How can you effectively teach your kids smart and practical financial lessons in today’s increasingly cashless society?
Two words: debit cards!
Why are debit cards considered one of the best ways to teach your kids about money? For starters, a kids debit card can give you control over their spending while still allowing them to make mistakes and learn important financial lessons.
Nowadays, it is easier than ever. Kid-focused debit cards like BusyKid’s Visa debit card for kids are secure, easy to use, and can teach your kids very important financial skills—managing money they can’t see and investing their hard-earned money into real stocks.
The Lowdown on Debit Cards for Kids
A debit card can be a great teaching tool that can teach your teens about money management and the dangers of impulse buying. A debit card can also be used to teach your kids about healthy skepticism and caution when it comes to spending decisions.
Here’s an interesting statistic: the average person spends over half a million dollars in impulse buys in their lifetime. Understandably, you would prefer that money goes to your kids’ savings rather than being spent recklessly. While you may be aware that impulse spending is not your friend, your kids probably don’t.
Spending using a debit card can be tricky for your teens since they deal with money they cannot see. That said, you need to guide them accordingly. Below are some of the important lessons you should teach your kids when it comes to debit cards:
Lesson #1: A debit card is a budgeting tool, it is not a license to spend.
Money that goes to the debit card should come with a guideline. In line with this, you need to sit down with your teens and plan where their money should go. For instance, some of the money can go to clothing while another percentage can go to their savings. Guide them accordingly so they can decide wisely.
Lesson #2: Don’t put money they did not personally earn on the card.
Earning can refer to allowance they have earned or money they got for doing something of value like mowing the lawn or helping around the house. This is important, so they would think twice about recklessly spending money they have worked hard for.
Also, if your kid has a savings jar, it would be a good idea to get it out and add it to their debit card. Often, teens barely realize that change is still money. Make sure you ask your teens how much money they can add to their debit card from their change jar each week.
Lesson #3: Money is not limitless.
Simple conversations can help your kids learn that money is not limitless. For instance, if they want to buy those cool sneakers they have always wanted, they need to forego buying that new game (at least for the time being). This will also teach them what to prioritize and not spend what they have in one go.
Lesson #4: Postponing spending decisions is a wise idea.
This is a lesson you should be relentless with. You can cool down your kid’s urge to impulse buy by suggesting that they think about their decision for a week or two. When the impulse to buy passes, you can remind them that they have saved money, and it’s a good feeling to have.
Lesson #5: You won’t bail them out immediately if they run out of money.
While it would be tempting to bail your teens out each time money on their debit card runs out, it is recommended that you refrain from doing so. They need to know that they have to be wise when it comes to spending. Otherwise, they won’t be able to save for their future or be able to buy what they want. It’s one of the most important financial lessons every kid should learn.
Once you decide it’s time to (find out when the best time to get them a debit card here) get your kids a debit card, it is recommended that you guide them every step of the way so they will learn responsible spending and smart financial lessons in today’s nearly cashless society.