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Should You Give Your Kids Allowance Advances (a.k.a. Loans)?

So she’s at the store and your daughter sees “the most perfect t-shirt ever!!!! Seriously, they never have this shirt in my size and it’s the very last one!!!”

The problem is, your daughter is broke. She already used her allowance and birthday money for CDs, lattes and cool stickers for her laptop. She’s begging you for a loan or an advance on her allowance.

Sound familiar? And if so, what’s your reply strategy? Allow us to offer a few choices.

Option 1: “No Way, Kiddo.”

It happens to all of us at some point, and it will happen to your child, too. Your teen happily spends all of her discretionary cash, then runs into a great retail deal she didn’t expect. She requests an advance from the Parental Unit Bank. Your response to your kid’s loan request might depend a bit on 1) generally how responsible your kid is with money and 2) how new they are to allowances or having their own spending money.

Food for thought: Advancing your child money really is teaching them to go into debt. They don’t have the money to buy the coveted item, but they found a place to borrow it (you). They’re buying now, paying later. Sounds a bit like a credit card transaction, doesn’t it?

If you haven’t yet seen this hilarious letter from a dad turning down his 6-year-old son’s loan request, be sure check it out.

Option 2: “Let’s Make a Deal.”

Maybe that T-shirt really is a one-of-a-kind item that your child has wanted for months. If so, and you know your child is pretty financially responsible, you could forward the money to their account and greenlight the purchase.

Food for thought: Your child may need to have some “skin in the game.” Savvy parents may require their kiddo to do some extra chores in return for the money. They may also take possession of the cool t-shirt (sort of like a Parent Layaway Plan) until those chores are done satisfactorily. If the kid doesn’t do the work, or repeatedly does it sloppily, the shirt (or whatever item) goes back to the store.

A slightly different layaway option: You keep the item until your child pays you with their next allowance.

Option 3: “This Warrants An Exception.”

There are times when you might be a little less hardline. For instance, if your kid has the money at home—just not with them at the store—it’s probably reasonable to advance them the funds until they get home and pay you back.

Another example: A future event needs to be paid for today. For instance, your teen might have a chance to buy concert tickets, but the deadline is this Friday. Your kid can’t afford the tickets this week but absolutely can pay you back between now and concert night three months from now. As long as your child repays you, this might be a reasonable choice. (However, older kids should start a savings fund for just these kinds of opportunities.)

You’re the Family Loan Officer

Which of these options would work best for your family? There’s no right or wrong here. The choice is up to you.

Just consider that your answer will teach your child an important money lesson they’ll carry with them for a long time. Make sure it’s the message you want them to remember.

(photo courtesy © Quazie cc2.0)

What to Pack for a School Field Trip

The weather is improving and the school year is starting to wind down: It’s prime time for teachers to plan school field trips.

If your kids are heading out for a day trip with their class, their teacher may send home a list of items to pack. However, experienced parents know that those lists often cover just the basics. Here’s what your kids really should bring on a day trip:

  • Backpack or string bag: This pack should be a bit smaller and lighter-weight than their everyday school backpack. Be sure your family’s last name is clearly marked inside the bag. Security-conscious parents suggest you not mark your child’s first name in the bag. A sketchy adult could see and use your child’s first name to suggest that they know each other. (“Hey, Jake, remember me from your dad’s work?”) Include your phone number or email somewhere inside the bag in case it gets lost.
  • Cell phone (if allowed): Some schools prohibit or strongly dissuade kids from bringing phones. Instead, you may get a list of the teacher’s and chaperones’ cell phone numbers, and they’ll have your contact info. If your child takes his/her phone, consider sending them with a portable phone charger, too. The kids probably won’t have spots where they can recharge their phones during the day.
  • Cash or debit card for extras: Your school may have a policy about personal money. If students are allowed to purchase extra snacks or souvenirs on the field trip, send them with a modest amount of cash or a kid-friendly debit card.

It’s a good idea to make sure your child’s debit card doesn’t allow them to withdraw cash at ATMs or get cash back (for splurges or treating their friends). Even better are kid/teen debit cards that message you before authorizing your child’s purchases.

