It’s important for parents or guardians to teach their children about money as early as possible. The epidemic of college students getting into debt through a combination of financial ignorance and the lure of easy credit tells us that financial education is as important a part of child rearing as anything else. It’s reported that 76 percent of college students have credit cards. Of that percentage, 20 percent say they’re in financial hardship due to credit card debt. Prepaid debit cards are becoming handy tools for families to learn about financial responsibility in a safe way, before the kids get out on their own. For example, you can try a Kaiku reloadable credit card or similar card to provide an allowance for younger teens or help older kids manage their pay.
How Debit Cards Can Teach Teens About Money
1. They teach them about financial tracking
Since debit cards are used in the same manner as credit cards, they record all financial transactions. Unlike cash, which tends to slip through the fingers easily, debit card purchases require a little thought. They also help kids and parents see where the money is going and may help teens develop better spending habits.
2. They teach them about accountability
Prepaid debit cards leave a paper trail, too. Even if funds are withdrawn via ATM, there’s still a record of the time, date and amount. Periodic reviews open the way for discussions about financial accountability and responsibility.
3. They teach them about limits
Unlike credit cards, a debit card allows the user to spend only the amount of the deposit. This can teach teens discipline when it comes to limited funds and the decision about how best to use them.
4. They teach them independence
Having a card that can be used anywhere that cash or credit cards can be used, and that’s loaded with funds on a scheduled basis, can give teens a certain amount of independence and help build their confidence.
Prepaid debit cards also offer peace on mind to parents. for one thing, they’re safer than carrying cash, and parents no longer have to worry as much about situations where their child may be stranded someplace without money.
How do you teach your kids about financial responsibility? Tell us below!