In light of the horrible idea by the Kardashian sisters to give financial advice to parents and teens through a prepaid credit card complete with exorbitant fees and a rather generous shot of the sisters on the front, I thought I’d take the opportunity to give some alternative advice to you parents out there that want to teach your teens about money.
I now bank with USAA and highly recommend their services. They have several options for parents that want to open an account for their teen. Let’s take a look at these options and how they can help parents. Most legitimate banks and credit unions have similar options.
A prepaid card (without celebrities on the front) is a great teaching tool
USAA has a prepaid credit/debit card available for teens. There are no fees associated with the card. It can be used exactly like your own debit or credit card.
With these prepaid cards you can manage spending limits for your teens and view their transactions. You can also set up an allowance schedule if you would like a pre-set amount be credited to the card at a set interval. Adding money to the card is instant and can be done any time from the USAA website.
Why this is a good idea
If you take the time and discuss how the card works with your teen and set up the spending limits and deposit schedule with them, they will know how they should use the card, how much money is there, how to track their spending and will be on the way towards a financially savvy future.
These cards, like any other tool, are just a vehicle for lessons and you still have to take the time to teach your kids about saving and tracking their spending. If your teen is younger and has no clue, this is a great place to start.
Set up a teen checking account
While the above prepaid cards are a great start for a teen, they lack some of the additional feature that a full-fledged teen checking account have such as the ability to write checks, pay bills, transfer money to a savings account and use ATMs to withdraw cash.
Like the prepaid card, you as the parent would still have full control and access to your teens account but with a teen checking account, the account itself has less restrictions than a prepaid card. You don’t have the ability to set up spending limits in the same way you do with the prepaid card and your teen would have a bit more freedom over how they spend and manage their money.
The benefit of the account over the prepaid card though is that a teen checking account would give your teen complete real world training while you look over their shoulder to make sure they don’t screw up. They would get all the benefits of a regular checking account such as debit rewards, interest, overdraft protection, automatic transfers and the ability to create a savings plan with an attached savings account. This is the best way for a teen to learn to manage their own money because they would actually be doing it.
What to look for and look out for with teen products
Before you get started, you should have a good idea what level of financial knowledge your teen already has because there are tons of products out there that you can choose from to help your teen learn about money, aside from those I mentioned here, and you need to know exactly what you are looking for to find what you need.
Just like your own banking products, teen accounts shouldn’t have any fees associated. Look for a prepaid card with no fees and free parental tracking tools. As for teen checking, look at the teen accounts as if you are looking for a new account for yourself; it should be free of fees, offer rewards, checks, debit cards, online access and free BillPay.
As your teen gets older and more responsible, you will want to step out of the way and let them make their own decisions so check if the teen account can be graduated into a full-fledged account.
As with any good and helpful product on the market, someone else is out to profit from it like the Kardashians sought to do with prepaid cards. Prepaid cards and similar products really can be used as training wheels for your teen as they start dealing with money, but an aggressive fee structure will cripple any of the benefits of the product.
What methods do you use to teach your teens about money?
Image by Whiskeygonebad br>
Tags: banks, celebrities, checking account, checks, clue, credit debit, credit unions, exorbitant fees, financial advice, horrible idea, how much money, interval, kardashian sisters, parents, prepaid card, prepaid cards, prepaid credit card, teaching tool, usaa