Teach Your Pre-Teen Kid Essential Money Management Skills with a Prepaid Card

A prepaid card is a great tool for teaching essential money management skills to kids under 13. Why?

• It’s safer than cash in a piggy bank;
• It’s widely accepted in stores and online;
• It automatically tracks transactions; and
• It introduces your child to modern banking and personal finance concepts.

Why start all this before the age of 13? A recent Cambridge study concluded that many money habits are set by age 7. Yikes!

“Wait a minute,” you say. “Don’t kids have to be at least 13 to get a prepaid debit card?”
Yes, that certainly seems to be the norm.

So how do kids under 13 get a hold of a prepaid card?
They don’t. You do.

Here’s how you can teach your pre-teen good money habits with a prepaid card:

• Order a separate prepaid card in your own name. Use it to store money and make purchases or donations on your young child’s behalf.
• Customize the card to indicate that it’s for your child’s funds. Find a card that allows you to add your own custom emboss line beneath your cardholder name. Add something like “Johnny’s Card.” That way, you’ll be able to easily identify it amid the other cards in your purse or wallet, and your child will feel a stronger sense of ownership.
• Load money on the card as your child receives “income.” As a youngster, your child’s income sources might be some or all of the following: a regular allowance, household chores, odd jobs around the neighborhood, entrepreneurial activities, gifts, or the occasional “bonus.” Make sure you find a prepaid card that supports a way to make frequent, instant micro-payments to your child without incurring extra fees. Typically, card to card transfers within the same prepaid card network are free and immediate, so consider getting yourself a “parent funding card” to serve as the fee-free funding source for frequent transfers between you and your child. You can periodically replenish your parent funding card with infrequent loads from your bank account, paycheck, or some other source.
• Be the ATM. If your child receives a check or cash, it might be most convenient to make the deposit to your own bank account (or wallet) and then transfer the equivalent amount onto your child’s card. Conversely, if your child needs cash for some pocket money, hand over some of your own cash, and transfer the corresponding amount from your child’s card to your parent card.
• Give your child visibility and ownership. Get a card that supports online and mobile access to the current balance and the transaction history. Condition your child to never ask you to purchase something without first checking the current card balance. Not enough funds? Wait and save patiently until sufficient funds are available. It’s miraculous how whining and begging disappears once children take ownership over their own funds and purchasing decisions.
• Use the card for your child’s online purchases. Don’t expose your main credit or debit card to your child’s recurring online game purchases, music downloads, etc. Register those online accounts separately under your child’s prepaid card. That means no more unpleasant surprises when your kid goes bonkers with in-game purchases — pheww. Your kid may run her own card dry (a good lesson!), but your main cards will be protected.
• Set up real-time alerts with balance feedback. Get a prepaid card that supports text or email alerts whenever there is activity on the account. Each alert should include a description, an amount, and the resulting balance. That way, your child will “see” the money as it comes and goes on the card in real time and quickly realize that cards are not some magical, bottomless source of funds. With real-time alerts, you’ll also know about any suspicious activity right away, so you can move any remaining funds off the card immediately and report fraudulent behavior.


• Reward patient saving with parent-paid interest. Teach your child the power of compound interest. Each week or month, reward your child with a “bonus payment” that is a percentage of their outstanding balance. The neat thing is, since you’re acting as the “bank,” you get to make that interest rate as compelling as you’d like (instead of being stuck with the truly uninspiring interest your child would earn in a typical bank account).

Those are just a few ways you can instill good money habits in your youngster using a prepaid card. Have you tried others? Share your thoughts.

Note: Lots of prepaid card offerings will allow you to accomplish all of the above with some manual effort, but FamZoo’s prepaid cards are uniquely designed to make the experience simple, safe, and convenient. Find out more here.