So you have a teenager you want to start teaching good financial habits to. What’s the best way? Personal finance is really about establishing a few good habits: Save, give, borrow wisely, tie money to values, don’t buy financial products you don’t understand, keep your finances simple.
We don’t see any need for teenagers to have a credit card. You want them to learn how to live within their budget first.
The alternative is to teach them responsibility with a prepaid card. Since plastic is increasingly the preferred way to spend, it’s important to help your kids develop good habits with cards. Think of a prepaid card as a “training card” for your kids, allowing you to teach useful habits without the risk that comes with the ability to spend more than you have.
Prepaid debit cards are just that – prepaid. This eliminates the danger of falling into debt while working through the growing pains of using plastic responsibly. While there’s no way to incur interest charges with prepaid meaning you’re not dooming your kids to a debt pile before they’re old enough to drive.
With a prepaid card issued to teenagers but managed by parents, this mutually beneficial option gives both parties freedom and control respectively. Parents are able to load the card at their discretion and monitor how their child is spending the money. Because funds can be loaded remotely (either online, over the phone, or automatic transfers) there is added convenience and security in case of emergencies. Parents can also restrict the cards to be used only at places they would like their children to go to
Get your kids thinking about responsible credit card swiping early with a prepaid debit card. You won’t need to worry about them running up a balance, and they’ll develop practical spending habits without the risk of running into debt.