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A Debit Card for a 10-Year Old?

By JLP | February 15, 2006

That’s the question Steve Rosen of the Kansas City Star asks in his column Plastic, Not Fantastic. I have to agree with Steve that it is more important to teach your kids proper money management skills with actual money BEFORE we train them in the proper use of plastic. The reason I say this is that I know from experience that kids need to feel the pain of making a purchase.

My wife and I have paid our boys a weekly allowance for a couple of years now. Although I “paid” them weekly, I used to just keep a running total of what they had available and then when we were out and about, if the boys wanted something I would buy it for them and take the money out of their account. The problem with this is that they weren’t getting the experience of spending their money. Their money wasn’t real to them because they never really saw it. This year we are doing things differently.

Now, we pay them a weekly allowance divided the following way:

10% – Tithe
25% – Long-term savings
25% – Short-term savings
40% – Spendable

They are responsible for keeping track of their spendable money. If they want to save their spendable money and add it to their short-term savings to buy something like a skateboard, that is their choice. Also, if we are out and about and they see something that they want, they have to have their money with them. If they don’t they don’t get to buy whatever it is that they want.

My goal as a parent is to teach them responsibility. I’m sure they will make mistakes, but I also think that by them taking more responsibility while they are still young, they will have a healthy respect for money when they get older.

Now it is time for your comments. What are you doing that works? What are you doing that doesn’t work? Let’s get some dialogue going.

Topics: Kids and Money | 3 Comments »


3 Responses to “A Debit Card for a 10-Year Old?”

  1. » Faux Debit Cards for Kids on Blueprint for Financial Prosperity Says:
    February 15th, 2006 at 2:56 pm

    [...] I saw a post over at AllThingsFinancial about giving a 10 year old a debit card and I thought in principle it’s a good idea, in practice though it could be a disaster. The article itself is about JLP’s allowance policy and how he believes it’s more important to teach kids about real money instead of plastic (I agree) but I think that education on credit does have it’s at an early age. It’s important to make the link between a credit/debit card and real cash, that is they should be treated as one and the same. Why not give your child a faux debit card, instead of a real one that they can lose, that acts like a real credit or debit card? Feel free to use my MS Paint debit card below as a starting point. [...]

  2. fivecentnickel.com Says:
    February 15th, 2006 at 3:35 pm

    We use a similar system, although we ultimately decided to fold short term in with spending. That way they have to decide to save for bigger items on their own, and they learn the downside of blowing their spending money. It’s worked great. Our oldest actually saved enough of his ‘spending’ money for a Nintendo DS — not an easy thing for an eight year old to do (it took months and months of not dipping into his spending money). But he learned A LOT about the value of saving. And he did it all willingly (i.e., there was no ‘short term’ savings stipulation to help him alnog).

  3. Tom Graneau Sr. Says:
    April 20th, 2006 at 11:59 am

    Way to go, JLP! I did a similar thing with my two children who are now adults. Their mother and I taught them how to save and spend their own money (weekly allowances). When they made unwise decisions with spending, they suffered the consequences by missing out on other privileges. To say the least, they learned from their mistakes.

    Another thing: we taught our children from young how to be self-sufficient. We started preparing them from 10 years old to be on their own. By the time they were 19, they had fulltime jobs, their own apartments, and paying for everything. Additionally, they paid their way through college with little or no help from us.

    Today, both of them are college graduates and have big dreams for the future.

    Looking back on things, they both have admitted that they appreciate the way we raised them and will do the same with their children.

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