Be sure you have account information safely stored at home or work in case your child loses their debit card. Also, make sure your child knows to contact you right away (or have a chaperone do so) if they lose their debit card. That way, you can quickly get in touch with the card issuer or use a mobile app to disable the card.

  • Writing tools: Include a notebook and a pen or mechanical pencil with a clip on the side. Insert the pen/pencil into the metal spine of notebook (clip on the outside) for easy storage.
  • Disposable camera: Give your child a one-time-use camera marked with their last name. You’ll develop the photos the old-fashioned way when your kid gets home.
  • Wearables: Sunglasses are something most kids forget to pack but wish they had available. Depending on the weather, your child may also need a light wind or rain jacket and extra layers of clothing. An extra pair of socks is easy to carry and super helpful if it’s rainy or your kid loves stomping through any type of water.
  • Refillable water bottle: An inexpensive plastic one is fine. If your child is fussy about keeping their water cold, a small, insulated water bottle is great, too.
  • Packable snacks and/or lunch: If the school isn’t providing food, keep your kid’s options simple and disposable. That way, they don’t have to carry back bulky items like a lunch box or thermos.A brilliant idea: Pack your child’s lunch in one of the plastic clamshell boxes that often hold fresh fruit at the grocery store. These sturdy containers keep sandwiches and other soft items from getting squashed. Plus, your child can toss the whole container when they’re done. Need some lunch inspiration? Check out these ideas for disposable field trip lunches.

By the way, are you chaperoning a school field trip? Get the inside scoop here about field-trip volunteering, including stocking your own daypack with extra snacks, sunscreen, hand-wipes…you name it. If you actually survive taking a bus-full of kids to the art museum, planetarium or anywhere, you are a rock-star parent. Kudos to you!

(photo courtesy © Matt Stehouwer cc2.0)

Should You Participate in ‘Take Your Daughters and Sons to Work Day’? It All Depends

This Thursday is the return of the annual “Take Your Daughters and Sons to Work Day.” Although participating in this day seems like it should be a no-brainer, it’s not. Many parents actually are ambivalent about the event.

When this day was created as “Take Your Daughters to Work Day” back in 1992 by Gloria Steinem and her For Women Foundation, the intent was innovative and well-meaning: Encourage more girls to consider professional careers. The day (which is now celebrated on the fourth Thursday in April) was later broadened to include boys/sons.

Some parents now wonder if the day is still necessary or helpful. Why? For one thing, a lot of today’s parents have computer-based jobs that aren’t easy (or as interesting) to show kids. How do you compare computer work to, say, the work of a firefighter or veterinarian?

On the other hand, if you don’t take your kids to your workplace, they may end up doing busy work at school and/or feeling left out of the “fun” while most their classmates are away.

So how do you decide whether to opt in to this career day? Consider a few different criteria:

Are You Prepared?

Blogger Katherine Lewis offers some good basics on how to make this day work well if you’re new to it. Key takeaway: Plan your workload carefully. You won’t get as much done as you hope. And it does pay to think ahead about activities and talk with your boss and colleagues about how to make the day interesting for the kids.

Is Your Child Old Enough to Appreciate the Day?

Washington Post parenting editor Amy Joyce decided a couple of years ago that her kids (then about 5 and 7) weren’t going to participate. As one of Joyce’s colleagues pointed out, many of these days end up with parents and their coworkers desperately trying to come up with ideas to make work seem fun for kids who would otherwise be bored. Are these junior workers getting a realistic idea of what it’s like to work at your company? Probably not.

Does Your Workplace Have an Organized Program?

This is a big one. It’s much easier to make this day work when you have help. Are different departments willing to do “show and tell” presentations to groups of employees’ kids? Will someone offer to arrange a couple of age-appropriate, hands-on activities?

For instance, my husband’s former employer, a catalog/online retailer, arranged for kids to write fun catalog descriptions of a few products and learn a bit about a computer design program. That worked great.

What’s Your Goal?

If you want your younger child just to be able to visualize where you are all day when you’re at work, awesome. However, a quick tour of your office any day—and it doesn’t have to be in April—might be enough in that case.

