Teens and Money, Part 1

Mar 6, 2015

One of the first steps toward real freedom (and adulthood) is having a checking and savings account in your own name. These accounts allow you to save money, make purchases, and pay bills efficiently. Both, however, require you to take an active management role – so you can achieve your goals and avoid errors.

Start a savings account 

Getting into the habit of setting money aside regularly is the foundation for a successful financial future. If you save a portion of every paycheck, it won’t be long before you accumulate an impressive sum. Financial experts recommend keeping at least a couple months worth of expenses tucked away in a savings account.

Managing a checking account 

After you open your checking account, it is your responsibility to handle and monitor it correctly. This means knowing how much is in your account at all times, reading your statements for accuracy, and never writing checks for more money than you have in it. And remember, savings accounts are for saving money, not checking accounts!

Don’t “bounce” checks 

Bouncing checks is serious and expensive business. If there aren’t enough funds to cover a check, it will be rejected when it comes in for payment. The check will be sent back to the person who deposited it and you will be charged for “bouncing” it. How much? A lot. The merchant you wrote it to can not only charge a returned check fee, but you may be charged up to three times the amount of the check.

You can avoid accidentally writing bad checks by always knowing how much you have in your account. Keep track of the deposits you make, checks you write, ATM withdrawals, and fees you are charged in your check register. Always read your account statements and learn to use tools such as PFCU’s TellerNet and TellerPhone in order to check on balances.

You can also protect yourself by establishing a PFCU Line of Credit, which will provide overdraft protection. If you overdraw your Checking account, the money will automatically be deducted from your Line of Credit, saving you money and embarrassment.

Using your ATM/debit card 

When you open your checking account, you may be issued either an ATM (automated teller machine) card or a debit card. There are differences between the two:

• ATM card- You can use an ATM card to withdraw cash, make deposits, transfer money between accounts, obtain your balance, etc., without having to go into a branch and speak with a teller.

• Debit card- You can use a debit card at a store or restaurant as well as the ATM. It may look like a credit card, but it is not – money is automatically deducted from your checking account when you use it. It has the Visa® or MasterCard® logo on it, so it is processed using their systems, but it is your money, not a loan.

Karl J Bernhard 
PFCU Financial Educator

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