With summer in full swing and kids out of the classroom, now is the perfect time to school your children on good spending habits. Has your child just started a first summer job? Does he or she have a paper route, or receive an allowance from you? If the answer is yes to any of those questions, take this opportunity to teach the skills needed for a balanced approach to finance and spending.
Did you know that some financial institutions now offer youth bank accounts to children as young as 12 years old? These accounts feature low banking fees, and offer kids access to their own debit cards.
“Debit cards are a real stepping stone to building proper spending habits,” says Caroline Hubberstey, head of external affairs at Interac Association. “Debit allows the freedom to access your own money, without the fear of debt that may accumulate when using a credit card.”
While setting up an account for your child may be easy, teaching them proper spending and saving techniques might require more finesse. This is why youth accounts let parents set limits on spending, including daily and monthly limits. Providing access to their own money with a debit card while preventing them from overspending will help demonstrate the value of a dollar and keep kids protected from debt. If you currently issue an allowance to your child, you can even send funds or gifts directly to them with an Interac e-Transfer, saving you a trip to the bank to withdraw cash.“Using debit not only helps you and your child keep track of purchases in real time to prevent overspending, it is also the most secure method of payment in Canada,” Hubberstey explains. “The security behind Interac Debit cards has helped to reduce associated fraud by 92% since 2009, so you can rest assured that their money is protected.”
Here are some other helpful tips to consider when teaching your kids about spending:
Find the best deals: As they begin to see the value of a dollar, encourage your children to shop for the best deals. Take some time to explain how price comparisons and coupons can help stretch the money they’ve earned.
Stop emotional spending: Sometimes we make spontaneous purchases, but these can add up. Teach your kids to think about the things they want to buy and encourage them to sleep on a decision overnight, and only make the purchase if they feel the same way the next day.
More tips like these are available at www.21dayscreditfree.ca.