Getting my kids their own debit cards

When Jase was five we began giving him a small allowance to teach him about money. In the beginning, I would put cash in his wallet. When he went to store, he paid for his items. We did the same for Lexie when she turned five. (For those of you who don’t know, the kids are now 12 and 9.)

Then in 2015, the kids received iPads for Christmas and with that came online purchases for apps and games. As online purchases became a norm and with Jase making money doing yard work, it became easier to keep track of their money on a spreadsheet.

As time passed, we ended up just keeping track of their money virtually and stopped putting cash in their wallets. It was easier with online purchases or for the times when we were out at the store and they didn’t have their money with them.

But this meant that I had to know how much they had. I would have to remember to check the spreadsheet before we left or before the kids bought anything online. The information was tied to this one file and the kids didn’t have access to it. And with us making purchases for them and just keeping a running tab, we worried they weren’t effectively learning money management.

We decided to look into other ways to handle their money or more importantly, put them back in charge of their money. We looked at apps, but they didn’t improve what we were already doing. My husband’s office uses a debit card through Wal-mart, but it charges a fee every time you add money which we would be doing weekly for their allowance. We were going to look into a PayPal account but while it may do what we want, it didn’t have the ease of access for us to oversee their accounts.

A quick internet search led us to the answer to our problem. We found three programs designed to let kids or teens have their own debit card with proper parental monitoring.

Current offers a Visa card for teens. It allows teens to put money into three different wallets – savings, giving and spending. Parents can set up allowances and chore charts and have the option to set spending limits and block purchases from certain categories.

The main negative in our case was that your child had to be 13 to have a card.

Price: $3/month for one kid, $4/month for two kids (each additional kid is an additional $1/month) – billed upfront yearly.

Greenlight offers a Mastercard for teens. While similar to Current, it does not offer payment for chores, and there is no way to divide money into savings, giving and spending categories. The card also cannot be used at ATMs or to get cash backs on purchases.

Price: $4.99/month per family.

FamZoo also offers a Mastercard. With this program you can do a virtual tracking of money or you can opt to get a debt card attached to your child’s account. If you opt for a debt card for anyone under 13, the card will be in your name, but after they turn 13, the debit card can be in the teen’s name. You can divide the money into savings, spending and giving but each one will be on a different card. You can also set up allowance and chores.

Price: $5.99/month for up to 4 cards. There is a discount if you pre-pay making the amount as low as $2.50/month.

After weighing the pros and cons of each card and reading reviews for each program, we decided to go with FamZoo. We signed up for three cards – one for each child and then one for me (aka The Bank). My card holds the money I want to be able to transfer to their cards.

We loaded the app on Jase’s phone and Lexie’s iPad. They have their own log ins and can only see their own information. On my app, I see all accounts and can review their purchases.

They have tried them out at the store with no problems, and we linked their cards to their iTunes and Xbox Live accounts.

The only negative we have had so far is that I put money on Lexie’s card for the school book fair, but they couldn’t process her payment. They only take credit cards and hers is a debit card. (Actually, it brought up a screen where the librarian could call and process the payment, but the librarian wasn’t willing to do that for fear it would take too long.) It worked out okay as I had my credit card with me. Seconds after making the transaction, I moved the money out of Lexie’s account and back into my FamZoo account. Problem solved.

I think we are going to like the FamZoo cards, and I definitely think it will help the kids be more aware of their money and where they are spending it. It will put the money management back in their control instead of mine.

 

Encouraging my nine-year-old to save money

When Jase was 5 years old, we started giving him a small allowance as a method of teaching him how to handle money. We stopped buying him candy or toys when we were at the store and insisted he uses his own money for these extras.

He wanted a Star Wars AT-AT and with the help of a graph to show how much savings he had verses the cost, he ended up saving up enough money for the toy. (We did match his savings so technically he only had to save up half the amount but it was an expensive toy so it still took him a long time.)

Now, Jase is willing to do extra chores to earn money and is good about savings. Even now, he has $100 in savings and is often reluctant to spend his money.

Lexie too has been receiving an allowance. But she has the exact opposite reaction as Jase. If she has money, she thinks she needs to spend it. If she gets $5, she wants to buy something right then. She made $9 at her Nana’s garage sale and immediately handed it to me to buy an app for her iPad.

These past few weeks, she has been saving her money but her plan is once she reaches her goal, she will spend it and be out of money again.

I hate that she spends everything she receives. I also don’t like that she is purchasing virtual things – often “gems” or “coins” for some i-Pad game. She has nothing physical to show for her purchases. But I am not sure it is my place to qualify her purchases as foolish as they might not be to her. All I can do is explain the opportunity costs of her decisions. (If you buy gems for Animal Jam today, you won’t have money when we go to Sea World this weekend.)

