Superior Equity Group – Financial Responsibility for Teens

Written by admin on December 6th, 2010

The teenage years are a perfect time to learn responsibility.  One way to accomplish that is an allowance.  By giving your teenager an allowance, they’ll learn budgeting skills, and what happens when they spend their money too quickly.

Today, it’s much different than when you were a teenager.  Now, teens have the ability to get pre-paid cell phones.  They also have the opportunity to get a pre-paid credit card.  Specifically, they are pre-paid debit cards with either a Visa or MasterCard logo.  It acts like a credit card, but works like a savings account.   Unlike a credit card, if the money isn’t physically there, they can’t spend it.

Why would you think of giving your teen a debit card?  You can put their allowance on that card, and let them use the card as they see fit.  They’ll learn responsibility, because they’ll need to set priorities. If they know they have this week on their card, but the new cell phone they want is 0, then they know they’ll have to limit their spending until they get that 0.

If they spend that money on something else, they’ll learn that actions have consequences.   If, however, they discipline themselves, and save money up for a purchase that they’ve been wanting to make for a long time, then it will be rewarding for them when they hand the card over and make that purchase, knowing that they earned it through discipline and hard work.

This will give them a head start on college, because once they enter college, you won’t be there to watch over them all the time.  If they have time to learn how a credit card works ahead of time, they’ll be much more likely to make responsible spending decisions upon entering college, rather than looking at a credit card as free, replaceable money.

A lot of debit cards allow your teen to make deposits by purchasing pre-paid cards at stores such as Walmart or Target.  This, too, will teach responsibility, because they’ll learn the importance of saving money for future needs.  This, of course, is a skillset necessary in college and for when they enter the “real” adult world.

The usefulness of such a card in an emergency cannot be discounted.   If your teen should ever be stranded, or find themselves in trouble and need to get home, that card will be there for them to secure transportation, or other emergent needs.

If you do decide to get a card for your teen, make sure you sit down with them and go over with him or her the importance of financial responsibility, and the consequences of spending money too freely.  In the end, you will likely find it to be a rewarding and smart choice, setting them up for wise financial decisions into adulthood.


Tags: , , , , , , , , , ,

Leave a Reply