If you truly want to expose your kids to career options they might not otherwise consider or fully understand, should they go to work with you…or someone else? For instance, I’m pretty sure my younger daughter doesn’t want to be a freelance writer like me. My hope, instead, is to find a friend in software design who’ll let my daughter shadow for a day. And I’m open to it being a day other than the fourth Thursday in April.

Is One Day Enough?

I like this Working Mother writer’s idea that it’s great to extend the career lessons well beyond this single day. Make a point to talk regularly with your kids about job choices that aren’t as obvious as firefighter, veterinarian or whatever you do.

Better yet, look carefully at their natural interests (Minecraft enthusiast = future software game designer?). See if you can connect them with people who can offer some ideas.

After all, sometimes your child’s best first career counselor is you.

 

(photo courtesy © Brandon Atkinson cc2.0)

Do You Know Where Teens Are Spending Most of Their Money? Hint: It’s Not Just Starbucks

Who woulda thought it was possible to shift aside the beloved java joint in teen consumers’ hearts?

Well, actually, teens do still love their Starbucks. However, for the first time in seven years, it isn’t their absolute top eating-out spot, according to the semi-annual Piper Jaffray Taking Stock With Teens® survey (2017).

So if you’re wondering which food/drink joint you might want to greenlight on your teen’s debit card—or which gift cards to buy for upcoming birthdays and other occasions—here’s the scoop:

Chick-fil-A. Yep, this national chicken sandwich franchise now ties with Starbucks as upper-income teens’ favorite place for eating out. However, Starbucks is still holding its own and is the number-one eatery (by a good margin) among average-income teens. Chipotle, Buffalo Wild Wings and Panera are next in popularity.

Some other interesting survey findings:

  1. Food is first, followed by clothes. According to the Piper Jaffray survey, the average teen spends 24% of their money on food. Clothes are next, accounting for 19% of teens’ spending. A bit farther down the list are car expenses (9%), accessories and cosmetics (also 9%), shoes and video games (8% each) and electronics at 7%. The rest of teens’ money goes to music, movies, and events.
  2. Teens are clothing-label-loyal, and Nike is number one. No matter what income level their family falls into, teens are huge fans of the Nike swoosh when it comes to clothing (31% of the market). Other popular teen clothing brands this year include American Eagle, Forever 21, lululemon, Adidas, and H&M.
  3. Nike is tops in shoes, too. Nike owns the footwear market with a 52% teen market share. The next-most-popular footwear brand is Vans, followed by Adidas, Converse and Steve Madden.
  4. Under Armour and Aeropostale are losing out. These two brands top teens’ lists of clothing labels they no longer wear. Aeropostale filed for bankruptcy last year, but is attempting to keep selected stores open.
  5. Amazon is their favorite web retailer. Teens rate Amazon.com as their top online shopping stop (43%), followed by Nike.com (5%).
  6. Michael Kors is tops for handbags. A third of teen buyers prefer this purse brand, with Kate Spade next at 19%

You can read the full teen spending study on Business Wire.

 

(photo courtesy © Geoff Livingston cc2.0)

3 Real Conversations Greenlight Triggered With My Kids

We’ve been using Greenlight Cards with my 8 and 10 year olds for about five months now. In the early days, the kids were overjoyed just to have cool looking cards with their names on it and my wife and I were pleased with the convenience of easier management of requests to buy Pokemon cards on Amazon.com or little games on the app store.

Over these past few months, however, I’ve realized the questions coming up and the conversations happening are much more meaningful long term for these kiddos than simply having plastic with their names on it. Here are three of my favorite talks we’re having on a recurring basis that wouldn’t have happened without the Greenlight Card.

What’s the difference between a debit and a credit card?

It started when we were checking out at the grocery store, and I let one of them buy his own “cool new pencils” using money on his Greenlight card. The keypad at the checkout asked him “Debit” or “Credit, ” and I told him to press DEBIT and then type in his PIN. He was happy to comply, but later in the car asked me, “What’s the difference between credit and debit?” This started our conversation about how using a debit card means you’re just transferring money that you already have to the merchant, whereas if you were using credit, you were actually borrowing money (for a fee of course) that you promise to pay back later. I explained to him that he’d need a few more years of “practice” demonstrating good decisions before having the privilege of getting real credit from me or anyone else!

