Do you remember when you started getting an allowance or learned how to balance a checkbook? Were you ever taught money management skills by a parent or friend?
Children are moldable, teachable, understanding. You teach your children how to speak, how to read, how to write, how to dress and act. If you are able to teach them life s most fundamental, yet critical skills, then you can teach them most anything and they will remember it. Now, as a parent, you may not think that money management is a skill you should teach until your children are old enough to make their own money, or even understand the concept. While waiting seems like the logical thing to do, teaching your children where money comes from, how you can earn money, how to spend money wisely and how to save money is critical. Money makes the world go 'round, so you need to start now to help your children know how to harness its power and spend and save responsibly.
As a parent, how can you successfully teach this principle? We have one suggestion: Prepaid debit cards. Yes, prepaid cards may have a stigma as being the last option for those unable to qualify for a credit card. And yes, many of them have a list of fees that you could incur if you perform various actions. But believe us when we say that prepaid debit cards can be great learning tools that can help your children, teenagers and college students learn about money management.
When you give your children cash, what happens to it? They spend it on sweets, a toy or a game. They get the cash, quickly spend the cash, and that s the end of the story. It's important that they learn to distinguish a need from a want (which we know is hard for all of us). Establishing this concept will help your kids make smarter spending decisions.
Mint.com, a notable money management tool, lists three basic steps that you should follow to develop a personal budget. We think these also work perfectly for children:
- Identify where your money has been going
- Set a goal, something you want your money to help you achieve
- Track your spending
As children complete chores and special tasks, receive good grades or earn money in other ways, instead of giving them cash, which they are likely to spend quickly or lose, load a prepaid debit card with the cash and give them a ledger (like a check book) that they can use to track purchases and card balance. Now, instead of spending their money in one lump sum, they can see where the money goes and be responsible for knowing the balance of their card and their transaction history. The best part, the majority of credit and debit cards will issue you an online account, meaning you can log in and see the complete purchase history of the card. From this itemized list of expenditures, you will be able to see what your kids are spending their hard-earned money on.
As your children grow into teenagers and then into college students and then into adults, they will take everything that you have taught them over the years with them into the world. Start now! Help your children understand the importance of earning, budgeting and keeping track of their money. A prepaid debit card is a great tool to help you help them make the right financial decisions in their lives.
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