When Should You Use a Debit Card as Part of Your Child’s Allowance?

by Miranda Marquit · 0 comments

debit cardLast week I set my son up with his own checking account and debit card. He is 13 years old and he’s ready to start learning how to track his spending and manage money in a world of plastic.

If you are thinking of doing the same thing, know that your child will need to have a parent or guardian share the account with them. You won’t be able to have your children get their own bank account in most cases. My son’s account is actually a no-frills checking account that has him as the only debit card user. I still own the account title, but he has a debit card as an authorized user.

Is Your Child Ready for a Debit Card?

One of the reasons we are switching things up is because most of us use plastic, or even our phones, to make payments today. I want my son to learn how to manage money in a cashless situation. This debit card set up makes it easy for me to transfer his allowance money into his account, and for him to access the sum. It also makes it easy for him to transfer the portion of his money allotted for savings to his savings account. He is also more interested in helping different causes now, and he will be able to quickly send money to charities that he supports with part of his allowance.

I’m only allowing this arrangement because he showed a level of responsibility in the past. He can save up for short-term purchases that he is willing to give to charity, and he understands the importance of long-term savings. He is also very good about keeping track of his money. Because he has shown that he can handle his cash, I am ready to teach him how to handle plastic.

As part of this deal, my son is required to use personal finance software. We set up a sub-account for him in the software and he is required to enter all of his income, as well as record his receipts when he spends money with the debit card or if you withdraw cash using an ATM. I want him to learn the importance of tracking his spending even if he isn’t using cash. This is an especially important skill to learn when you are using plastic because it can be harder to realize how much you are spending.

I like this debit card set up because there are no fees for this account, and there are no account minimums. I don’t have to worry about paying a monthly fee because of a prepaid card, and we had a discussion about the cost of getting money from an ATM that isn’t our bank’s ATM. Another feature of this card and this bank account is that there is absolutely no overdraft protection. As a result, he won’t be able to make the purchase if he doesn’t have the money in the account. This is a hard way to make sure he doesn’t get into trouble, and that he is very aware how much money he has.

Only you can figure out if your child is ready for a debit card. Carefully think about his or her habits with money and if you feel that he or she is ready, a debit card can be a good way to move the money lessons to the next level.

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