How does gratuity work?

We love to eat out in our family. Friday night is Taco Night at Verde in Atlanta, a tradition that both the kids and parents love dearly. I usually will ask the boys if they have their Greenlight card and, if so, I’ll transfer money to their card (using my phone) so they can handle the bill. This is especially fun to watch because, of course, they had to be explained the process. First, you review the bill to make sure it’s accurate. Then you give the waiter your card so they can go swipe it. (I told them the waiters are going to find out if they have any money on the card!) Finally, what comes back is the receipt they will need to sign and add gratuity to.

We’ve had spirited debates occasionally about whether we had good service (earning the waiter sometimes 16-18 or even 20%!), or poor service (which might get them down as low as 12-15%). This exercise usually is also accompanied with some stellar math practice too. I confess, this Dad is usually only as much help as the calculator on my iPhone.

Side note: I’ve detected a pattern that is a life lesson for all of us. The most common indicator of “good service” by my kids is how often the waiter or waitress smiled at us. If they didn’t smile (but nailed the service), the kids have a hard time saying they deserve a big tip, but the times we sit with empty water glasses for half an hour but get a big smiling apology, the boys will usually argue that the service is awesome.

Contributing to the family with chores in exchange for an allowance.

My favorite new lessons learned lately have been around the importance of contributing on a regular basis with day-to-day tasks around the house. In return for this contribution, they receive a small allowance, calculated by their age.

Before allowances, my boys were constantly angling to make deals with me like: “If I do X, can I earn $5?” This bargaining went on so much that it became an argument to get the basic household tasks done. This is why we started an allowance. We made a short one-page contract with each of them that outlined the chores they were expected to do as often as possible and these were covered by the allowance. Any extra projects they could find to help out around the house that wasn’t on that list were fair game to make a deal (e.g. Help mom clean out the attic for $5).

Having the “automatic chores” for “automatic allowance” has been amazing. And it even works!! As a tip for other parents, here are some of the chores that have worked well for both the 8 and 10 year olds:

  • Set the table before each meal.
  • Make the drinks for each person.
  • Load the dishwasher.
  • Empty the dishwasher and put away things you can reach.
  • Make your own lunch before school.
  • No screen time in the mornings or before homework is done in the afternoons (not a chore, but seemed worth putting in writing to make life easier).
  • Take the trash out whenever asked, without complaining!
  • Roll the trash cans to the curb on Wednesday nights and empty ones back to the house Thursday.
  • Make your bed every day (eh, not so much, but once in awhile it happens).
  • Hang up your towels after showers.
  • Sweep the kitchen when asked.

I think our favorite part about this system has been the expectation that these are done WITHOUT COMPLAINING. You parents know what I mean. Sometimes, it’s easier just not having them to do a job so you can avoid another argument. But I suppose because we were so explicit when we came up with this system about the “no complaining” rule they actually heard it.

Plus, just like us adults, they like seeing that weekly allowance hit their accounts as well!

Help Your Kids Understand Taxes

At some point, your kids have probably watched you:

  • Mumble under your breath (or louder!) as you work on your April taxes
  • Gripe about how much tax disappears from your paycheck
  • Make a not-so-nice comment about sales tax added to your purchases

Sound familiar?

Taxes can be an irritation, for sure. However, it’s also important to remember—and to help our kids understand—that a lot of our tax money goes to helpful services from which we all benefit. Here are some ways to help your kids understand just what taxes are all about:

Play the “Who Pays For It?” Game

Keep the tax concept super-simple for young kids. Whenever you see a fire truck whiz by, or pass a favorite park or community swimming pool, ask your kids: “Who do you think pays for firefighters to help us?” or “Who pays for our swimming pool to stay clean and have lifeguards?”

