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Ask Dave

Should I Link My Bank Account With My Child's?

Julie says her 13-year-old son wants to set up a bank account. What does Dave think about Julie's son having an account and linking her checking account to it?

QUESTION: Julie in North Carolina says her 13-year-old son wants to set up a bank account. He’d like to have a debit card to make online purchases for games and things like that. Her husband wants to open an account at the same bank in order to link the accounts. What does Dave think about Julie’s son having an account and linking her checking account to it?

ANSWER: I would open a standalone account. I would not link them in case he makes an error.

What we did with our teens when they hit that age to where they started having requests like that—number one, he doesn’t want a savings account; he wants a checking account. He probably needs to have both—a savings account and a checking account. And he needs to only put the money in the checking account that’s going to be spent. Otherwise, you’ll look up and you’ll have a room full of games and no money. That’s not a lesson we want to teach.

What are we doing here? What we’re really doing here is not facilitating him buying games, and we’re not really setting him up for his adult life with this money or anything. Really what we’re doing is creating a teachable moment. So what is it we want to teach? A) We want to separate the money to a savings and a checking—to two accounts. B) No, I would not link it to you in case he screws up. It bounces checks like rubber balls and makes a mess. I’d rather that happen in his account than it clean out your account. He may post that card number in some way on the internet, then all of a sudden your account gets cleaned out by some thief or something, right? So let’s just limit the exposure by not linking them. C) The only way this happens is if the account is in his name but you are the custodian of the account, which is technically the only way to open it anyway. A minor can’t open an account, technically. You’re a signer on the account. You’ve got control of the account. This is not his money if he decides to run away to California, you know? We’re not doing any of that crap, right? This is a teaching experience.

The last part of it that neither one of y’all have thought of yet—none of the three of you—is part of his new chores—each month, he has to reconcile this bank account, and you look over his shoulder while he does it. You have the opportunity to teach him how to operate an account. When he uses the debit card to buy something, he needs to post that in a checkbook register and not wait until the charge clears and then just kind of do like most people. Let’s run to the bank and look at my balance and run to the bank and look at my balance. Let’s actually learn how to operate—what outstanding checks look like, what outstanding deposits look like, and how to reconcile that to the bank. You can do that with a simple piece of software—something like Quicken, that kind of a thing is fun to use. It makes it real easy, usually, to link to your bank account. And you want this thing to be very primitive.

You remember when you learned how to do a checkbook register? And we used to get our physical checks out? We checked them off down the checkbook register, and the ones that didn’t clear the bank, you had to adjust for those called outstanding checks. I want this kid to learn that. I want him to learn that there’s not money in the account. He can’t keep buying crap. That’s called bouncing checks.

What we’re doing here is we’re creating a checkbook class. We’re going to class on how to operate a checkbook. You guys as parents have to run the class—forever—until he leaves home.

When mine were 13 through 15, I looked at it every single month. After they got to 15 or 16 and they had proven themselves to be trustworthy and competent on handling the checkbook, we left them alone and we’d look at it occasionally. My last one is getting ready to go off the payroll in that regard, and I’ve got about until May until he graduates from college. But guess what? I have full web access to his account. He’s in another city, but I can look at every expenditure he does on the web because we have a shared bank account, and I can link in and do it. He knows that, and I do it occasionally because I can kind of track his behaviors by where he’s spending money.

We’re not losing control. We’re not tossing a kid the keys to a car he doesn’t know how to drive. We’re going to stay right on top of this, but it creates a great learning experience for a teenager because you know what every teenager since the beginning of time has said: “Treat me like an adult.” Every one of us have said that, to which all parents that are smart—their answer is, “Then act like it. Sure, as soon as you act like it, I will treat you that way.” This is an adult function, so it’s a real cool thing for a teen and a parent to interact over. “Son, my job is to school you up so when you leave this house, you are competent and you can never have to move back into our basement because you’re incompetent.” That’s what we’re doing here. It’s my job, just like I taught you to brush your teeth and I taught you to get good grades and we taught you to take a bath and we taught you to wear clothes that sort of match sometimes. My job is to teach you to handle a checkbook and a debit card properly,” and all of mine have done that.

By the way, the moral of the story is this: All three of my kids—and we didn’t run a Nazi boot camp for money at the Ramsey house, we’re normal people—went through all four years of college managing a budget, managing a checking account without bouncing a check, and without calling me and whining for money because they were over budget all the time. This is because I created these teachable moments when they were 13 to 15 and laid the foundation, so when they left home, they weren’t brand-new neophytes out there in the world ready to have their heads chopped off by some Discover card salesman with enough chains around his neck that you think he’s Mr. T.

It’s great what you’re doing. Great, great, great stuff.