Give Your Kids Cash Instead Of A Credit Card 

There's a lot of advice about giving your kid a credit card. Find one with a low interest rate. Don't cosign for the card because you might ruin your own credit. Make it extremely clear to them that yes, it's real money and yes, they must pay it back on time and in full.

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Beth Kobliner, author of the new book Make Your Kid A Money Genius (Even If You're Not), has some different wisdom on this topic. Her advice for parents: Just don't do it. Don't get them the card. In an interview with PBS News Hour, she points out that with kids, it's best to stick with cash:

When it comes to day-to-day lessons, the best way to teach your kids the value of a dollar is to give them actual dollars. Use cash with your kids. When my daughter was 13, she wanted to go shopping with friends for back-to-school clothes. The other parents gave their girls a credit or debit card and imposed a spending limit. Me? I embarrassed my daughter by handing her $50 … in cash. The reason: I knew that when she got to the checkout line with more than $50 worth of merchandise, she'd have to make hard choices and put something back.

Cash tells kids that money is finite, unlike plastic. A famous study out of MIT showed that people will spend twice as much money on the same item when they pay with credit cards instead of cash. While plastic can seem like play money, cash feels all too real.

The advice might sound a little archaic - who even carries cash around these days? - but for those who are just starting to develop a financial sense, the tactile experience of holding real dollars creates an awareness that what they're spending has been earned. When I was 12 or 13, I remember being so proud to buy a swimsuit at the shopping centre with notes and coins I had saved up for that specific purchase. It must have been a massive pain for the store employee, now that I think about it, but that exchange of real money felt significant, powerful.

Kobliner also recommends using cash in front of your kids to show them that there are limits, and choices must always be made. That's a difficult lesson to teach when all you have is this seemingly magical piece of plastic.


Comments

    Who the hell gives their kids a credit card? That's just asking for trouble.

      Yeah, that was my first thought... I'd never even consider this. I certainly know my parents didn't when I was a kid. It strikes me as utter madness.

      I logged in to say the same, I'm actually shocked there is advice floating around about getting kids a credit card!!

      Beth isn't proving "different wisdom" on the subject, she's providing the only bloody wisdom on the subject.

      Yep. That's just insane.

      Do schools even teach kids about these things?

      The only good answer I got from a parent was that they can track their spending and see what they're actually buying and where they're buying it from. If there's a weird purchase on the statement, then the parent can have a conversation with their kid about that purchase. The limit would be set very low to a pocket money level (no more than $200), and would be paid off in full by the parent.

      Kids also want to be able to do a variety of things online, such as buying merch from online stores or support their entertainers (such as bits on twitch), in which you need a card to do so.

      That being said, I don't think that's enough to validate for a children's' credit card. There's a lot of complexities with a credit card that haven't been taken into account. IMHO, setting up a visa or mastercard debit card and giving your child cash for them to deposit might be a better idea. It gives them freedom to spend and save accordingly, while effectively teaching the value of a dollar.

      It's not as unusual as you might think. And it's only getting worse with the various "Phone Pay" systems.

      I totally agree with the article, and to be honest it's not bad advice for adults too. Lock your credit card away and use cash instead. Save the card for emergencies. Especially if you're doing something were impulse control may be an issue like going out drinking, or gambling at the RSL/Casino/wherever.

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