The answer is “Us! Everyone who lives in our town helps pay for those great services and places. A little bit of the money we make from our job is automatically paid to our city/county/state. That money is called ‘taxes.’” (Now, don’t you feel a little bit better about paying taxes when you think of the money that way, too?)

Create a Family Tax

Financial expert Neale Godfrey, president and CEO of GreenStreet Commons, suggests a Family Tax as a hands-on way to help middle-school and older kids start understanding taxes. When you give your kids their allowances or pay them for extra chores, require that a small portion of the money (maybe 5%) be set aside in the Family Tax jar. You (the grownups) may want to add some funds to it, too.

Every few months, make a point of spending Family Tax money on something that benefits everyone in your tribe. One suggestion: A family pass to the pool, zoo or local science museum. The idea is to help your kids see that taxes do useful things.

Review Your Teen’s Paycheck

Once your kid starts working, taxes will quickly become a reality. They’ll undoubtedly wonder why they’re losing so much of their paychecks to taxes. At this point, Godfrey suggests explaining a bit more about tax brackets, Social Security withholding (FICA) and more. A few sites that might help: IRS Understanding Taxes and IRS Tax Form Simulations.

By the way, unless your teen is making a ton of money (check IRS Publication 929), you might want to help them fill out a W-4 form. That way, they can claim that they’re exempt from federal and local taxes (line 7). The result: your teen will be able keep more money from their paycheck and not have to wait for a tax refund in the spring.

However, your kids should fill out tax returns even if they don’t owe the government any money. Read more about At What Income Does a Minor Have to Fill Out an Income Tax Return?

 

(photo courtesy © Chris Potter cc2.0)

The Lure of the Lemonade Stand: Your Child’s First Business

Are you interested in helping your kid start a first business like a lemonade stand, but need some backup? Consider signing up your budding entrepreneur for National Lemonade Day. Many communities hold coordinated Lemonade Days sometime in May. Signups are underway now.

When they participate in Lemonade Day, your child gets a free backpack filled with everything they need to know about running a successful small business. This includes an explanation of the mysterious “supply costs.” Parents of first-time stand proprietors can tell you: Most kids have no idea that someone actually has to pay for lemonade and other ingredients, then get reimbursed from the stand’s profits. In other words, ingredients aren’t magically produced for free by Mom and Dad.

Adult Supervision Required

Each Lemonade Day setup kit also includes an adult guide. The sponsoring nonprofit organization, Prepared 4 Life, requires kids to partner with a responsible adult—a parent, grandparent, teacher or neighbor—on the project. The guide prompts adults to ask the kids key questions to help them set financial goals, choose a site for their stand, create an advertising plan and more.

This project also emphasizes the three-jar money concept of spending, giving and saving. Once kids earn their Lemonade Day profits and pay for their original supplies, they get to:

  1. Keep some of their earnings
  2. Connect with a local bank to save some of the profits, and
  3. Choose a charity to which they’ll donate a portion of their funds

The Lemonade-Day Advantage

Of course, you can always help your kid start a drink stand—or a dog-walking or lawn-mowing business—on their own, anytime. The coordinated Lemonade Day project just gives your kid’s business some extra structure and support. Plus, local organizers often connect kids with sponsoring community organizations.

Is your community participating in National Lemonade Day? Check the map.

(photo courtesy © Elvert Barnes cc2.0)

What the Tooth Fairy Pays—Plus Some Great Non-Money Gift Ideas

When your kid turned six or seven, your household probably started getting visits from that teeny-tiny ambassador known as the Tooth Fairy, or the TF for short. In many cultures, the TF leaves kids money while they sleep in exchange for their baby teeth. Today’s average U.S. rate: $4.61 per tooth. That’s a pretty good return for something so tiny that can’t even be used again!

Fun fact: Apparently, the TF’s going price for teeth correlates with stock market ups and downs. When the stock market does well, the TF pays well. When the market takes a dip, so do the TF’s under-pillow offerings, according to Delta Dental.

The Tooth Fairy Can Leave More Than Just Money

Interestingly, the TF begins leaving money for kids before many of them fully appreciate what those coins and dollars can do. Some kids still intermingle money with their toys—a sure-fire sign that they don’t yet understand money’s value.

