The Power of Plastic (and beyond)
America went fairly quickly from hating debt when I was young, to embracing debt for the last 30 years. Even more quickly we have moved from the first form of plastic, a credit card, to having many credit cards, then to debit cards, and now to using a phone app to pay for purchases. Shopping is so much easier than having to carry around cash. While the total transition has taken generations, that is still lightning fast when the breadth of history is considered.
Dave Ramsey and Financial Peace University promote the use of cash and not credit or debit cards. I agree completely because making spending easier has been proven to dramatically increase spending.
But there may be something even better than cash, at least for children. Rather than an “absolutely not, never, not in a million years” reaction to giving a child plastic, consider Greenlight. It is far from perfect, but it has some advantages over cash. Whether it is something you want to try or will work for you is for careful thought, prayer and consideration.
Greenlight calls itself the debit card for kids.
• Parents have the ability to set limits on “anywhere” spending,
• Parents can limit the stores where money can be spent, even select specific stores as the only places where the card can be used,
• Parents can place dollar limits on the money that can be spent, and
• Limits can be set on ATM withdrawal limits.
The advantages of Greenlight over cash seem obvious.
• It has a PIN number, so a lost wallet or purse or card is not necessarily the loss of all cash.
• Cash can be spent anywhere but you can limit the merchants where Greenlight can be used.
• There is an element of teaching the responsible use of a card that is helpful.
• Your children can track his/her savings balance easily.
• Greenlight claims that at least for some families, their children do more chores to earn more money.
Other options include a prepaid card with a controlled balance, and a few competing products such as FamZoo, Mango Prepaid Mastercard, TD Go Prepaid Visa, American Express Serve, Akimbo Prepaid Mastercard, and Capital One MONEY Card. Fees and features vary from card to card and even from state to state, so check each one carefully.
We could do a review of each of these, but in a week or two that review might very well be out of date. More financial products like these are coming out all the time. Do a search for debit cards for kids and cards for kids before you decide. Look for a current independent review on the card or product you are checking on at CreditKarma or online generally, but know that any of these cards can change their charges at any time. New apps for phones are also coming out regularly, so check them out as well.
But before you do any of that, please read The Truth About Teens and Credit Cards. Dave Ramsey gives real life examples as well as solid advice about avoiding credit cards. Consider this site as a good resource for learning how to teach your kids better about money. You are not doing your child any favor or teaching anything good if you are setting your child up for overwhelming consumer debt and financial failure. The lessons involved in Parts 1 through 8 of this series of articles should all precede a debit or credit card of any type.
Before the card and the phone apps, start here
The most important lesson about money you can ever teach your child is that decisions and choices about money handling are all spiritual decisions. How money is earned, given, saved and spent are all deeply intertwined with your relationship with God. Bad financial decisions often result from a lack of good spiritual understanding, counsel and prayer. Just go back to the Sermon on the Mount, Matthew 5, 6 and 7. In Matthew, in rapid succession, Jesus mentions giving, prayer, treasures in heaven (true wealth), followed by the inevitable lesson for those with misplaced priorities, anxiety. It is fitting that He closes that chapter of the Bible and those lessons with these words,
33 But seek first his kingdom and his righteousness, and all these things will be given to you as well.
34 Therefore do not worry about tomorrow, for tomorrow will worry about itself. Each day has enough trouble of its own.
Life and teaching life means having to make many choices, often hard ones, sometimes painful ones. Make them wisely and with God in mind. And check out our previous articles on Teaching Money to Children and Youth at www.idlewildfoundation.com/for-parents/ for other ideas to help teach children of all ages.
About the Author
John Campbell has retired from a 40-year legal practice as a trial attorney in Tampa. He has served in multiple volunteer roles at Idlewild Baptist Church in Lutz, Florida, where he met Jesus. He began serving as the Executive Director of the Idlewild Foundation in 2016. He has been married to the love of his life, Mona Puckett Campbell, since 1972.