Why Your Kids Should Have A Youth Account

Ellie Lott

Ellie Lott
Guest Blogger
youngandtheinvested.com

“Ellie is passionate about millennial financial planning and uses her website to help educate her generation on making smart decisions with their money.”

Why your kids should have a youth account
Children are rarely too young to be taught financial education. A study conducted at the University of Michigan Center for Human Growth and Development indicated that children as young as five have already developed emotional reactions to saving and spending money.

One of the roles of parents/guardians in their kids’ lives is to protect and nurture them into independent and responsible members of society. While living with the young ones may be fun, one day they will inevitably have to leave home to fend for themselves. Often, financial independence is an indicator of whether they are ready to sustain themselves. Opening a youth account is a great way to kick-start your kids on the path to financial success.

What is a Youth Account?

The US law prohibits minors from opening a bank account. However, this should not prevent them from having a savings account. A youth account is a savings account that is under the minor’s name with a custodian as joint on the account. In most cases, the adult manages the account until the minor turns eighteen, although the age may vary depending on the financial institution. The adult plays a supervisory role and may impose certain controls such as setting a withdrawal limit to ensure it is well-managed.

Benefits of a Youth Account

Besides the obvious reason which is to gain interest in their savings, here is why you should encourage your kids to open a youth account and develop healthy financial habits.

1. They learn financial literacy

Financial management is an essential life skill that is not taught conventionally in a classroom. Since not everyone grows up in a family where money matters are taught, when teens have their own money in their accounts, they are likely to learn a lot about managing their finances. From the basics of how to set financial goals and budgeting to the more complex issues of how to manage debt. Having a youth account goes a long way in enabling kids, teens, and young adults to take full control of their financial future and possibly pass on the acquired knowledge to friends or family in the future.

2. Cultivates responsibility

A savings account enables kids to keep track of their contributions, savings as well as withdrawals. This teaches them, from a tender age, the correlation between choices and consequences. The more they save, the faster they can achieve their financial goal. This is not attainable without regularly contributing to the account and resisting the urge to spend.

3. Teaches them the value of investing

As a kid, grasping the concept of interest may be difficult. However, a youth account simplifies it by practically showing kids how their savings increase over time. It teaches them practically how saving not only safeguards their money but can also earn them more money. As their savings increase, so does the interest earned. Since most accounts can be accessed digitally, they can notice any interest earned on their savings, however small it may be.

4. Develops their banking relationship

Developing a relationship with financial professionals is another great bonus. For starters, your kids can better utilize the services offered in financial institutions. Credit unions offer many other services besides savings and checking accounts. They offer services like budgeting basics, debt consolidation services, and ultimately the best stock picking services for the long term.

Having a financial specialist could go a long way in ensuring children achieve their financial goals. In developing a one-on-one relationship with the credit union, they may appropriately analyze your child’s spending and saving habits and offer advice. They can assist the child beyond verifying his/her deposit and in this way, he/she becomes more than just an account number.

5. Teaches compassion and perspective

In some ways, a youth account can help kids understand how financial resources are tied to what people have and don’t have. Through this, they can start to form a bigger picture about life and how some people are more or less fortunate than others.

Additionally, the simple act of saving, watching their money grow, and using their money to buy what they need teaches them that to purchase things in the future, one needs to budget and save. It also enables them to understand that as a family, certain sacrifices need to be made to meet certain financial obligations.

6. Prepares them to be financially independent

As kids grow up, they often express a desire to handle bigger responsibilities. What better way to ensure they do this by helping them open a youth account? In opening one, they are entrusted with the responsibility of managing their funds. There is no more begging or pleading for money, what they save is what they get. Having the ability to budget, reference previous spending, and curb their enthusiasm to overspend their money prepares them to be financially independent adults.

Closing thoughts

There is no right time for kids to open an account, but given life’s unpredictable nature, having a youth account would secure your child’s financial future and teach them at the same time.

If you’re ready to open a youth account, visit Freedom’s Youth Account Webpage to learn about their tiered options and other youth financial products.  Depending on your employer, you may also qualify for a $25 youth match. Ask by calling 800-440-4120 or email [email protected].

About Freedom Federal Credit Union

Freedom Federal Credit Union is proud to be your financial partner. Freedom serves and is open to anyone who lives, works, worships, attends school, volunteers, or has family in Harford or Baltimore County, MD. As a credit union, we are committed to putting you first, not shareholders, and helping you achieve your financial goals.

Learn more at freedomfcu.org/personal/youth-accounts or call us 800-440-4120 to see how we can help. 

Credit Cards: Reading the Fine Print

Girl holding a magnifying glass to her eye

Q: How do I read the fine print from my credit card issuer?

A: Fine print often has information you can’t afford to miss. Here’s the big deal on the small print found on credit card paperwork:

What do all those terms mean?

