Teaching teens and children financial literacy can have a significant impact on their financial future. A 2019 EVERFI Money Matters study found that one of the biggest concerns students have is not knowing how to manage their money. In fact, 53% of survey participants listed money management as the college-related challenge they felt least prepared to take on.
An effective way to provide a child with money management experience is to give your son or daughter a debit card. Learning to use a debit card responsibly can provide young people with many benefits, from financial independence and confidence to practicing budgeting in real life.
The key, of course, is determining when to give your child a debit card. Not only do you need to make sure your child is ready to take on the responsibility, but you’ll also need to check with your bank for the rules. Some financial institutions require children to be a certain age before they can get a debit card in their name, while other companies may offer debit cards for children with no age limit.
This is where Greenlight can help. Whether you’re looking for one of the best debit cards for kids or want to teach teens financial literacy, Greenlight’s debit card and app has the tools your kids need to learn how to manage their money wisely. responsible. Greenlight also allows parents to automatically deposit allowance money or other forms of money directly into their children’s debit account, which means that once your children learn to use Greenlight, they will will be able to see exactly how much money they have to spend.
Financial benefits of a debit card
A debit card can provide a number of financial benefits to users of all ages. If you think you’re ready to help your child open up a first debit card, here are some of the benefits debit cards for kids and teens could offer.
- Convenience. Having a debit card makes it easier to shop, in person and online, without having to carry cash.
- Security. If your child loses their money or someone steals it, they may never be able to get that money back. However, a lost or stolen debit card may have certain protections under the Electronic Funds Transfer Act (provided you report the problem in a timely manner).
- Send money. The best debit cards for teens can make it easier to send money or pay an allowance to your kids via wire transfer.
- Money management skills. Some parents give their children a set amount of money to use with their debit card each week or month. This structure can help demonstrate two important lessons: the importance of budgeting and the dangers of overspending.
It should be noted that credit cards can provide many of the same benefits above, but most children are too young to open their own credit accounts, and a debit card is a much better way to learn how to swipe, tap, shop online and manage account balances. If you want to help your child establish credit before they leave the nest, you may want to consider making your child an authorized user on your credit card, but you’ll need to carefully consider the pros and cons of debit cards. compared to credit cards before making your decision.
When to give your child a debit card
There are many reasons to give your child a debit card, but how old should your children be when you first give them access to debit? If you wait until your child is the “perfect” age to handle the financial responsibilities associated with debit cards, you may feel frustrated and your children may miss out on potential learning opportunities. Every parent must weigh a number of different factors when deciding if their child is ready for a debit card.
Ages to consider
It is wise to teach children about money at an early age. In fact, your children may be learning about money by observation without you even realizing it. A 2013 Money Advice Service study found that children as young as seven may already have an understanding of basic financial concepts.
Of course, the techniques you use to teach your kids about money can change as they get older. A young child who isn’t ready to carry a wallet or track expenses on a smartphone app probably isn’t ready for a debit card. A middle schooler, teenager, or college student, on the other hand, might be better prepared for the responsibilities.
Remember that you know your child better than anyone knows them. This makes you the most qualified to decide at what age to give your child a debit card.
One of the best times to introduce debit to your kids is when they start earning their own money. Whether they’re working a summer job or providing babysitting for neighbours, the process of earning and managing their own income can give your child the chance to learn critical money lessons – and l Adding a debit card to the mix can give your son or daughter a chance to practice making good choices with the money they earn.
If you have teens or young adults who have recently started driving, setting up your kids with one of the best debit cards for teens can be helpful in a number of ways. In addition to teaching teens about financial responsibility, a debit card can provide access to cash or financial resources in an emergency.
When your child frequently asks for money
Another clue that it might be time to set up a debit card for your child is if your son or daughter starts asking for money repeatedly. In some cases, a debit card can limit constant demands for a few extra dollars here and there. In other cases, a debit card can help kids learn to save money for future goals instead of spending it all in their account whenever they want. receive it.
Many parents give their child a set amount of money each month or week, perhaps as a task-based allowance that must be earned. Once your child begins to receive regular deposits into their debit account, you can let them know what types of expenses they will need to cover with their debit card and help them learn how to budget accordingly.
How to make sure your child uses a debit card responsibly
Learning to use money is an important skill, but parents who teach financial responsibility to teenagers, or even young children, need to develop their own skills. Here are three tips that can help you teach your child how to use a debit card responsibly.
- Establish clear rules. Before giving your child a debit card to use, it’s important to set clear expectations. Make sure your son or daughter understands what monthly expenses they need to pay, when and where they can use their debit card, and what action they should take if an unexpected or urgent expense arises.
- Take advantage of alerts and other parental controls, if available. The best debit cards for kids come with features that can help parents manage their child’s account. For example, you might be able to set up alerts, set spending limits, and view spending reports on your child’s account. Not all banks offer these types of digital tools, which is why fintech services like Greenlight can be so helpful when it comes to teaching teens financial literacy. If your bank doesn’t offer the features you’re looking for, you might want to shop around and look at other debit cards for teens and kids to find a better fit.
- Have frequent money meetings. Before your child starts using a debit card, it’s important to help them create a spending plan. The plan should clearly outline any expenses your child is responsible for (snacks, gas, streaming services, etc.) as well as savings goals. Some families incorporate charitable giving into their children’s financial plan. Others use tools like Greenlight to teach their children about investing. Once your child has created a budget, you’ll want to meet with them frequently to make sure they’re staying on track. If you find that your son or daughter is overspending on unexpected or variable expenses, this opens the door to discussing financial priorities and saying no to impulse purchases.
Why Greenlight could be a good option
The Greenlight debit card for kids and teens is one of the best debit cards on the market, not only because it can help your kids build financial literacy skills, but also because it includes some solid features that benefit the whole family. The prepaid debit card comes with an application that can be configured to perform any or all of the following actions:
- Let your kids earn money doing chores
- Easily transfer money from your bank account to a child’s top-up accounts
- Help kids set savings goals
- Teach children to invest
- Use parental controls like real-time alerts, balance tracking, and withdrawal limits
The next time your child asks if they can have $20, ask them how much money is left in their Greenlight debit account. If they don’t have enough money set aside, they may have to wait for their next allowance payment, which might make the day less fun, but might give your child the kind of financial lesson that will last a lifetime. his life.
The bottom line
Debit cards can provide a child with critical money management experience before they enter adulthood. Before you sign up your child for one of the best debit cards for kids, ask yourself if they’re ready to take on the financial responsibility and be prepared for common money mistakes like overspending. your budget or spend too much money. their allocation on impulse purchases.
Services like Greenlight can give your kids the freedom they need to learn from these mistakes, while giving you the ability to monitor and control the debit account if necessary. Knowing when to give your child a debit card is a key step in helping your children learn important financial literacy skills, so don’t put off this important step!