A Fresh Idea for Teaching Your Kids to Handle Money

You know, teaching your kids to handle money has never been an easy task… Do you teach them to use cash?  Checking?  Savings?   Or do you try something different?

Here’s a fresh idea for teaching your kids about money – get them a prepaid card!

When they start getting a real allowance, or they’re ready to start that first real part time job, or if they’ve already got a little money saved from babysitting, mowing yards, or shoveling driveways, then it’s time for you, the parent, to step in and teach them how to budget, spend wisely, and save.

You would be absolutely appalled if you knew how many young people graduate from high school or even college and have absolutely no idea how to handle money.  They don’t have checking accounts, they don’t have savings accounts, and they are completely comfortable just grabbing Mom or Dad’s debit/credit card whenever they need anything. And that makes it all that much harder for them to not only learn to handle their money, but to stop depending on yours for everything!  And let’s face it, no one wants to have to support their kids forever…the goal is to raise them to be self sufficient, stable adults.

While you could take them to the bank and help them to open a conventional checking or savings account, it’s probably not going to be the best way to teach your children how to handle money.

In the first place, unless you’re willing to hand them their own debit card to carry around, they likely won’t have access to the money in the account except during normal banking business hours, you’d probably have to try and get them there, and that’s not always convenient for you!

Secondly, because you will have to sign on their accounts, if they overdraw their account, the bank can withdraw that money from YOUR bank account, even if it’s a separate account (it’s true, read the fine print).

So, without inconveniencing yourself or risking your own bank balance, what is the best way to teach your kids about money?

Get them each a prepaid / debit card!  That’s right – sign up for a prepaid / debit card in your name, and then set your child up as an additional cardholder on the account.  (Since most prepaid options only allow one additional cardholder per account, you will need to set up a separate card/account for each child.)

In doing it this way, each child will have an account that can be set up and accessed via an online interface that looks remarkably like a bank account, and a prepaid card that can be reloaded as needed, without a significant risk to your own finances.  He or she can load the card with that babysitting money, that lawn mowing money, or you can just put their allowance on the card, and the money is available when they need it.

No carrying cash.  No trips to the bank.  No “losing” his/her lunch money, book fee money, or allowance.  And best of all, no overspending!  After all – with prepaid cards, you can’t usually spend more than you have available on the card, and they’re great for shopping online (or downloading music, or buying tokens for online games, or whatever else kids do online these days).

So go ahead, start your young adult on his/her way financially!