Giving hands-on experience to your kids on how to handle money can give them a financial kickstart early on in their life. Today, almost everyone prefers going cashless – and using cards or digital platforms for transactions. During this time, a common question often persists– is it a good idea to give children debit cards?
Here, we evaluate when is the right age to start this practice + what debit cards bring for your children.
The right age really depends on your child’s maturity to handle their money and make decisions. While some can be ready in middle school, others can take some more time to understand the concepts. However, it is always better to start early on – so they can learn from their mistakes and get prepared for their future.
Like any other tool, knowing how to use debit or credit cards becomes extremely important. Not knowing the pros and cons of the tools can push you towards learning bad habits from it. At Milestone, we believe in educating and raising awareness about financial tools before implementation, to bridge the gap between parents and children and encourage them towards a healthy financial journey.
While this can be a big decision to make, debit cards have proven to be a great tool to teach children money management and build healthy financial habits.
Children can check their own balances, receive their own statements at the end of every month, and learn online banking. As a joint account owner, you can also analyse their spending patterns and correct them along the way if required.
They can plan their monthly spending according to their earnings and spending patterns. A debit card allows the children to make a connection between their spending, the goods they receive for it and more importantly, the value of money.
While you can lose cash once and for all, debit cards can be frozen in the case of misplacement. Furthermore, cash is harder to track and record.
Constant alerts whenever they are making a transaction can drive them towards conscious spending and prevent an “out of sight, out of mind” mentality. With frequent notifications of money being taken out of their account, they might also get tempted to spend less and save more. Parents can set a limit as well as no-spend days to prevent impulsive spending.
The Risk of Theft+Loss of Card: Children may disclose sensitive information to third parties which can be problematic.
What you can do: Bewaring them of thefts and making them exercise caution, this can be prevented. The cards, at Milestone, enable the parent/child to pre-set a spending amount per transaction as well as block the card in any case of suspicious activities.
More Technology Inclined: They can become more inclined towards their devices to constantly track their activity. While this can help them, it can further reduce personal interaction with their families.
What you can do: Milestone isn’t designed to encourage your kid’s constant usage. With quick interesting quests and carefully curated curriculum, spending 5-10 minutes every day should be enough to learn and build useful practical habits.
It is a great decision to provide your kid with their own digital wallet and a card they can learn to manage in due time. Among additional features, the tool ensures complete control of the parent on the account. This can also prepare your child to also build up the skill of compounding. Furthermore, by connecting to our Milestone app, you can track budgeting and ensure they learn more along the way!
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