Teach Em Young
I’ve been teaching my children about money for as long as I can remember. (I am a financial planner after all.) Starting from a young age they’ve received an allowance. When it first started, they received cash on a weekly basis. I had to make sure I had enough cash on hand to give them their allowance. We’ve always done a weekly allowance but there were times when I had to give them multiple weeks allowance if I didn’t have the correct bills to give them.
A couple years ago I decided to move to the electronic world of finances. While cold, hard cash was good when they were very young, they are beginning to understand that everything is digital these days. For the transition, I opened “teen” checking accounts at Capital One. While Capital One calls it a “teen” checking, there is no age limit. It’s just a joint checking with my child and myself.
The weekly allowance has become much easier. I set it up in the Capital One app and it happens automatically. It’s been easy to increase as they’ve gotten older. Also very easy to cancel or decrease as needed (such as not completing their chores or keeping their rooms clean).
With the checking account, each child gets her own debit card. This allows them the freedom to purchase what they want without asking. There are times we need to encourage them to save for a particular item. They can set goals in the app for future purchases. The app also allows me to give them a “bonus” if they meet their goal.
We took a trip to Disneyland a while back. I grew rather tired of them pestering about buying this or that. I decided to give them a preset amount for the remainder of the trip and transferred the funds to their checking account. Then, they bought what they really wanted knowing they had a limited amount of funds. It was quite interesting to see the change in how they looked at souvenirs in the middle of the trip. They started checking price tags and calculating how much money they would have remaining after the purchase. We’ve continued to do this on other trips.
My hope is that instilling these lessons early will set them up for future success when it comes to handling income and expenses. We haven’t ventured into investing and compound interest but that is still to come.
Jeff Karst, CFP®
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