Now when we first started the allowance, it was meant to be a learning tool – one I researched a lot before we implemented it. Many sites suggest you have your child divide their money into three categories – savings, spending and charity.

But I didn’t want to tell them how to spend or that they had to give their money away. I didn’t want to tell them what they could and couldn’t buy. I wanted it to be their money and their decision. Which means if they want to spend all their money on candy or virtual “money” than they can

The kids and I have talked about budgets and wants vs needs as part of our summer life skills/lessons. We have talked about making sure you take care of purchasing the things you need such as a place to live and food over things that you just want to do like go to the movies or buying a new video game. And I plan to repeat these points to them as they grow up.

Recently, I sat down with Lexie to talk about her spend-everything attitude. I reminded her of times we were somewhere and Jase was able to purchase a larger toy than she could because he had saved more. And there have been times where she couldn’t buy anything at all while Jase spent his money. (The bad thing is Jase is too sweet. He will buy her something so she isn’t upset.)

But more importantly, I mentioned to her the importance saving will have when she is older.  When she is an adult and on her own, she will not want to spend everything she makes. She will need money for emergencies. Being an animal lover, I pointed out that something unexpected could happen to her dog and she will not have the funds to pay for medical expenses.

That example made an impact on her but I don’t expect her to all of a sudden to start saving. In her mode of instant gratification, I don’t know if she will have the dedication to become a saver without some help.

So as much as I would love to allow her to do whatever she wants – and I do think she can learn some powerful lessons by making her own mistakes with money – I also want to instill in her the importance of savings.

In order to get her use to savings, I think we are going to have a minimum she must have in the “bank” rather than a certain amount to save from each allowance.

Part of me fears that making her save without her understanding the reasons can backfire later. When she no longer has anyone “making” her save, she could go the opposite way and go back to spending like crazy. Or maybe she will have learned to save some of her money. But really, only time will tell.

Using allowance to teach kids financial responsibility

Many children don’t have a grasp of money in general let alone how to manage it. In college and even now, I know quite a few people who never learned to manage their money. In fact, both my brother and brother-in law racked up large amounts of credit card debt as young adults.

I don’t want that to happen to my kids.  I want them to be responsible with money, so I decided to start teaching them about it while they are young. To do this, we started giving them a weekly allowance. I no longer buy toys or DVDs for the kids. They know that they will get these things for Christmas or birthdays but any other time, they need to spend their own money.  This has drastically reduced the amount of “Will you buy me this?” and “I want” statements when we are at the store.

Now I did a lot of research before giving Jase an allowance. We began when he was five. Lexie of course started sooner (at the age of three), but I don’t think even now at four she is getting the same benefits that Jase receives as she just doesn’t understand the concept as well as he does.

The first thing we had to determine was how much to give him. I know several families that give out a quarter a week but honestly, what can your child buy with that? It will take them a long time to save up enough to buy anything. On a few websites, I saw suggestions of $1 per year per week. So since Jase was 5, we would be giving him $5 a week or $20 a month. This sounded like too much for a five-year-old. (I remember receiving $5 a week as a teenager.) In the end, we decided on 50 cents per week per year – so he receives $3 (we rounded up rather than do the change) a week. When he turns 8, we will up it to $4 a week. Lexie has been receiving $2 and won’t see a raise until she turns 6.

Now we do not tie his allowance to doing chores and experts support this decision. Doing chores such as making their bed or setting the table should be part of their job as being a member of the family. You don’t want to barter with your child to take out the trash. If you are paying them to do normal household responsibilities, then if they don’t care about the money, they won’t do the chore. However, we do allow him to do some extra work around the house if he wants to earn some additional cash.

His allowance has already taught him quite a bit. He has learned to read the prices of the things he wants. He has had to work on math by counting his money and ensuring he has enough to cover his purchase. It has taught him to delay gratification. If he wants a bigger toy, he has to save for it. He has learned that if he buys the small set of Legos now, he will have to wait longer to buy the bigger set.  His biggest accomplishment was saving up for a $100 Star Wars AT-AT toy. (pictured above)

As he gets older, we will discuss the differences between a want (toys) and a need (food). And we will discuss making sure your needs are taken care of before your wants as well as living within your means. I will gladly talk to him about what we earn and how we decide to spend our money. However, for now, we don’t dictate what he does with his money. We don’t require him to save or donate a certain amount to charity. He spends it as he sees fit. The other lessons will come soon enough.