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.

 

Teaching my kids life skills

My kids are 8 and 11 and while they do some chores around the house, I know there are many things they don’t know how to do that are just part of living. When in college, there were many students who had never had to cook or do laundry before. And don’t even get me started on the amount of people who have little knowledge of how to handle money.

So to better prepare my kids for life (or just to have them help out around the house more), I decided this summer we would work on some “life lessons.”

There are tons of websites out there that list what type of activities kids should be able to do at every age. I started there and have been adding items to my list as I think of them.

Money

As I said, my concern is that they will not know how to handle money. We currently give them a small allowance which has let them learn about saving up for bigger purchases and only buying what they can afford. But they see us all the time using debt or credit cards. I just didn’t think they had a good enough understanding of how that pays for the items we need.

budget discussion

Budget worksheet for the kids…we used monthly incomes of $1200, $1800, $3000 and $4000.

So far, we have talked about bank accounts and debit cards versus credit cards. We have talked about the difference between a want and a need. And we even worked with budgeting our money using Monopoly money (see photo for our worksheet). The top of the page had them first putting money aside for savings. This is a point I plan to stress to them a lot – you don’t spend everything you make. You need emergency money. And of course that you buy the things you NEED before the fun stuff.

Household Chores

My kids have washed dishes, swept, vacuumed and cleaned windows before but there was still a whole bunch of additional cleaning chores that we went over. We did the sorting, washing, drying and folding of the laundry. They changed the sheets on their bed, learned how to start the dishwasher, set the table and the basics of sewing – threading a needle, putting on a button, fixing a small tear.

Cooking

One of my favorite sections (and the kids’ favorite) has been cooking. I have shown them how to use the can opener and microwave. We have followed a recipe as well as bought groceries (which included price comparisons) and learned about expiration dates and reading labels.

We have made brownies and cookies from scratch as well as ice cream, and each child has made dinner by themselves.

General

And last but not least there have been discussion on things that didn’t seem to fit into any of the above categories. We have practiced making 911 calls, discussed making calls to businesses and taking messages for incoming house calls as well as giving a firm handshake when you meet someone. I have drilled in our phone numbers (house and mobiles) as well as our address (including city and state). Lexie still has trouble with this but Jase has known his since he was 5.

Just last week we also talked about general first aid information even though both kids have been doctoring their own cuts with bandaids for a few years.

It has been a productive six weeks, and I will continue looking for more things to introduce them to during the rest of the summer. Of course, I don’t expect to stop when school starts. I think I will always be on the lookout for more things to share with them. It just is amazing how often we do stuff for our kids rather than spending the time to explain it to them or better yet having them help us. And then we wonder why they don’t do anything for themselves!

 

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.