Today’s kids start demanding financial independence much earlier. It is up to you to decide how much independence they should be warranted and how you wish to control their spending.
Teaching Money Management to Children
1 If you have a young child, about 2 years old give him his first lesson in money management by teaching him how to count coins.
2 As they grow up combine your children’s math lessons with that of money management and tell them how to make change with coins.
3 If your kids are older, make your child understand how to use a bank savings account and help him open and operate one himself.
4 You could next teach them about the power of various financial instruments such a check, debit and credit cards and so on.
5 When they grow up a little more, teach them the skills required to make a personal budget.
Whether you like it or not, the whole scenario of shopping and making payments has undergone revolutionary changes today. Gone are the days when teenagers would have to rummage through drawers and piggy banks to locate their big loot. Today, every child wants a debit card that can take care of his financial needs.
The Money Times brings you a complete guide on the use of debit cards to give your kids practical lessons on money management while also keeping a check on their expenses.
Special Debit Cards for Kids
Debit card companies realized the potential of a debit card specially designed for grown-up kids and launched prepaid debit cards or reloadable debit cards.
What makes them different from the normal debit cards is that parents can refill them with the desired amount from time to time.
These cards thus come with the dual benefit to both parents and their children. Where on one hand, they enable parents in exercising control over the amount of money that is at their kid’s disposal, on the other they give liberty to kids to spend as and when they wish to.
Advantages Offered by a Kid’s Debit Card
The biggest and the most obvious advantage of reloadable debit cards is the fact that they help in making children financially independent.
Apart from this, grown up children begin to appreciate the value of money early in life, thus laying the foundation for their future money management skills.
Apart from this basic advantage the other benefits associated with prepaid debit cards are as follows:
- It does not give rise to credit, so there is no question of your children spending beyond a specific limit.
- All transactions beyond the amount deposited by parents are automatically declined.
- The transactions entered into through these cards can be tracked by parents on-line.
- Carrying a prepaid debit card is any day safer than carrying cash.
- They are widely accepted.
- They can be reloaded in any of the numerous locations established by the debit card company issuing it.
Are There Any Disadvantages?
Well, the answer to this question would primarily depend upon how your kids use the debit card given to them. There are chances that they get habituated to making payments through cards.
Though parents have a control over how much their children spend, they cannot regulate on what their children decide to spend the money on.
Another apparent disadvantage associated with a reloadable debit card is the charges levied on its usage. The debit card company charges you a certain fee every time your child makes payment using the card.
In addition you would also have to bear the other mandatory one time expenses such as the activation charges and account set-up fees etc. at the time of activating the card.
Getting Best out of Your Kid’s Debit Cards
Eventually, you will have to put in hard work in order to ensure that you get the best out of your kid’s debit card.
It is not unless your kids learn to use it responsibly that it would finally start paying you the benefits associated with it. So, make sure that your kids appreciate that every transaction they make using the card is chargeable and therefore must use it sparingly.
They must stick to paying in cash wherever possible. If your kids understand the value of money and know the kind of hard work it takes to earn it, they would be able to do justice to this instrument of making payments, if not they are probably still not ready for it.