“Learning how to make bank deposits, writing checks, using electronic payment applications and monitoring bank account activity is crucial to financial wellness as an adult,” said Thompson.

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Build Credit

Parents of teens that display financial responsibility with their joint bank account and debit card use may decide to add an older child as an authorized user on their credit card.

Thompson said parents may limit the teen’s spending on the card. Doing so, said Thompson, allows parents to teach their children how to build credit and use credit responsibly. 

Should You Share a Joint Bank Account With Your Teen?

“There is no definitive answer to this question,” said Professor Michael Collins, CFA of Endicott College. “Some experts say that joint bank accounts can help teach children about financial responsibility, while others argue that it can complicate financial matters if parents and children have different spending habits.”

Parents that decide whether they will open a joint bank account with their teen, or not, will make this decision on a case by case basis.

“For a young adult, especially in college, a joint bank account may be the perfect tool if a child is reliant on their parents,” said Schwab. 

If you do share a joint bank account with your young adult, Schwab said parents shouldn’t be scared if they see their children making different financial choices. 

“It is important that you walk alongside your kids with finance,” said Schwab. “They might not make the same decisions you do because they are different people with their own priorities and goals. But you have the wisdom that they need, so don’t give up if they aren’t receptive. They may not realize how much they need your advice.”

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