When was the last time you saw a teenager pull out their checkbook? Youth of the 21st century may not be familiar with writing checks or balancing a ledger, but that doesn’t mean they aren’t ready and willing to learn how to manage money. In fact, if parents can make the time, there’s nothing wrong with teaching kids about finances as soon as they start taking math in school.
Madhavi Venkatesan, PhD and Visiting Assistant Teaching Professor of Economics at Northeastern University in Boston says there are many online resources for kids and parents to learn how to manage money. Venkatesan recommends the Federal Reserve banks: “All Federal Reserve banks have an online presence and offer educational materials.”
Of course, you can also help your child learn by getting them their own debit card or adding them to one of your low-limit credit cards. With access to online banking, they can see firsthand just how delicate of a balance there is between your spending habits and cash flow. Determine an allowance or allotted spending limit each month – with their input – and let them have “real life” experience, while still under your watchful eye.
Age has its limitations
While adding your child to an existing credit card will help them better understand credit management, it will not help them build a credit history. Unfortunately, when it comes to building a credit history, age does matter. According to Venkatesan, “Typically, a person is limited in building credit by age of emancipation.” What she means is “at 18 when they are legally recognized as an adult and therefore hold legal liability in any executed contracts, they can start to develop a credit history.”
Once your teenager turns 18, help them research the best credit card for their unique needs. Until then, give them access to yours, so they can ask questions and learn by example. Better yet, show them your own credit score and explain how the credit card they’ve used impacts your overall score.
How current can help kids manage money
On the other hand, if your kids haven’t even graduated high school yet, there’s still plenty they can do to get a head-start. One option is to choose a bank that offers an easy-to-use and easy-to-manage debit card. Current leads the way in bank cards for teens. While they do offer a debit card for any-aged individual, Current is dedicated to helping families with teenagers.
The pros of using a Current Student Account:
Current’s online banking platform offers two different experiences — one for kids and one for their parents.
Kids will be able to view their spending and receipts, while also being able to manage their money a couple ways. For instance, kids can opt to round up their debit card purchases as a way to build their savings. Rounding up is nothing new, but the incremental savings can add up quickly. Plus, it’s another component of money management for your child to learn and control on their own. The feature can, of course, be turned off at any time with a simple swipe of a button.
Other popular features of Current prove that your child can build financial skills while building character. For one, Current partners with a variety of charities, allowing your child to donate to a cause that matters to them. Common options include the World Wildlife Foundation, Girl Scouts of America and the Salvation Army. Your child can also use Current to request funds. The platform asks for the amount and the reason for the request, forcing kids to prioritize spending and take responsibility for their spending habits. Parents then see the request in Current and approve or deny it. If approved, funds are automatically transferred over.
In addition to approving one-off requests, parents can set up an automated allowance. You set the amount and frequency, so your child can learn what it takes to time their spending. If your teenager is old enough to hold a job, perhaps you’d rather offer bonus money. With Current, you can create a chore list and set the amount they can earn if the chore is completed. As the parent, you can always control spending limits and even block certain types of transactions (no online poker tournaments for them!).
The downside of using a Current Student Account:
To use a Current Student debit card, you will incur a small fee of $3 per month. This monthly fee is charged annually, which means you will pay approximately $36 in fees when you open the account for a single child. For multiple kiddos, the Family Plan would be more appropriate. This plan costs $3 per month for the first child and $1 per additional child.
Current also makes it clear that they pass along their partner fees to their customers. These fees include ATM transactions, money transfers, international purchases and any card replacements.
While using a debit card won’t help your teenager build a credit history, the Current debit card can help them build confidence in money management. Allow your teenager the freedom to spend, save and give, and they’ll quickly understand the importance of financial stability.