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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)

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)

5 Rules for Kids Who Buy Things Online

Spending habits have shifted significantly over the last decade. High adoption of smartphones, social networking, tablets, and more are several reasons why people make less purchases in physical stores than ever. While you may have participated in this transition, your kids are growing up with online spending as the norm. Amazon, Hulu, Netflix, Ebay, and other services have made it as simple (and affordable) as possible for their customers to make online purchases rather than going to the store. With kids spending more than 1.6 hours a day online according to online safety provider Norton, it is critical that you set ground rules for your children to follow.

  1. No Purchases without Parental Approval

            Regardless of how old your kids are, they should be comfortable talking with you about their online purchases. Setting a rule that they must check with you first for approval gives you an opportunity to verify that the website or app they are using is safe, and the purchase is appropriate. As your kids get older, you can relax this rule to teach your children about trust. For example, you could allow your kids to spend their allowance when they want online, provided they use websites you have pre-authorized.

  1. Approved Websites & Services

            Sit down with your kids and walk them through which websites and services they are allowed to access, and which sites they should not be using. This can be supplemented by parental controls, but not every mobile device or PC has these capabilities or makes it simple to use. A spending card and app like Greenlight can simplify this process through its simple interface while teaching children about good money habits.

  1. Purchasing Amount Limits

            Sit down with your kids and set strict limits on how much money they are allowed to spend online at any given time. Limiting how much your child can spend at one time or each month will significantly reduce the possibility of an unwanted purchase. Link this amount to your child’s allowance because you can review their spending monthly and teach them better money management skills.

  1. Category Limits

            Much like a dollar restriction, select specific categories your kids are allowed to purchase from. For example, you may allow purchases related to gaming, clothes, and music, but restrict purchases to junk food, R-rated movies, and more. Several allowance systems allow you to set up categories for spending which could be used to enforce the restriction further.

  1. Time Limits

            Whether your kids are using cell phones, tablets, or a computer, set specific time limits for how long they can spend on any of the devices. In addition to limiting access, set specific hours that they are allowed to have screen time. Your kids should learn when it is appropriate to use online devices, and occasions when it is not appropriate such as family time. A general rule of thumb is allowing a maximum of one to two hours per day with an online device after they have completed their homework. Establishing a cut off time is also important so your kids don’t impact their sleep schedule.

(photo courtesy © Lucélia Ribeiro cc2.0)

Financial Literacy - Greenlight Debit Card for Teens

Imaginary Dogs: A Clever Way to Raise Financially Responsible Children

Do you want your kids to be financially stable when they’re adults? Want to avoid having to take-in your wayward son after he’s run out of money, forcing you to shelter him in your basement until he gets back on his feet? Want to make sure your daughter doesn’t waste her entire paycheck on a frivolous, impulse purchase?

If your answer to any of the above questions is “yes,” consider this technique: Have your child look after an imaginary dog for a month.

Why an Imaginary Dog?

When I was in high school, I had a friend named Scott who desperately wanted a dog. His parents were hesitant, worrying about things like, “What if we end up taking care of the dog all the time?” and “Can we afford all the expenses that come with a dog?” But, in a moment of parenting brilliance, Scott’s mom and dad came up with the Imaginary Dog Plan. This plan required Scott to wake up every morning at 6am, walk a leash around his neighborhood, put down an empty food bowl, and then open and close an empty dog crate. Immediately after school, Scott came home and walked that empty leash again, put down the empty food bowl, and spent 30 minutes either vacuuming, dusting, or completing some other household chore as a stand-in for the time he’d have to spend cleaning up after a dog. Additionally, his parents struck a deal requiring him to pay for half of all the expenses that come with having a dog. To prove that he could do this, Scott did extra chores around the house and got a part-time job. By the end of the month, Scott had walked his empty leash 60+ times and had saved $300. By the end of the month, Scott had a real dog.

How an Imaginary Dog Can Help Your Family:

So, how does my friend’s dog apply to you and your family? Simple: the principles Scott’s parents taught him through this exercise are the same principles any kid needs as a foundation for a successful financial life. If your son or daughter wants something, whether it’s seemingly insignificant, like a crazy new pair of socks, or something bigger like a pet or laptop, consider using this technique to help them get what they want while also teaching them the importance of being responsible with their money. Some of the lessons they’ll learn from an exercise like this are:

  • If you want something, you need to work for it
  • You need to consider all the responsibilities attached to making a purchase
  • You need to be fully prepared, financially and physically (with your time, etc.) before making a purchase
  • You should give yourself time before making a big purchase to make sure you really want that particular thing
  • Often, making purchases (especially big ones) requires some sort of sacrifice, so you need to ask yourself, “Is it worth it?”

Obviously, if you decide to try this with your kids, the situations will be different, and you’ll need to adapt strategies. It wouldn’t make any sense for your daughter to walk a leash every day to prove that she’s responsible enough to buy a laptop. Instead, you may start by asking her to save a certain amount of money each week. Then, have her to carry around a fragile place-holder (picture frames, perhaps), proving that she’ll be careful with something as breakable as a laptop. You could even have her do research on how to fix common laptop problems, making sure she’ll know what to do if it won’t turn on one day, or if it gets a virus.

Whatever way you apply this to you and your child’s life, just be sure to remember the main point: If you prepare your kids now to be responsible, both financially and personally, they are much more likely to continue these practices as adults. Try it today, and hopefully you’ll still have your basement to yourself once your kids grow up!