Are your kids at this early stage—or would your family just prefer that your kids earn their money rather than have it magically appear under their pillow? If so, the TF is quite open to non-monetary ideas. New York Times columnist Ron Lieber agrees with her that losing teeth shouldn’t always be about the money. Here are some alternatives:

  • Tooth certificates: The TF is more than happy to leave your child a special recognition certificate to commemorate a tooth upgrade. If money is still expected, the TF is open to the option of loading reward money on your child’s prepaid debit card.
  • Tiny letters: The TF is pretty small, we understand. So it’s pretty cool when she leaves a personalized little letter for your child, honoring his tooth loss. Of course, the TF’s letters are proportionately tiny. Your child may need a magnifying glass to read them. That adds to the fun.
  • TF books: What’s the story behind the mysterious dental enthusiast anyway? What does she do with all those teeth? Does the TF do things differently in other countries? She loves leaving kids some great reads to help them with their research.
  • Foreign currency: Speaking of other countries, the TF is a global phenom. That means she has access to coins from all around the world. Sometimes she leaves those foreign coins for her gap-toothed friends. She encourages them to start a coin collection, get enthused about future travel and more. She has access to the same kinds of coins you might find at a bank with a foreign currency department, or churches that collect interesting types of coins in their weekly collections—hint, hint.
  • Dental supplies: The TF is all about tooth health. So it makes perfect sense that she’d love an excuse to leave your child some fun supplies. Think flavored dental floss, electric toothbrushes bearing images of favorite characters—or even cute little boxes or pouches for future lost teeth.

Whatever gifts the TF leaves, expect to see a bit of fairy dust. The TF is a big fan of leaving bits of glitter behind. That girl knows how to make a grand exit.

(photo courtesy © Michael Bentley cc2.0)

Spring Break Money Lessons for Kids

Teaching your kids about money might not be at the top of your Spring Break to-do list. However, if you think about, a spring break trip—or any vacation—is an ideal time to increase your child’s money IQ. Your family makes a lot of financial choices when you travel—from which daily activities you choose to how much money to spend on souvenirs.

Here are some great ways to use your Spring Break trip to give your kid hands-on lessons about money.

Give Vacation Cash Bonuses For A+ Behavior

You can always let your kid earn extra spending money for your trip by doing some extra chores ahead of time. However, have you considered any of these smart ideas for encouraging kids to earn—and be more pleasant humans—while you’re traveling? Consider giving kids an extra buck or two for:

  • Trying a new food (bonus: it makes kids more enthusiastic about experimenting at a new restaurant instead of a familiar chain)
  • Trying a new activity they might otherwise skip, from snorkeling to rollerblading
  • Not squabbling with siblings on the plane or while you’re driving
  • Being quiet for an hour in the afternoon while you rest (they can draw, read or quietly play on electronics)
  • Doing a good deed, like opening a door for another hotel patron, or letting a younger child in front of them in line at an amusement park

And don’t worry—you’re not bribing your kids. When you bribe someone, you give them money to do something they shouldn’t. These payoffs are rewards: You’re giving your kids money for doing something right.

Establish a Souvenir Budget

Rather than listening to your kids beg for money every 15 minutes, give them a set amount of money upfront. If you have young kids, you may need to release their souvenir money to them every few days, so they don’t spend it all at once.

Give older kids an amount that has to last the entire trip. (If they want to bolster their fun allowance with the extra money they’ve saved, that’s fine.) To prevent teens from carrying a big wad of cash, consider loading their souvenir allowance onto a prepaid debit card, like Greenlight. Don’t refill the card once your teen spends their entire budget. When the money’s gone, it’s gone.

Let Teens Make Family Activity Choices

Some families give their teens an assigned trip day and budget, and let the kids decide the family’s schedule. This can be done ahead of time (if you’ll need to book advance tickets, for instance) or at the very beginning of your trip.

This exercise helps teens see that having a budget means making smart choices. For instance, would they rather spend the family’s entire daily budget on tickets to an indoor wave pool and a movie afterward (with a no-frills dinner back at the condo), or a less expensive activity that leaves money for a fun dinner out? Encourage your teens to look for coupons and other deals online.

