Hello Bear Family!
Financial literacy is a fundamental skill that every adult should know. An important component of this is understanding how to manage a bank account. For your student, personal bank accounts are essential for their transition into their adult lives and become more independent. Today’s talk is all about the important knowledge your student should know to become confident about managing their own banking!
The beginning is choosing the right bank and right account type. There are many banking options available and it can seem overwhelming to your student at first. However, the bank your student uses is who is going to hold & protect their money. Therefore, your student should properly research their options should be done to ensure that they choose the best option for them & their lifestyle. The first criteria I suggest determining first is this: location, location, location. There are banking options that are local, regional, and national. Whether your student is coming here this fall, currently attending, or graduating this month, the amount of a bank’s branches and their location in the country are an important factor to consider. Will they be able to use that bank back home or if they move cities? For your student’s time in Springfield, I highly recommend opening an account with a bank with a branch here in town, even if your student has an account with a bank back home. Having a local bank account has several important benefits: no ATM withdrawal fees, your student has a local point of contact, many banks around here offer unique college student accounts with great features, and it is very convenient. Similarly, if your student is graduating in 2 weeks, they should do the same when settling in their future home (if they have not done so already).
Next is choosing the right account type. Each bank offers a unique set of account types that have different features, requirements, and conditions. It is extremely important that your student analyzes what each account offers and what it requires. It is very common for banks to have fees associated with the usage of the account and for deviating from certain minimums or limits they set. Your student needs to be able to answer the following questions about their options:
- What benefits does this account offer?
- Is online banking available?
- What is the minimum amount of money needed to open this account?
- What is the minimum amount of money I need to keep in the account?
- Are there any usage requirements for this account (e.g. minimum amount of transactions per month)?
- How many withdrawals and transfers can I make a month without getting charged a fee?
- How much is the overdraft fee? Is overdraft protection offered?
- How can my family deposit money in my account if they want/need to?
- Can I make cash and check deposits at the bank’s ATMs?
- What other fees, terms, and conditions are associated with this account?
These are the major questions that will tell your student the essential information about the account options available to them. Even if your student already has an account, they should know the answers to all of these questions about theirs. I have learned the hard way several times not knowing the answers to these questions about my accounts. If I had taken the time to learn these things, it would have saved me so much stress and confusion. Do not let your student will not make the same mistakes I did. As your student thinks about opening an account, they need to determine what they do and do not want from their new bank account(s). Luckily for your student, many college student accounts offer great benefits such as overdraft protection and have little to no extra fees. Student accounts are a great way for your student to get experience with managing their own banking. I highly recommend your student takes advantage of this by opening one!
As I mentioned previously, your student having a bank account is an essential part of their transition into adult life. There are three big reasons for this. First, if your student has a job or is going into a new job, it is likely they will need one. It is common for employers to require a voided check after someone is hired, especially if they offer direct deposit (which is a great service for your student to use by the way). Additionally, if they are employed, they should use their account to learn how to manage the money they earn from their job. Second is paying bills. In today’s world, nearly everything is online. Accordingly, I strongly recommend your student should definitely use online banking if it is available. Online banking easily allows your student to manage their account much easier and at any time of day. In addition to checking their balance, tracking spending, and making deposits and transfers, online banking is an especially beneficial feature for your student paying bills. Automatic bill payment is a common feature with online banking systems and can make paying bills a much simpler process. When your student knows how much their bills will be each month, they can set the amount to be automatically taken out of their account to pay them before or on their due date. However, if your student does this, they should centralize paying bills from only 1 account so they can keep track of their spending effectively and efficiently. Lastly, if your student will be living off-campus or is moving after graduation, housing companies will almost certainly require at least a checking account. Many property companies and owners require payment via a personal check, money order, or cashier’s check. Therefore, your student should also know the charges for buying checks and money orders and how to write them. Knowing how to write a check is another basic financial skill that your student should know before they move into their own place. If your student does not know how to write one yet, they should not feel bad. I admit did not know how to write a check until my second year here. However, it is a very quick and easy skill to learn and they will likely be writing them for many years. Overall, managing a personal bank account is a fundamental aspect of your student becoming an independent person.
No matter where your student is in life, they should have their own personal bank account and know how to manage it. College is the perfect time for your student to learn this important life skill. Not only should you help your student gain this skill, you can also encourage them to use their resources here on campus. We have an organization called MSU Real L.I.F.E. (Literacy in Financing Education) that is available to teach your student the financial knowledge and skills they need to know now and post-graduation. This organization has a peer financial counseling team comprised of fellow students, a series of informative videos on topics such as budgeting and student loans, a guide for saving money while in college, and numerous other resources. Check out their website here: http://www.missouristate.edu/financialaid/reallife/. I hope that this talk will help your student feel confident in making the first big step in the financial transition into adulthood!
Thanks for reading and Go Bears!