Saving money has interested me since I was a child, but tracking my finances was paramount. How many 12 year olds could say that? Fast-forward 30 years. The way I handled money then was different than the way teens of 2018 do. Today’s money is abstract.
For some perspective, when I was a young teen there were no ATMs. If I wanted to withdraw money from my savings account, I had to go into the bank with my mom. There was no swiping a Visa Buxx card—I carried cash with me to buy stuff!
That brings me to the topic of virtual money and the question: Should tweens/teens have a debit card? I am torn. Part of me feels kids need to physically see the cash leaving their wallet and part of me realizes our society is going cashless and I need to get on board. After speaking with several moms and dads of tweens and teens, it really comes down to how responsible the child is and why cash may not be the best option. Can a teen debit card teach teens financial autonomy, to be good stewards with plastic, and even prepare them for their first credit card?
Since my eldest is bit young for a Navy Federal Visa Buxx card, I polled some friends and asked when their tween or teen got their first debit card and this is what a few had to say:
One mom said her eldest got one when she was 12 years old. She said she likes the flexibility of being able to add money to her account when she needs it and cash isn’t the best option. She also said teen debit cards also provide good money-management opportunities by balancing their account, tracking spending and deciding if the purchase is really worth it.
A dad said he’s been thinking about setting up a high school account for his 14-year-old. It will be a separate account from her savings and she will get a monthly allowance and additional money can be added from chores, babysitting, etc. He also plans to match each dollar she saves as an incentive. He feels debit cards are safer than cash and easier to manage/fix if lost.
Another mom told me that her children didn’t get debit cards until they had real jobs. They have student checking accounts through her bank and she is secondary on the account since they were minors when they opened their account, which made it easy to transfer money and track their spending.
I’ve always had a strong sense of financial autonomy ever since I made my first dollar. I hope to pass down some of my financial best practices below to my children, so they will be successful with their money, too. Here are four principles I’m teaching at home:
Be entrepreneurial at a young age. My boys “work” for the family business and do odd jobs around our house and at their grandma’s house for extra money. They get paid in dollar bills, so they can count their money and physically see it add up.
Determine wants vs. needs. Set goals. Money tends to burn a hole in my eldest’s pocket, and we have been practicing patience before buying stuff. I have a three-day wait-and-see rule; if he still wants it after three days and he has the money to buy it then we’ll comparison shop to stretch his dollar even further. This valuable exercise makes him ask if he still wants it, or should I save my money for an experience or a bigger-ticket purchase.
Make a habit of showing savings. We use Dave Ramsey’s Give, Save, Spend method. We divide earnings in thirds. Give goes to the charity of their choice, save goes into their piggy bank and spend goes into their wallet. Every few months we count the money in their piggy bank and transfer it to their savings account. Seeing their name attached to their money online encourages them to make more money so they can save even more.
Be open and honest about family finances. My kids know money doesn’t grow on trees and they see the effort we put into our work pays off. They also know stuff breaks and we have to pay to have it fixed. We don’t hide “real-life” money issues from them. It is important that they know we are financially comfortable and the reason is because we have an emergency fund for when these situations happen.
No matter your kids’ ages, remind them of the importance of being good stewards of money and to track all their money. Remind them that even though they may be able to afford it that it doesn’t mean they need it right now.