21 - Banking for the Next Generation: A Guide for Parents & Teens

How do you teach your teen about money? With Branch Operations Coordinator Shelby Liford, we provide a guide to opening a first checking or savings account. This episode is packed with practical advice for parents, explaining when the right time is to get started, what account features to look for, and how to use this important milestone to instill good financial habits—like saving and tracking spending—that will last a lifetime. 

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Transcript

21 | Banking for the Next Generation: A Guide for Parents & Teens

00:00:00 Daniel Hill: Shanna. Picture a fifteen year old who just got their first real job. They're excited. They've got that paycheck, and it's a paper check.

00:00:13 Shanna Browning: A what? A paper.

00:00:14 Daniel Hill: Paycheck. They're holding it in their hand, and they have this moment of realization.

00:00:19 Shanna Browning: What do I do now?

00:00:20 Daniel Hill: Exactly. They could ask their parents to cash it, and then they have a pocket full of cash, which could easily be lost or spent without a second thought. You know that burning hole in your pocket?

00:00:30 Shanna Browning: Oh, yeah.

00:00:31 Daniel Hill: Or this could be the perfect moment to learn how bank account actually works.

00:00:36 Shanna Browning: And that, from a banker's perspective, is a very pivotal teaching moment. It's the transition from getting a cash allowance to managing real earned money in the financial system.

00:00:48 Daniel Hill: And for parents, knowing when and how to navigate that transition can be tricky. Today we're going to provide a clear roadmap to do just that. Welcome back to Making Sense of your Cents. I'm Daniel Hill.

00:01:13 Shanna Browning: Hi, friends. I'm Shanna Browning, and today what we're going to talk about is a topic that is really crucial for building a financially healthy future. And that's banking for the next generation. We're providing a guide for parents and teens on how to take those important first steps into the world of banking.

00:01:29 Daniel Hill: And to give us a real, on the ground perspective. We're so excited to welcome our special guest. Shelby Liford is the Branch Operations Coordinator here at First Century. She has first hand experience on the front lines helping families open these first accounts. Shelby, welcome to the show.

00:01:46 Shelby Liford: Thank you all so much for having me. This topic is special because I get to see the excitement and the learning happening in real time. It's a really rewarding part of my job.

00:01:56 Shanna Browning: Well hi Shelby, so let's start with the why. So before we even get into the mechanics, why is it so important for young people to learn about banking and money management early on.

00:02:08 Shelby Liford: I think it's one of the most important life skills a parent can teach. Right up there with learning to cook or even swim. It builds what I call financial muscle memory - the habits a teen forms with their very first paycheck, whether it's saving a portion, tracking their spending, or learning to use a debit card responsibly. Those are habits that will stick with them for the rest of their lives.

00:02:30 Daniel Hill: It's really about giving them a safe space to just practice. It's far better to make a small mistake, like overspending on video games with your first hundred dollars paycheck, than it is to make that same mistake with a four thousand dollars paycheck when you have rent and a car payment due.

00:02:48 Shelby Liford: That's the perfect way to put it. It's a learning lab. It allows them to build confidence and learn from small, low stake mistakes, while their safety net of their parents is still there to guide them.

00:02:59 Shanna Browning: And that's important. So with that, "why" being established? Let's talk about the "when". Is there like a magic age to open a first account.

00:03:08 Shelby Liford: Well, there's no magic age, but there are definitely key life stages for younger kids, say seven to ten years old. Opening a simple savings account is a fantastic first step. The goal here is just to introduce the concept of a bank. It's a huge moment when they bring their piggy bank in and we count the coins together, and they see a deposit slip with the real number on it. It makes a saving, tangible action. Not just an abstract idea.

00:03:35 Daniel Hill: But the conversation really shifts gears when a checking account comes into play. What would you say are the triggers for that point in time?

00:03:44 Shelby Liford: The trigger for a first checking account is almost always a new level of financial independence. The number one reason we see families come in is the first part time job. A teen with a regular paycheck needs a way to use direct deposit and manage their own earnings. Other common triggers are getting a driver's license and needing money for gas.

00:04:04 Shanna Browning: Oh yeah.

00:04:05 Shelby Liford: And car expenses. Or even just becoming more socially active and needing to pay for their own movie tickets or dinner with friends.

00:04:12 Daniel Hill: That first date.

00:04:13 Shelby Liford: That first date? That's right. It's when their life starts to require them to handle money. Handle money regularly.

