As my children have gotten older, one of the biggest challenges that I have faced has been teaching them financial responsibility and the true value and meaning of money. My younger kids have occassionally asked me for money for one thing or another, and when I’ve answered that I don’t have money for that right now, their response was something along the lines of “Well, don’t you have a card? You can just get money out of the machine.”
Children need to learn that money doesn’t just appear in the bank account, to be accessed whenever we need some cash. Money is earned through work (and often very hard work and lots of hours) and must be used wisely. I love these tips for teaching children about money from Jean Chatzky.
Now that I have a teen and a pre-teen, I’ve noticed that their need to “borrow money” is more frequent and the amounts are higher than they were when they wanted to take a trip to the dollar store. I’ve been thinking about the credit card my parents got for me when I was a teen in high school, getting ready to leave for college soon (it was connected to their account). I’ll be forever grateful for the credit training that they gave me while I was still at home and while the stakes were not high.
I just learned about the PASS card from American Express, made specifically for teens. It’s not a credit or debit card — it’s a pre-paid, reloadable, easily trackable card that parents give to their teens. There is no risk of overdraft fees and the PASS card cannot effect a credit score. If the card is lost or stolen, American Express will replace the funds (which is a huge benefit over cash!). Funds never expire, either.
However parents give money to their children, whether it be through allowance, a reloadable card, or by borrowing cash, I think that one of the most important lessons that children and adults can learn about money management is the difference between needs and wants.
Needs vs. Wants
From education to a new car to groceries, money is what you need to fund your way of life—your needs and your wants.
What you need and what you want are two different things.
Needs are the basic things that are required for your safety and health, including food to keep you alive, clothing to keep you warm, and a shelter to protect you.
Wants, on the other hand, are items you desire but are not critical to life. These may include ice cream, designer jeans, or a new bike.
Understanding the difference between needs and wants is important when you are managing your own money. In order to afford the items that you need (such as groceries), you can’t spend all of your money on things that you want (such as a new CD).
(from https://www.japersonalfinance.com/gsjapf/activities/page3.jsp?key=Activity3Page1)
What is the most important lesson you have learned about managing money? How are you teaching your kids?
Please visit the PASS web site to learn more about the PASS Card.
Disclosure: I wrote this review while participating in a blog tour campaign by Mom Central Consulting on behalf of American Express and received a gift code to thank me for taking the time to participate.
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great post. It is so important to teach our kids about money. Our credit union has a children’s program that gets them set up with their own account and will sit down with them and talk to them about money, budgeting and life when you set them up.
I love this card and I’m going to send to Scott to do for our girls (when they are a little bit older). He’s totally in charge of money at our house.
We use a free website, http://www.moneytrail.net, to teach our kids to keep track of their allowance and IOUs.
very very appropriate post for what i have been thinking about lately. Two Teen girls… neat ideas!!