Get Creative About Other Money Choices

Every family and kid is different. You may think of some family money rules that work especially well for your Spring Break trip. For instance,

  • If you have a kid who constantly snacks: Try a “one purchase a day” rule—snack or souvenir. They get to choose between the two; they’ll never get both. (And if your kid is truly hungry, they’ll be happy to take the apple and nuts you pack with you!)
  • If the trip is extra spendy: Tell kids well ahead of your next trip that they’ll need to save up birthday and holiday gift money to pay for souvenirs. You’ll pay for everything else.
  • To discourage a spending frenzy: Offer your kids a match on any money they bring home from your trip unspent. This is a great incentive for kids to skip buying tchotchkes that will just end up gathering dust.

What money strategies have you used with your kids on Spring Break or another vacation? We’d love to hear from you.

(photo courtesy © Carissa Rogers cc2.0)

6 Signs That Your Kid is Ready for a Prepaid Debit Card

Letting your kid “graduate” from handling cash to carrying a debit card can be a big milestone in a family’s life. After all, handing over that shiny piece of plastic is a signal that your child or teen is moving to a new stage in their financial life.

If you’re still the primary owner on your child’s debit card—which you really should be, as a parent—your child’s financial life is still on training wheels. However, you’re allowing your child or teen to begin making some more independent decisions with their money.

So how do you know if your kid is ready for debit card? First, you know your own child. You’re the best judge of their maturity level and spending habits. However, if you’re a bit on the fence about a child or teen prepaid debit card, here are some good readiness indicators:

1. They’ve successfully handled cash for a year or two.

It’s actually not a great idea to give kids debit cards until they’ve had some hands-on time with cash. Financial expert Dave Ramsey suggests a cash practice period, too. Why? You want proof that your kids fully understand the value of money and the concept that “when it’s gone, it’s gone.”

Kids and teens also need some experience separating actual cash and coins into at least the three basic categories of Spending, Saving and Giving. Using separate jars or envelopes for this task gives kids a visual picture of the budgeting process.

On the other hand, if you let kids start their money lives with debit cards, money may not seem as real to them. Plus, their funds are all lumped together into a single account they think of as “mine to spend.” So be sure give kids and teens a solid cash training period before upgrading them to debit cards.

2. They can keep track of their belongings.

Carrying a debit card is a privilege and a responsibility. Kids who constantly lose things, from their coats to their phones, may not be ready for one. Today’s EMV chips do make it much harder for thieves to use lost/stolen debit cards, since they also need to enter a PIN code to complete transactions. However, who wants the hassle of dealing with a lost debit card?

Wait until you see signs that your kids can keep their valuables safe. However, if your kid does lose a debit card, be sure you know how to quickly “freeze” it so thieves can’t use it. Greenlight makes it easy: Simply log into your mobile app and turn off the card. Then let us know that you need a replacement card.

3. Your kids responsibly handle “school bucks.

Many schools let you load funds onto kids’ ID cards to pay for school lunches and snacks. Unfortunately, you may already have dealt with that shocking first semester when your middle-schooler drains all their prepaid lunch money by buying extra junk food or feeding their ravenous friends.

This experience isn’t unusual and it doesn’t mean your kid is a financial deadbeat. However, it is a sign that they don’t fully understand the responsibility of having funds attached to a card. So first, talk to your kids about your expectations for how they spend lunch money. And wait on the debit card until your kids prove they can spend their school bucks carefully.

4. Your kids need to be able to make purchases on their own.

For many kids, this is about the same time they get a cell phone. You’re no longer with them 24/7. They’re getting more independent, so you give them a cell phone to get in touch while you’re apart. Entrusting them with a debit card so they can buy a movie ticket or get lunch with friends can also be a nice convenience.

5. Your kids need to buy things that cost more than a latte.

If your teen is doing his own back-to-school shopping, he’s going to need to carry more in his wallet than, say, $5. When your kid starts carrying enough cash that it makes you a bit nervous, that’s the time to consider a special child or teen prepaid debit card. The safety factor alone may be worth it.