00:04:19 Shanna Browning: Mom and dad are done. Now you have your own money. That's right. So. Okay, so here we are, our teenagers. Ready? They're going. They've got their first job, and a parent decides it's time to come into the bank. So, Shelby, walk us through that process. What should a parent expect? What should that teenager expect and what do they need to bring with them?

00:04:38 Shelby Liford: This is a great question. Knowing what to expect makes the whole process smooth and stress free. First, the account for a minor will be a joint account, meaning the parent or guardian is a legal co-owner, so the parent will need to bring their own government issued ID like a driver's license.

00:04:55 Shanna Browning: What's the minor age? What is that? When you say minor, is that below eighteen. Is that underage. So it's under eighteen.

00:05:01 Shelby Liford: School age.

00:05:01 Shanna Browning: Okay okay.

00:05:02 Shelby Liford: School age I don't we don't put an age to it okay.

00:05:06 Shanna Browning: Just school.

00:05:07 Shelby Liford: School age.

00:05:07 Shanna Browning: Rule of thumb.

00:05:08 Shelby Liford: Rule of thumb. School age.

00:05:09 Shanna Browning: Okay.

00:05:10 Daniel Hill: So the parent needs to bring their identification. What about the teenager or the minor? What do they need to bring?

00:05:16 Shelby Liford: So for the teen, we'll need their social Security card. And typically another form of identification. This could be a birth certificate, school ID with a photo or state ID card if they have one. It's always a good idea to call the branch ahead of time just to confirm the exact documents needed, but that's generally the standard.

00:05:34 Shanna Browning: It's a great thing. Call and confirm. So now we have a specific account just for students that we offer. Or how does that work at First Century Bank.

00:05:44 Shelby Liford: We actually don't have a specialized teen account product. And that's because we found our standard accounts work perfectly as a learning tool when they are set up as a joint checking account with a parent or guardian. This structure gives the teen the independence of having their own debit card, while keeping the parent involved to provide that layer of guidance and oversight.

00:06:03 Shanna Browning: Makes sense.

00:06:04 Daniel Hill: And that's the primary tool they'll be using is a debit card. Not checks or not. Not a credit card. Right.

00:06:12 Shelby Liford: Absolutely. That's right. And that's a critical distinction to make for a young person. A debit card is tied directly to the balance of your checking account. It's like a digital version of cash. If you have fifty dollars in the account, you can spend up to fifty dollars. You cannot spend more. This is the single most important lesson in cash flow management. You can't spend money you don't have, right? Right.

00:06:33 Shanna Browning: Are you sure? Are you sure?

00:06:36 Shelby Liford: It makes the concept of a finite balance real, and prevents a young person from getting into debt. A credit card, on the other hand, is a loan, which is a lesson for a later stage in their financial journey.

00:06:47 Shanna Browning: Later. Exactly later. So I love that we understand what a debit card is. I think that's important to distinguish for sure. So Shelby, this is great, great, great, fantastic practical advice. But opening the account is just really the first step. And I think the learning happens after that too. So what advice being on the front lines do you give to parents on how to use this new account as a teaching tool?

00:07:10 Shelby Liford: So I always give three pieces of advice. First, have the paycheck. Sit down when that first direct deposit hits the account, don't just let it happen. Sit down with your teen, open their mobile app together and look at it. That's a crucial part. This is a moment to celebrate their hard work and make the connection between their labor and the number on the screen.

00:07:32 Shanna Browning: I know it makes me happy when I see my paycheck.

00:07:34 Daniel Hill: Yes, yes. And I love that. I love that it makes a positive, shared experience between the teenager and their parents.

00:07:41 Shanna Browning: Yep.

00:07:42 Shelby Liford: So secondly, use the moment to introduce the save, spend, give framework before they spend a penny. Help them make a plan. You can say okay, your paycheck is one hundred and fifty dollars. Let's start by paying your future self. First. Let's automatically transfer ten percent. That's fifteen dollars into your savings account right now. The key is to help them attach that savings to a tangible goal.

00:08:07 Shanna Browning: Which is great.

00:08:08 Daniel Hill: And we talked about that in one of our previous episodes about how important it is to pay yourself first.

00:08:14 Shanna Browning: That's right, that's right. And so really you're basically you're not just saving for savings sake.

