September 20, 2010

Digital Kids

Teaching your children how to manage money isn’t easy. Do you give them an allowance? How much should you give? Do you require them to save? Do you have them pay for things you believe are non-essential?

There are lots of books, magazine articles and Web sites that can help you educate your kids. Most banks have programs meant to entice children to open a savings account. They often have brochures for young people that explain savings and compound interest; they also might offer information about checking accounts for teenagers. CBS money watch has a series of articles called “Money Skills for Your Kids”

If you want to give your kids an allowance, but don’t want to dole out cash, you can give them an electronic allowance. A free online system might work for you.

DigiBeanz allows parents to set up a list of chores or projects and assign a value to them. Kids can earn “DigiBeanz” and redeem them for items on You can also reward kids for grades and for reading.

Zefty acts like a bank, allowing you to “direct deposit” to your child’s account but it doesn’t require any cash. Kids earn virtual money and when they want to cash in, they present a “ZeftyCheck” to Mom or Dad.

The PAYjr (from Bank Corp and Visa) has a large collection of articles and tips on using an online system. The Web site also offer a printable chore chart and online calendars to help you and your kids to track chores and their associated rewards.
 At some point, your kids will probably get a debit or credit card
Even very young children notice that you can pay for things with debit or credit cards. By the time they get to be teenagers, they are accustomed to using their parents’ cards. New federal guidelines make it more difficult for teenagers to get credit cards, so they avoid getting themselves into debt that will take years to pay off.

At some point, though, they will probably get a debit or credit card and they need to learn that they don’t have an endless supply of money. You can teach them how to manage money with a prepaid card.

You can set up a PayPal student account where you deposit money and your child gets a debit card. You and your child can decide how the money is going to be spent. Your child can check the balance and get alerts by cell phone. This is a good teaching tool, because when the balance hits 0, they can’t spend more. Bonus: You can set it up so that your kid can’t buy online. Be aware that there are fees if you don’t load the card directly from PayPal.

There are numerous other prepaid cards available, almost all of which come loaded with fees. While these cards can be excellent teaching tools, keep in mind how much they will cost you before you sign up.

What’s your best financial advice for kids? Click on Post a Comment, below, and tell us.

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  1. For teaching kids good personal finance habits, you and your readers might be interested in as well (full disclosure: I'm the founder ;-)

  2. Anonymous12:15 AM

    Hi, very interesting post, greetings from Greece!

  3. Anonymous3:03 AM

    hi there every one - hope yous had a realy nice one - doing the rounds and back from parents 12lbs heavier a`hhh , all the best for new year -


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