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A checking account is just one of the services that banks offer. It allows you to put money in the bank and use paper checks instead of cash to pay for what you owe. You probably won’t need a checking account until you have a real job that pays wages or a salary. Most people want a checking account to pay for bills or expenses they have. Kids usually give cash to their parents for them to write a check from their checking account if they need to pay for something.

If you are starting a checking account, it is important to know what to do first. With a checking account, you deposit money in the bank and have different ways that you can take it back out again. It is mainly used for money that is going to be spent soon. Your money can be taken out by using a paper check, an ATM card, or a withdrawal ticket.

You will need to go to the bank, talk to an account manager usually found in the bank lobby, and set up the account. The bank will want your Social Security number and an I.D. Usually a school photo I.D. is okay. Sometimes kids like to take a parent with them because it is always good to have advice during the account set up. It is also a good idea to call the bank to find out what you will need to bring and if there is a minimum balance. A minimum balance is the least amount of money that you can keep in your checking account without being charged a fee. For example: Your minimum balance is set by the bank at $200.00. You have $400.00 in your account and write a check for $201.00. You now have $199.00 in your account and you will be charged the extra fee. Minimum balances need to be watched and checked often so that you don’t lose money with extra charges. If there is a minimum balance, you have to deposit at least that amount when you set up the account. Some banks have student accounts that don’t have a lot of extra charges.

When you set up your account, you will deposit (or put in) money. The deposit can be in cash or a check. Cash is available to take out or write checks on right away. Sometimes a check takes a little longer to use because it will be sent to a large bank that will then send it back to the bank of the company that it came from. Then the company’s bank will electronically transfer the money to another bank that will transfer it to you. It sounds like it would take a long time to do this, but it usually takes from 2-3 days. Then you can write checks and know that they will be paid. It is important to pay attention to the time it takes for your deposited checks to ‘clear’ or be approved and paid. If you will be getting a paycheck from the same company each week, you can call the bank a few days after your first deposit and find out how long it took for the money to be transferred to your account. This will let you know how long you need to wait before you write checks using that money.

The account manager will give you your first checks. A check is a rectangular piece of paper that is used to pay debts. The check includes the following:

Your name, address, and (usually) your phone number. Stores usually want your phone number when you write a check. Having it on the check already is a time saver.
The date and who you are paying the money to.
The amount that you want to pay to this person or company. This is written in two ways. The first is the numerical way. For example: $4.50. The second is writing the amount in words. For example: Two and 20/100 dollars. On this line, the cents are written as a fraction (20/100).
The bank name and location in words. At the bottom of the check will be long string of numbers. These are bank routing numbers so that the check can get back to your bank when it is cashed by the company or person you wrote it out to. The numbers also include your account and check number. For this reason, keep your checks safe. Someone could write out and cash a check if they found one blank, or empty. A bad person can take your account numbers, get into your bank account, and withdraw money. Not a good thing!
Signature. You need to sign your name in cursive writing. Your name needs to be signed just like it is listed at the top of the check. If you opened the account calling yourself William, then you shouldn’t sign checks with Bill. These are legal pieces of paper and any time you have something legal to sign, you use your full name.

The bank will give you a register, or booklet where you write down all of the checks you write, the ATM withdrawals you make, the withdrawal tickets you use, and deposits you make. Each time you do any of these things, you write it in your register. If you look at the picture, you will see that there are columns to use for all of these things. Look at the picture. The register includes the following columns:

Number = Check number
Date = Date you wrote the check, took out money, or deposited money.
Code = Use this to mark the checks, deposits, and withdrawals that are in your bank statement.
Description of transaction = Write down the person or company that is getting the check. This area should also be used to write down ‘deposit’, ‘ATM’, or ‘withdrawal ticket’ if you do any of these.
Payment/Debit = any amount that needs to be subtracted from your account like checks, ATM, or withdrawals.
Fee = any bank or ATM fees that need to be subtracted from your total.
Tax = Any checks that you can use for your income taxes. Kids don’t usually use this column.
Deposit/Credit = Money that is put in or needs to be added to your total.
Balance = How much you have after you add or subtract what is on the line.

