Adulting 101: A Guide to Personal Finance
Opening a Bank Account
Why do I need one?
Banks can be a hassle - especially when you factor in all the fees - first, to open a bank account; second, to use certain ATMs; third, if you over draft, that is, spend more money than you have in your account. Plus, bank hours are not always convenient. But, banks are an essential part of life. You might have been told that it's too risky to keep a lot of money in your house-what if there's a fire or earthquake? And carrying around wads of cash makes you an easy target to rob. More important is the fact that you want your money to work for you! Money in a bank account makes it easier to make purchases in stores and online; it can earn a little interest (more on that topic later); it can even give you a reputation (hopefully a good one!).
When your money is in a bank, the Federal Deposit Insurance Corporation (known as the FDIC) automatically protects it, up to $250,000. When you get a job, you can have your paycheck automatically deposited into your bank account, which means you'll never lose it or spend the money too quickly. A bank account comes with an ATM card, which you can use to withdraw money at any time to pay for gas, food, a movie - just about anything.
How do I get started?
Opening your first bank account is a big deal. It means you're ready to be responsible for your own money for how much you spend AND how much you save. You're starting down the path to financial independence. The first step is to choose a bank. Talk to your parents or guardians. Find out which bank they use and ask them what they like and don't like about the services it offers. Visit a few of the banks in your town or city. You're likely to do most of your banking online or on your smartphone. But sometimes you need to visit the actual bank for assistance, so you want to choose one that's easy to get to and open at times when you can get there.
It's important to find out what you need to open an account ahead of time. Different banks have different qualifications. For instance, most banks require a parent or guardian's signature on the account if you're under 18. You'll definitely need an identification card, like a driver's license or passport. And you'll need all of your personal information: birthdate, home address, and social security number. Being prepared makes a big difference - it shows the bank that you're responsible and ready for this step!
Next up is a trip to the bank you've chosen! Once you go to the bank, you'll meet with a banker to open your account. There are some banks that let you open an account online or over the phone, but doing it in person is a great way for a first time user.
Your first decision is to choose the type of account you want. Typically, the choice is either a checking or a savings account or both. A checking account is used for everyday purchases, such as gas, food, shopping or anything else you need or want to buy. A savings account is exactly what it sounds like: a place to save your money rather than spend it.
Many people put a certain amount from their paycheck into their savings account each week or month. A savings account is what you'll draw on for large purchases (like a car or a computer), for emergencies, or for retirement.
Based on your research before you went to the bank, you should have brought with you the necessary information and the money needed to open your account your first deposit.
Once your banker has opened the account for you, be sure to ask any questions. For instance, be sure you understand any fees the bank charges when you withdraw money, or when your balance is too low. You'll definitely want to know the maximum number of withdrawals you can make in a month. If you have a savings account, you'll want to know the current interest rate. Your banker will answer any question you have - and you can always stop by another day if a new questions comes up. In the meantime, you are done you now have a bank account in your name with your own money in it!