First, let’s take a look at 10 basic credit card terms that are important to know but are often misunderstood:

  • Accrued interest – The amount of interest incurred on the credit card balance as of a specific date.
  • Annual Percentage Rate (APR) – The rate of interest paid on a carried credit card balance each year.
  • Annual fee – The yearly fee a financial institution or credit card company charges you for having the card.
  • Balance – the amount of money owed on a credit card.
  • Billing cycle – The amount of time between the last statement closing date and the next one.
  • Cash advance – Money withdrawn from your credit card account, usually with higher interest rates and attached fees.
  • Credit limit – The maximum amount of money that can be charged to your credit card.
  • Grace period – The time the consumer has between making a purchase and being charged interest.
  • Late payment notice and fee – These will alert you to a missed payment and its fee for missing it.
  • Minimum payment – The smallest amount of money the consumer can pay each month to keep the account current and avoid fees.

Do I need to read the small print on my credit card application?

Those microscopic letters on your credit card application contain important information. Here are some common claims you might find on an application and what the small print below these claims actually says:

Claim: Sign-up bonus: $950!

Fine print: Must spend $3,000 on the card within the first three months of ownership.

Claim: Interest-free offer!

Fine print: Expires after 18 months, and then a 22.5% interest rate kicks in.

Claim: 0% balance transfer!

Fine print: But there is a $300 balance transfer fee.

Claim: Cash advance of up to $1,500!

Fine print: With 20% interest and a $200 cash-advance fee.

How do I find the fine print on my credit card application or statement? 

Read the fine print before you sign up for a credit card. You’ll find this information on the credit card’s paper or digital application under a label marked “Pricing and Terms” or “Terms and Conditions.” You can also find this information when researching credit cards online; it may be labeled as “Interest Rates and Fees” or “Offer Details.”

If you’ve already signed up for the card, you’ll find these conditions on the “Cardmember Agreement” that generally comes with a new credit card.

Your credit card statements will also have lots of fine print, though most of it will be on the back of the bill. The information there will include everything in your application, as well as some additional information about your monthly bill.

Your Turn: Have you ever regretted missing the fine print on your credit card paperwork? Tell us about it on Facebook, Twitter, or Instagram. @FreedomFedCU

About Freedom Federal Credit Union

Freedom Federal Credit Union is proud to be your financial partner. Freedom serves and is open to anyone who lives, works, worships, attends school, volunteers, or has family in Harford or Baltimore County, MD. As a credit union, we are committed to putting you first, not shareholders, and helping you achieve your financial goals.

Learn more at freedomfcu.org/personal/credit-cards or call us 800-440-4120 to see how we can help. 

Payment Protection Program Scams

PPP Scams

The Paycheck Protection Program (PPP) has been one of the most important pieces of legislation signed into effect since the COVID-19 pandemic began. The unsecured loans through the Small Business Association (SBA) have enabled our favorite retail shops, restaurants and small businesses to stay afloat, even as the coronavirus devastates sectors of the economy.

Not surprisingly, scammers have been using the PPP for their own purposes, mainly to con struggling business owners out of money. In these scams, they’ll pose as SBA representatives or legitimate lenders to ask for personal information from the borrower. They may also send bogus emails appearing to be from the SBA to lead the victim into downloading malware.

Scammers are getting smarter all the time, but so are we! Here’s how to avoid PPP scams:

Know how PPP loans are processed

Ready to apply for a PPP loan?  Fill it out the SBA PPP loan application, and submit it to an SBA-approved lender. You’ll also need to provide some documents, such as tax returns for 2019, verifiable payroll expense documents, your most recent mortgage or rent statement, etc.

If you’re applying for a Second Draw PPP Loan, you will also need documentation that shows how you have used, or plan to use, your original PPP funds.

After you’ve submitted your application, just sit back and wait for approval.

How can I protect my business from PPP fraud?

Do:

  • Be wary of any individuals demanding immediate payment or asking that you make immediate contact to be eligible for a PPP loan. These are likely scammers.
  • Only use a lender that is accredited by the SBA. You can find all SBA-approved lenders here.
  • Look for the .gov at the end of each email or website allegedly from the SBA or another government entity.
  • Report any suspected scams to the Better Business Bureau (BBB). Don’t let those crooks walk free!

 Don’t:

  • Pay for a program that promises to process or expedite a PPP loan request if the organization behind the program is not accredited by the SBA.
  • Share any personal information with an unverified caller or email contact. If it’s personal info, make sure to keep it that way!
  • Click on links or download files from an unfamiliar email address.

Stay safe!

Freedom has made the Paycheck Protection Program available to its current members.  Applicants must have established a business or personal membership with Freedom on or before December 27, 2020.  Visit freedomfcu.org/business/ppp/ for more details. 

Your Turn: Are you a small business owner who has applied for a loan under the Paycheck Protection Program? Tell us about it on Facebook, LinkedIn,Twitter, or Instagram @FreedomFedCU.