Most of us understand that financial literacy is the key to becoming a successful adult. As adults, sometimes we wish that we learned financial literacy more in high school or younger. Now that some children are getting their education at home or through virtual sources, it could be the time to teach your children about those financial topics you wished you learned earlier in life. Wonderful lessons for children are to teach them how to earn money, spend it, and save for future purchases.
Teaching with Cards
While teaching children about wise ways to handle money is excellent; however, there is a point that hand-on experience is the best teaching tool. It is a sound practice that parents start small with children, teaching them the value of a dollar. Most children see mom and dad swipe their cards and think that money is just a matter of a simple swipe.
You can teach young children the value of a dollar by having them work on commission with small chores around the house to get paid in cash. Whether your child has a part-time job or work on commission around the house, showing them ways to handle their money in a digital world is becoming a must, especially as they get older.
Pre-paid Cards
Pre-paid cards are an excellent option for those children who are not old enough to have their checking account yet. As parents, you can find pre-paid debit cards that allow you to control how much your child can spend and where. With some cards like Greenlight, children can request money increases or allowance transfers as needed, but parents can shut down cards when life happens, such as when the child has lost the card.
Another benefit of a pre-paid card is if the card is stolen, the thieves can only access a limited amount of cash because the card is not connected to an account. The card is typically easily replaceable by merely picking up a new one at most department stores.
Debit Cards
Debit cards are typically attached to a checking account. Most banks usually don’t allow children to have checking accounts until ages 12-15. By this time, if your child has only had experience with cash, you will have to educate them about the balances and fees of their new account. With a new account, this may be an excellent opportunity to teach them about budgeting and saving for upcoming costs, such as buying their car.
When a child owns a debit card, it is essential to teach them about identify thief. Identify thieves can take a card number and quickly clean out a checking account, and if your bank has automatic transfers form savings to checking, it could be a chance for thieves to clean out savings accounts.
Main thing
When teaching children about money, the bottom line is providing them a safe place to be able to make mistakes and learn from them. While most of us adults have made some dumb mistakes with money, this is a chance to save your children the heartache of having to learn money lessons the hard way.