There is no set age by which children mature, which can make it difficult for parents to gauge when their kids are ready to take on more financial responsibility. On the surface it may not seem like there’s a huge difference between giving your child cash and giving them a debit card, but for most kids, getting their very own piece of plastic is the first step into the adult world. It comes with restrictions, limits, and rules that are imposed by a bank rather than by you.
If you’re seriously considering moving your child from cash to debit, here are a few questions to ask yourself (and them).
Do they understand how Debit works?
Make sure your child really comprehends that their debit card isn’t a magical source of never ending funds. Just like with cash, they’ll have a set total in their account and won’t be able to spend more than they have available. Teach them to check their account regularly and to keep their card number and PIN safe. Many online retailers now accept debit cards which can open them up to a whole new world of dangers (things like fraud, identity theft, and simply even buying things that they can’t return easily or spending too much money on shipping costs).
Do they expect You to Top Up their Account every time they Run out of Money? How are they with their Money Currently?
Teach your child to understand that their debit card is not an ever revolving door of free money. Make sure they understand that if they run out of money before their next scheduled allowance, then they have to deal with it. Constantly topping up your child’s account when they’re running low will only enable them to passively spend their money rather than actively thinking about every purchase.
Do they work/have a Separate Source of Income?
If they have additional income outside of what you give them (a paper route/babysitting/dog walking etc) then it’s especially important that you teach them how to budget and monitor their money.
Have you sat down and talked to them about Debt and the Dangers of Spending Beyond their Means?
Teaching your child good financial management skills from an early age is your best bet. The sooner they understand how to responsibly handle their money, the less likely they are to get themselves into trouble when they’re older (and have access to credit). Be as transparent as possible about the dangers of spending more money than you actually have access to. Teach your child about interest charges and how quickly they can accumulate.
Do they know how to Budget and do they Understand the Consequences of Spending all their Money too Quickly?
The last thing you want is for your child to start spending their money carelessly. Out of sight/out of mind can be a real danger with debit because kids no longer have the physical cash in front of them to remind them exactly how much money is left.
Do you feel like you and your child could benefit from outside financial help? You can apply online for a consultation right here.