6 Steps to Help Your Child Learn About Money

(This is a guest article by Andrew Salmon*)

Your child is going to have a love/hate relationship with money as they grow to adulthood.

If you’d like to push that relationship to be more about the former than the latter, here are six steps for teaching your child about money:

6. Good Morning, Early Birds

The best way to provide your child with a solid understanding of money and what to do with it, it’s best if you begin early before any bad habits can creep in while your back is turned. From as early as age 3, you can begin teaching your kids about handling money.

5. Make Allowances

There’s no better way to teach a child something than with hands on experience. Providing your child with a weekly allowance gives them spending power. Let them pick out items they want and pay for them with their own money. Have them work around the house to earn the stipend. Pick their birthday as a point for an annual raise.

4. Work It Out

Working around the house is one thing, working a “real” job is something else and the sooner your child gets this experience the better. Encourage them to get a part-time job in their mid-teens so they can learn what working is all about. They’re going to spend decades doing this, so they might as well learn it early while they have a chance to make money blunders that don’t result in catastrophe.

3. Practice What You Preach

Kids learn by example and your child is no exception. They are sponges and absorb whatever they are exposed to. So, instilling good money handling habits begins with the face in your mirror. Practice what you preach. Don’t stress saving and budgeting while displaying some extravagant purchase to the entire household. This will undermine the lessons you are trying to impart. Stick to you own budget, pay your bills on time. Economics Class is always in session.

2. Hold Your Hand Out

Take your child along with you when you stop off at Good Will or the Salvation Army to drop of your unwanted clothes, toys or gadgets. Stress how important this action is for people who can’t buy these things for themselves. Not only will they learn the importance of giving, but explaining the plight of the poor and needy will give your child a solid understanding that no one wants to be poor, that it is a state to be avoided and that through good money management, they can avoid poverty.

1. The Future Is Now

Money tends to burn holes in the Kids’ pockets. But one can at least make an attempt to teach one’s child to squirrel away into a savings account some small portion of their income whether it be from an allowance or a first job. Not only does this exercise stress how important it is to save, but it can also provide them with a nice start up nest egg for when they fly the coop.


*About the author: This is a guest post contributed by Debt Management. It was written by Vancouver based author and freelance writer Andrew Salmon.

*Image Credit: Photograph by kellyv [via Flickr Creative Commons]

Are Prepaid Cards the Right Option for You?

(This is a guest article by David Pratt*)

Recent college graduates and students still in school will now find it much harder to get their first credit card under new Federal credit card rules that went into effect in March. The Credit Card Accountability, Responsibility, and Disclosure Act is meant to protect consumers from unfair credit card billing practices. The law includes rules to help protect people under 21 from going into deep credit card debt at the start of their work career.

The good news is that for many young people, a reloadable prepaid card is a safe and convenient alternative to using a credit card, cash or checks for making purchases and paying bills. Prepaid cards are widely available online or at retailers such as drug stores and grocery stores.

"Increasingly, prepaid cards serve as a powerful tool to encourage financial responsibility for college students," said Kirsten Trusko, President and Executive Director of the Network Branded Prepaid Card Association (NBPCA), a non-profit trade association. "Prepaid cards provide all the flexibility and security benefits of a branded payment card without the risk of running up debt and overdraft charges."

Harder to Get a Credit Card

Under the new rules, people under the age of 21 now have to prove that their income is high enough to make monthly credit card payments. Or, they need a co-signer, such as a parent. What’s more, if you are under 21 and have a co-signer on your account, you will need the written permission of that co-signer to let the bank to raise your credit limit.

In addition, card companies are no longer allowed to market on college campuses. The days of handing out t-shirts, sodas, and posters on the quad in exchange for obtaining filled out credit card applications from students are over.

It’s still possible to get a credit card without a co-signer if you are under 21, but you will have to have a high enough paying job as well as something of a credit history already—through bill payments or a track record of paying a card loan—certainly possible, but out of bounds for plenty of grads, at least in the initial time after graduation.

How Prepaid Cards work

Provided you are 18 and can pass a simple identity check required under the U.S. Patriot Act (which means providing your name, address, birth date, and social security number) it is easy to get a prepaid card. A prepaid card is plastic card that looks like a credit card or checking account debit card. It is issued by a bank and has an account number embossed on the front and embedded in a magnetic strip on the back. It typically is tied to either the MasterCard or Visa debit network. These cards are widely accepted by hundreds of thousands of merchants nationwide and around the globe for transactions such as buying groceries, clothes, gasoline, and eating at restaurants. They can be used in person or online with a signature transaction or by using a PIN number.

But instead of making purchases on credit, you "prepay" for those purchases by putting your own money into the card account ahead of time. Thus, you are drawing upon your own funds rather than borrowing money or paying interest charges. You can add money at a Western Union agent by handing cash to the agent who then for a small fee, deposits that cash into your card’s account. Similarly, you can buy a Green Dot Money Pak for $4.95 and transfer the money from the Green Dot Money Pak into your card account. You can also take advantage of direct deposit to have all or part of your payroll check deposited directly to your prepaid card account. In this way, you can reload your card with funds and continue to use it indefinitely.

When shopping for a prepaid card program, check that your funds are insured under the FDIC program. Under MasterCard and Visa policies you should be protected if your card is lost our stolen. If reported within 48 hours your liability will be limited to $50 under those policies and capped at $500 if you somehow failed to report the lost or stolen card as late as 60 days out. But if you waited longer than that, you could be out whatever amount you had on the card.

Advantage for Budgeting

Prepaid cards do have some fees, which vary from card to card. These typically include an activation fee, a monthly account fee, and per transaction fee. Still, compared to alternatives such as check cashing fees, overdraft fees, and interest payments, prepaid cards can prove cost effective for many people.

A prepaid card can help you track your spending and live within a budget. Like paying for things with cash, you have to have enough money on your card to cover your purchases. You can check your balance and review your transaction history online, via ATM machines, by calling a customer service number, or even through mobile text messaging, with most prepaid card programs.

In today’s economy, more people are limiting their use of credit cards and just getting one credit card with lower credit limits, or favoring debit cards—either check cards or prepaid cards.

*About the author: This guest post is contributed by David Pratt, marketing director for MiCash.net who writes on the topic of prepaid debit cards. You can reach David at dpratt (at) micashcard . com.

*Image Credit: Photograph by jepoirrier [via Flickr Creative Commons]