Press: Yahoo Finance Article Quote - Should You Get Your 6-Year-Old a Debit Card?
Integritas Financial was recently quoted in an article on the Yahoo Finance website. Check out the article linked below and see further thoughts on the topic here.
Should You Get Your 6-Year-Old a Debit Card?
I am a financial planner who focuses on the behavior of clients to create healthy money habits. My initial meetings always start by asking about their relationship with money. I ask questions such as:
Did you parents talk to you about their money with you as a kid?
Explain a situation where you lost a large sum of money and felt regret.
When you hear the word “money”, do you feel anxiety or excitement?
Getting a better understanding of how my clients feel about money is a great way to determine how I will plan for that client. Do they only care about the numbers or do I need to make a plan that fits their emotional needs. Giving a debit card to an child is a great way to build a relationship with money. Hiding from the taboo topics such as budgeting, debt, income, and spending will create issues that will last throughout a person’s whole life. It is never too early to start learning about money so long as the parents handle the behavioral side of using a card. Here are some steps to make sure this becomes a positive lesson rather than a fear mongering failure.
The only money that goes into the account is earned by the child. Giving the child money out of nowhere will teach them that handouts come with time. Having them earn the money through good behavior or chores teaches them the value of hard work.
Do: Give the child an earned wage.
Don’t: Just give money to the child.
Only put a certain amount of money into the account each month. Make it like a paycheck. The money hits the account on the first of each month and they don’t get paid again until next month. This way, if the funds run out, they can no longer spend. This will teach them to budget and save for the things they way. If they want a $100 toy but only get paid $50 a month then they will have to save for two months to get it. Saving towards goals is an excellent way to teach commitment to a plan. This goal commitment will evolve into buying a house or saving for retirement later in life.
Do: Give them a monthly paycheck.
Don’t: Give them money when they ask for it.
Allow them an overdraft with you personally once a year. Debt is crippling a lot of millennials these days because they were taught to go to school and get a job. They weren’t taught that wages would not keep up with their needs to pay the bill when it came at the end of college. Give them a chance to take a loan from you, but at a cost. Charge them something simple such as 50 cents a day until the loan is paid. Remind them every morning how much they owe and when the next paycheck comes deduct it directly from their account. This is an innocent way to teach them that there is a cost to money.
Do: Give a simple personal loan.
Don’t: Put them into crippling debt and scare them.
This may be extra work for the parents but it is an excellent way to teach your kids the importance of an education in money.
Let me know you’re thoughts about how you raise you children around money. Adding financial transparency to your family discussions could help your kids develop an excellent relationship with money as they grow. Schedule a call with me to see how we can start this journey.
Fiduciary Mission
At Integritas Financial, we are committed to providing fee-only, fiduciary financial planning services that are tailored to the unique needs of young professionals, particularly millennials. Our experienced planners work with you to develop customized financial plans that address key areas such as estate planning, trusts and wills, retirement, workplace benefits, education funding, student debt, and buying a house.
We believe in transparent, client-focused service that puts your financial goals at the center of everything we do. As a fiduciary firm, we are dedicated to acting in your best interests, and we never sell products that charge commissions to clients.
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