00:08:20 Shelby Liford: Exactly. Ask them what's something you really want that you could save up for? Maybe it's a new video game that costs seventy dollars. You can show them that in five weeks, their savings account will have seventy five dollars, and they'll be able to buy that game outright with the money they planned with. This makes the concept of delayed gratification and goal setting real goal setting.

00:08:41 Daniel Hill: What a brilliant, brilliant way to make it concrete. Make it stick. And what is that third piece of advice?

00:08:49 Shelby Liford: Third piece of advice. Let's review the statement together. Once a month. Just take five minutes to scroll through the debit card transactions with them. The goal isn't to judge them or to be a big brother, it's to help them build awareness. You can ask questions like, wow, you spent forty dollars on coffee this month.

00:09:07 Shanna Browning: Look at my statement. Don't look at my statement.

00:09:10 Shelby Liford: Did you realize it was that much? How do you feel about that? It teaches them to be conscious of their spending habits in a non-confrontational way.

00:09:19 Daniel Hill: That's just great.

00:09:20 Shanna Browning: It really is.

00:09:21 Daniel Hill: Great. Shelby, I want to pivot just a bit to my world of security officer for teens today. Banking isn't just a physical card, it's an app on their phone. And you mentioned earlier about pulling up the app and seeing the direct deposit. What are the key conversations that parents need to have about digital banking safety?

00:09:43 Shelby Liford: Boy, this is so crucial. The first is about the mobile app itself. It's a very powerful tool. Show them how to check their balance, how to review transactions, and how to set up those low balance alerts that we've talked about. This empowers them to monitor their own account.

00:09:59 Shanna Browning: Which is good. So let's talk about that for a second. So what about also the p to p what we call p to p person to person. So those payments that are so popular like a Venmo a Cash App,  a Zelle, anything like that.

00:10:11 Daniel Hill: This is where risk really increases the number one rule parents need to teach their children and their teens is to only send money to people you know and trust. These apps are like digital cash. Once you send the money, it's gone. There's often no fraud protection. If you willingly send money to someone who turns out to be a scammer.

00:10:32 Shelby Liford: We see this quite a bit, unfortunately. A teen might see it too good to be true deal on social media for concert tickets, so to say, or new pair of shoes and they send the money and the person on the other end just disappears. It's a heartbreaking but very powerful lesson.

00:10:48 Daniel Hill: Oh, absolutely. And the other cardinal sin of digital banking never, ever, ever, ever share your Pin or online banking password. Not with your best friend. Not with anyone. Remind them that bank employees will never call or text them asking for this information. That's always a scam.

00:11:07 Shanna Browning: That's right. And parents should probably have that knowledge as well, right?

00:11:12 Daniel Hill: Exactly. Yeah. You know, this has been so, so helpful. And I hope this will give a lot of parents the confidence that they need to just get started. And that brings us to this week's actionable tip.

00:11:25 Shanna Browning: So your action item for this week is perfect for anyone with just a young person in their life. And we're going to call it the Family Money Minute.

00:11:34 Daniel Hill: Your simple task is this sometime in the next week, set aside just five minutes to have a short, positive, and low pressure conversation with your child or teen about a basic money concept.

00:11:49 Shelby Liford: I love this idea. It doesn't have to be a big formal lecture.

00:11:52 Shanna Browning: It just needs to be a conversation, right? People don't want to talk about money, but you got to talk about money. So if you're at the grocery store and you can use the debit card machine to explain the difference between a debit and a credit. And if you're paying a bill online, you can show them how an automatic payment works. If they get birthday money, you can talk about the idea of saving a portion of that.

00:12:15 Daniel Hill: The goal is simply this to normalize the conversation about money. Make it a regular bite sized topic. Remove the fear and intimidation, and build a foundation of curiosity and confidence that will last your young person a lifetime.

00:12:30 Shanna Browning: Shelby. This has been great. We're so glad you joined us doing this and talking about really from the front lines of what practical, real world advice is like when you're talking to your teen?

00:12:41 Shelby Liford: Well, it was my absolute pleasure. Thank you both for having me.

00:12:45 Daniel Hill: Next week, we'll be exploring the all powerful features you might be missing in your mobile banking app.

00:12:52 Shanna Browning: And as always, subscribe to us wherever you listen so you don't miss that. For Daniel Hill and our wonderful, wonderful guest, Shelby Liford, I'm Shanna Browning. Thanks for listening.