Debit cards are one of the ways to teach children about money. Cards can make spending money easy and convenient. As adults, we understand the importance of using the card and withdrawing money directly from our checking account. It’s also important for children to learn this skill, and there’s no age too early to start teaching them the basics of money management. This can be achieved through hands-on experience with a debit card.
A Quick History of Debit Cards
The term “checkbook balancing” relates to the traditional method of managing personal finances. Check users needed to keep track of how expenses accumulated against their remaining balance each month to avoid writing checks that would be “returned” when cashed by the recipient. Each month, banks would issue a statement indicating the amounts spent and deposited in the previous month and the funds available as of the statement date.
Although debit cards first appeared in the 1960s, the current version was not available or popular until the early 1980s and did not become widely adopted among youth until many years later. In 2018, the number of debit card transactions (16.6 billion transactions) surpassed the number of checks (14.5 billion transactions) for the first time.
Why Give Children a Debit Card?
A debit card can help a child develop good financial habits. “In the context of a child’s general education on proper budgeting, a debit card can be a great tool,” says Rob DeLucas, owner and advisor at Afton Advisors, LLC, in an interview with The Balance.
For example, a debit card can be a useful way for children to explore the basics of:
- Tracking expenses using banking apps, online tools, and text alerts
- Creating a monthly spending plan using income and profits
- Understanding wants vs. needs
- Making secure payments using mobile devices
A debit card provides a tangible way to create links between the value of money and spending and the goods or services received. While the same goal can be achieved using cash, debit cards and digital payments have become the most common payment methods.
Debit cards also allow children to spend money during school trips, whether domestic or abroad, or when visiting relatives. “At younger ages, it’s important to use actual cash to help children become comfortable with money,” says Tom Henske, an insurance expert and financial advisor, in an interview with The Balance. “As they grow older, transitioning to a more digital world prepares them for the real world, the Venmo world.”
Note: Debit cards also provide an opportunity to inform your children about the safety of debit cards online and the risky places to use a debit card. They need to protect their banking information, card numbers, and PINs, and not post pictures of their debit card on social media.
Learning Modern Money Management
Encourage your child to practice all means of managing their money so that they are prepared as adults to earn, save, and build financial literacy. A debit card is just one part of modern money management. Other ways to learn include:
- Involving your children in your own budgeting process
- Teaching them what a savings account is and how to use it
- Helping them set age-appropriate financial goals
- Assisting them in creating a budget suitable for their age
- Teaching them how to track their spending and compare it to the budget
Debit Cards for Kids: What Are the Benefits?
Source: https://www.thebalancemoney.com/when-should-you-give-your-child-a-debit-card-2085497
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