Teaching financial responsibility to children is a foundational goal that most parents have, but it can be hard to know where and when to start. Particularly given how technology has fundamentally changed the way we make purchases and track them, you can't exactly recycle the same money talk your parents probably gave to you.
Gone are the days of sitting down at the kitchen table to balance a checkbook, so when should your child be entrusted with the 'buying power' of a debit card?
When to Get Started
Currently, the average age for an American teenager to open a checking account is 17 years. Many experts say it should be sooner.1 Waiting until your child is just about to leave home for college does not give them very much time to learn and practice managing money under a caring adult's supervision.
In fact, research suggests that kids as young as 7 years old can already develop their habits and attitudes towards money, and that basic financial concepts such as budgeting and saving will be in place.2 Given that most 7-year-olds don't have a lot of money to manage, and most financial institutions have a minimum age requirement to issue a debit card, consider using those early years between the ages of 7-13 as a time to use actual cash to help children become comfortable with money.2
Once your child reaches the age of 14-16, you can probably find a bank that would allow for you to open a checking and savings account for them, perhaps jointly owned by you, or the bank may require you to act as a custodian on the account. Opening an account might coincide nicely with other milestones in your child's life - starting high school, getting their first part-time job, or gaining their independence with a driver's license. Ultimately the decision should be based on the amount of maturity and responsibility they display, and perhaps a good track record of not losing their wallet.3
With proper guidance, a child's first debit card can serve as a positive educational tool that will teach them to:
- Build money confidence
- Gain independence with managing a budget
- Learn to save money
- Decipher the difference between their wants and needs
- Practice tracking expenses with banking apps, online tools, and text alerts
- Provide encouragement to take responsibility for earning their own money and making their own spending choices.1,2
Things to Watch Out For
One aspect of strong goal setting is preparing for possible barriers or setbacks to success. While the mood when getting your child's first debit card should be primarily optimistic, be sure to take the time to warn them of potential downfalls and risks associated with their newfound responsibility:
- Avoid falling for scams - always protect login information and account numbers, even if another adult asks for it.
- Keep their card safe - losing a debit card may incur replacement fees, and worse, if the card falls into the wrong hands they may become the victim of fraud.
- Learn to say no - friends can quickly drain the funds in the account of an innocent and kind-hearted youngster if they have not yet developed the ability to say no when asked to "share the wealth" or buy everyone lunch.
- Watch out for overdraft fees - you may want to find an account that can prevent overdraft fees, or perhaps it could serve as an opportunity to learn from mistakes to prevent them from happening in the future.2,3
At the end of the day, a debit card is just one aspect of modern financial management, but it is a great tool that should not be avoided until your child absolutely needs one because they are 'flying the nest'.
Before you head to the bank, consider using these points above as a conversation-starter about what expectations you may have for your child to operate their own budget, save money, track their spending, and set age-appropriate financial goals. Remember to keep the lines of communication open about your own financial habits as well to help build their comfort-level of talking about money.2
Footnotes and Sources
1. SeattlesChild.com, August 29, 2021
2. TheBalance.com, March 10, 2022
3. FamilyMoneyAdventure.com, August, 2022