Financial literacy is something that the earlier you start learning, the better it proves to be in managing your finances. The advent of internet banking and cashless transactions has gradually eliminated the concept of dealing in liquid cash. However, one must be well-versed in the pros and cons of internet banking to deal efficiently with online banking without becoming the victim of cyber fraud and theft. The same goes for teens and young adults who are planning to earn money for teens expenses and shift from the stash of currencies in the piggy bank to having independent credit/debit cards.
For parents looking to provide financial independence to their children, there are various options available such as a traditional savings account with prepaid card for teens that parents can jointly manage. Parents can monitor the transactions and also offer guidance whenever required. They can begin by inquiring from their existing bank or credit union to know if they issue debit cards for minors. Organizations are supporting this idea with low or no account maintenance fees, providing the option of setting spending limits and convenient ATM access.
Following are some pointers teenagers should keep in mind when issued a debit card apart from following the financial advice of their parents:
- Always look for a checking account with a debit card rather than the prepaid debit card because these cards can be synced with the savings account helping teens saving money. It is a great way to understand the importance of saving from expenses, and it also helps to identify the individual’s wants and needs.
- Determining the type of card required depends on the expenses children must meet. For example, a university student might have to pay miscellaneous bills, which requires the bill payment option. However, a high school student mainly needs to spend on food outlets, movie tickets, going out with friends, etc.; for this, the “bill payment” feature may not be necessary. Prepaid cards like Fampay, Fyp, zywa, etc., are really helpful for regulating student finances.
- There is no exact specified age to issue these cards or introduce the concept of upi app for teenagers. Some are confident handling money in middle school, while others may struggle even after high school, they learn from their mistakes. So, they should make some minor mistakes in the earlier years of their lives and learn from them instead of making those mistakes in the future when the financial impact is huge, and the losses are irreversible.
- Protection of overdraft is another unique feature provided by the firms issuing the debit cards, which means there is no appropriate availability of funds in the account. Still, the firm initiates and approves the transaction, but the account charges extra fees. This facility is not suitable for saving money teens plan to because in this manner, they will never learn the concept of sticking to the budget and purchasing only the necessary items.
- Ground rules should be laid out by parents about the usage of the card and well explained to the kids, and the latter should adhere to them. Access to a huge amount of money should be avoided as it may cause overspending, and the basic guidelines should be carefully communicated to children to avoid silly mistakes.