6. Your kids start asking questions about debit cards.

Now, no one is implying that kids who show interest in cards automatically are ready for them. However, kids’ questions often are good indicators of changes in their development. A kid who asks about debit cards may be starting to notice how you use your debit card, or may see friends getting debit cards, and be curious.

This is a great time to open the discussion about when and why you will allow them to start using a debit card. Even if your child isn’t quite ready for a card, use this time to show them how you responsibly use your card, how you check your account balances, and to talk about the big difference between debit an credit cards. By the time your kid is ready for a card, they’ll be well versed in how to use it with care.

If you’re ready to teach your kids to be financially independent, check out the Greenlight Debit Card for Kids here to learn more!

 

(photo courtesy © NASA Goddard cc2.0)

4 Ways to Help Big Spenders See the Value of Saving

Many kids see saving as the most un-fun part of having their own money. Totally understandable. Many adults aren’t wild about saving money, either. However, saving is definitely an important 1/3 of the Key Three Money Skills: spending, saving, and giving.

To be fair, the saving skill may be a bit harder to teach kids who are natural-born spenders. And yes, it is possible for a human to be wired as either a natural spender or a natural saver. Parenting odds being what they are, there’s also a pretty good chance that your kid’s inborn money temperament is the polar opposite of yours. So if you’re a great saver, your kid probably can’t wait to spend his green on anything that floats in front of him.

If your child happens to be a natural saver or even an over-saver—appreciate your good fortune! But if you’re raising a happy-go-lucky spender, these tips are just for you:

1. Create a saving system

Spenders can be impulsive with their money. Nuf said. So make it easier for your child to do the right thing by putting up some financial guardrails. You essentially want to create automatic habits, or systems, to guide your kid to save.

Every time your child gets an allowance, earns money from work, or gets money gifts from relatives, make it a rule that 10% (or whatever ratio you choose) of it always goes into savings. No exceptions.

Next, make sure your child’s savings are in a separate account, jar, bank or digital category from any spending money. The guiding principle here: “Out of sight, out of mind.” Kids aren’t as tempted to spend what they don’t see. And by the way, the system of automatically transferring money from a spending account to a savings account works great for natural-spender grownups, too. Just sayin’.

2. Incentivize Their Savings

This is the reward system at its best, used to teach your kid financial smarts. Whenever your child puts money in savings, consider matching a portion of it. If they put in $1, you add an extra 50 cents. If they save $10, you add another $5 to sweeten the pot. Your kids will quickly come to see the saving habit as a very, very good thing.

Yes, your child will earn some interest on their money, if they put it into a savings account of some type. However, interest rates are low enough right now that your child might not get excited about earning an extra 12 cents a month. Your match makes savings much more exciting.

3. Teach Kids About the “Future Value of Money”

This is a good conversation to have with kids who are in late grade school or middle school. The main lesson: Over a long period of time (years, not just months), the build-up of compound interestand perhaps parental matching fundson your child’s savings means they’ll earn lots of extra “free” future money.

Here’s an example. The average kid gets an average allowance of $68 per month.

If your kid hypothetically could save that entire allowance from age 8 to age 18, they would have a whopping $14,230* by the time they go to college—without even taking on a part-time job.

The “future value” of your kid’s humble $68 monthly allowance becomes more than $14,000 in 10 years. And more than $6,000 of that sum is “free” money from interest and parental matches. That’s a pretty compelling reason for kids to save.

Put another way: If your child spends every penny of their $68 allowance, they’re also erasing more than $6,000 in future money. Yikes!

4. Walk the Talk

You’re your kid’s best teacher. If you want them to understand how to save, let them see you do it. Talk out loud about saving money for that new flat-screen TV or your next family vacation.

Better yet, create a colorful savings graph and post it prominently on your refrigerator. Mark your family’s progress toward that family vacation. Celebrate your savings milestones along the way.

Help your kids (and yourselves!) see that good money things come to those who save.

* Assuming a 10% return, compounded monthly

(photo courtesy © Rich Brooks cc2.0)