There are some things schools cannot be expected to teach children. The onus remains on parents to set standards and accountability at home, and create the correct framework of discipline and behavior in many aspects for children to take into their life ahead. Some of the most precious gifts you can give your children are responsibility, independence and ambition. It is almost too common to see teens growing up clueless with respect to money since they are provided for without having to do much in return. Placing them in charge of some things early on gives them important lessons regarding limits and priorities – both highly important for them so they don’t arrive in college or in the workplace with lots of choices but no sense of direction.
My own journey
A few years ago, my teenage daughter asked me for a debit card because all her friends had one. At first I refused as I thought a 14 year old did not need a debit card. But I finally agreed and got her a prepaid debit card. And in the past two years, I have learned that a prepaid debit card can help your child with lessons about money and responsibility because it forces them to think about self-sufficiency. While credit cards are risky, debit cards are handy because spending is limited to cash available on the card. In our case, I chose to have her allowance directly deposited on the debit card and she set up text alerts which is a great learning tool. Even if you don’t opt for direct deposit, you could just load a specific amount of money on to the card, and when your teen spends the amount loaded, further transactions are denied until the card is reloaded with funds. You and your child can get access to account details, so that you can see where the money is being spent.
Looking back, did I want to give my child a debit card at 14? No. But it has turned out to be a good thing. What we have accomplished is how to stay within a budget and stick to it regardless of unanticipated events. Expect money to run out and expect your child to beg for more money when that happens. But those are the true moments of learning. Because at that time, instead of loading the card or handing out more money, you can use that moment to deliver the lesson of living with their choices and make them wait till their allowance gets re-loaded.
The journey is the reward
Just getting a debit card isn’t all that it takes to get your child instantly in tune with their priorities. The evolution of limitations and expectations is key to learning. It takes time and the limits you set up are clearly important. Will your child make mistakes, ofcourse! Will they lose a debit card, definitely! But in time, this piece of plastic encourages your child to manage and track their money and best of all, NOT accumulate debt. They get to choose among the things that they need or want and live within that limit. If they decide to go buy overpriced items, it comes out of their own account. They not only learn to budget but also learn to save for the things they want but don’t have enough money for right now. Giving them a debit card must come with the understanding that this is how much they get and if they overspend, they have to manage with less or nothing.
The next frontier
While your teen will most certainly enjoy the freedom of a debit card, some realize that their allowance is not enough for them. This creates ambition to work over summer vacation or weekends. A summer job is an important learning opportunity for teenagers and it allows them to escape the mindless world that boredom creates such as too much TV, surfing the Internet, or chatting on Facebook or Skype. Also, children seem to be much more responsible about money when they make that money. Sensitivity and selectiveness suddenly come out of nowehere! Although in this economy finding a job may not be the easiest, it does make them more creative when it comes to looking at options. And volunteer work is an avenue that gives young people an opportunity to realize how fortunate they are and a sense of giving back to the community.
When they do get that job, once again, the learning opportunity in this is to teach them about saving and investing. Not an easy task because many respond with “Don’t tell me what to do, I am working now and make my own money.” But the onus again is on the parent to guide them with opening a savings account and encouraging them to have a mandatory electronic savings deposit with every paycheck.
Most importantly, lessons learned while at home are highly valuable. Such learning provides a safer framework to make mistakes and learn from them without paying a high price. A child that gains independence and accomplishment within a safe environment has a much better chance of feeling confident upon leaving home. And as parents, we want to bring up children who can step out into the world and make good decisions ahead.
Ritu Mehta, Editor, ACE Cash Express
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