The account manager will ask you if you want an ATM card. This is an Automated Teller Machine card and allows you to go any ATM machine, anywhere in the world, and take money out of your account. It is a convenience AND a huge responsibility. There are many people who steal ATM cards. There are people who might look over your shoulder while you are using it and steal the numbers so that they can take money out later. You need to be ready to protect an ATM card before you get one. For more on ATM cards, click here.

You will have money going in and coming out of a checking account all the time. It is easy to forget taking money out with your ATM card or a withdrawal ticket. Save all of the receipts that you get from the bank and keep them in the same place at home until your statement comes. A statement is a monthly notice from your bank that shows all of your deposits, withdrawals, fees, and interest (if you get any). When you get the statement:

Take out your check register and any receipts for withdrawals, ATM machine, or deposits that the bank gives to you.
Make sure that your check register is up to date and has listed the amounts on your receipts.
Look at your bank statement and find any fees that you are being charged. Subtract them from your register.
On our register, look at the column that is labeled code. Use this column to check off which checks and deposits have cleared the bank. Any checks, deposits, or withdrawals that are listed on your statement have cleared the bank. Mark these with a check mark on your check register.
When you get done, you will probably have checks, deposits, or withdrawals that are in your register that aren’t on the bank statement. This may be because bank statements are sent out once a month. Look at the date on the statement. If the check, deposit, or withdrawal that you have in your register that wasn’t on the statement was completed AFTER that date, then you will have to wait until the next statement to see them. Remember, when you send a check to someone, they might hold onto it for awhile. It might take months for that check to clear because it was carried around for that long.
In order to balance your check book, you need to subtract anything that has not cleared (or been checked off) on your register from the amount that the bank says you have. You might have to subtract your cousin’s check for months if he is slow in cashing it.
When you are done subtracting all of these things from the bank total, you should match the total that is in your check register. If it doesn’t match, you need to check the statement over again. Then you need to check your addition and subtraction on the check register with a calculator.
Sometimes it is hard to figure out why the two totals don’t match. If that happens, you can ask a parent to help you figure it out or the bank account manager can help, too. If you find that the bank never lists a deposit or withdrawal that you made—even after a few months—then call the bank. Banks only give us a couple of months to find errors that they make.

Just like all other services, the bank makes money on checking accounts. There might be a monthly fee or a fee for every check that you write. You will have to buy the paper checks from the bank or some other company. If you buy checks from them, your bank will subtract the cost of the checks from your account. If your bank has a minimum balance, and your balance goes under that at ANY time during the month, you will be charged a fee. It is important to find out what fees the bank charges when you set up the account.

Another fee is an overdraft fee. You can only take out the amount of money you actually have in your account. Here is how it works:

Your balance is $25.00 and you write a check to your local Piggy Video store for $30.00. Your check is larger than the amount you had in the bank.

The bank will charge you an overdraft fee of about $25.00-$35.00. Worse than that, though, is that some banks won’t pay the money to the video store.

The video store is charged the same fee that you did for having given the bank a bad check.

The video store will call or send a letter to you and charge you whatever their bank charges them plus the amount you still owe to them.

In the end, because you didn’t pay attention to your balance, you will pay about $50.00 - $70.00 extra. Not pretty.

Another way to pay bills through the mail or in person is by using money orders. You would go to the post office, grocery store or another place where they sell them and buy one. It looks a little like a check because the name of the person/company you are paying is on it along with the amount you are paying. Your name and address are listed. You use the top piece of paper like a check and keep the copy that is attached so that you can prove that the bill was paid. When you buy the money order, you pay the exact amount that will be on the check plus a small fee. For kids that don’t have a lot of debts, this is cheaper than setting up a checking account.

Sometimes teenagers have checking accounts because they have a job and need to pay things like cell phone bills. You need to decide how much use you will get out it before you get one A checking account is a money management tool but you need to decide when you are ready and responsible enough to use it.