As the new school year begins, it’s the perfect time to consider what your teenager is learning about money. Financial literacy is one of the most important skills they can develop, impacting their future independence and success.
Teaching youths how to manage money through practical experience, such as using a debit card linked to a checking account, is an effective way to build these skills.
Goldenwest Credit Union offers a SMARTStart checking account, designed specifically for teens. This account provides a free Visa debit card, access to a free mobile app and a free financial literacy program to guide your child through the basics of budgeting, saving, and spending responsibly.
When to introduce a debit card
The right age to introduce your child to a debit card depends on their maturity and financial understanding. Here’s a general guide:
- Ages 8-12: Some parents start during these early years, especially if their child earns an allowance or money from chores. The focus at this age is on basic financial concepts like saving, budgeting, and responsible spending, with parental oversight.
- Ages 13-15: Middle school and early high school are ideal times to introduce a debit card as teens begin to spend more independently. This stage is crucial for reinforcing financial responsibility and helping them manage a budget.
- Ages 16-18: As teens take on part-time jobs and prepare for greater independence, managing a debit card can help them practice financial independence in a controlled environment.
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Financial education: Key areas to focus on
Introducing a debit card is more than just giving your teen access to money. It’s about teaching them critical financial skills that will serve them throughout their lives. Here are some areas to emphasize:
Setting a budget: Help your teen create a budget that accounts for their income and expenses. This teaches them the importance of living within their means.
Tracking spending: Encourage them to track every transaction through Goldenwest’s mobile app. This habit helps them understand where their money goes and how to manage it better.
Savings goals: Work together to set specific savings goals, whether for a larger purchase, an emergency fund, or future needs like college. Achieving these goals can provide a sense of accomplishment.
The power of compounding: Introduce the concept of earning interest on savings, which helps them understand how money can grow over time.
How debit cards work: Explain how debit cards are linked to a checking account and how transactions are processed. Ensure they understand that a debit card spends money they already have, unlike a credit card, which involves borrowing.
Managing a balance: Teach them to regularly check their account balance to avoid overdrafts. Goldenwest offers alerts through their mobile app that notify users when their balance is low.
Fees and charges: Make your teen aware of potential fees, such as ATM charges or overdraft fees. Understanding these costs encourages smarter financial decisions.
Protecting personal information: Emphasize the importance of keeping their PIN and account information secure. Discuss the risks of sharing this information and the potential consequences of fraud or identity theft.
Graduated responsibility: As your teen demonstrates financial maturity, gradually give them more responsibility in managing their account. This helps them grow into financial independence at a pace that suits their development.
Long-term thinking: As they become more comfortable with managing their debit card, introduce broader financial concepts such as credit, investing and the importance of planning for long-term goals.
Goldenwest SMARTStart Checking Account
Goldenwest’s SMARTStart checking account is a valuable tool for helping your teen learn financial responsibility. With no monthly or annual fees, no minimum balance requirements, and no Visa card fees, it’s a cost-effective option. The account also includes a free Smart Money financial literacy online learning platform to teach key concepts of budgeting and money management.
To motivate academic achievement along with financial literacy, Goldenwest offers a Pay For Grades program. Middle and high school students can earn $2 for every A and $1 for every B on their report cards. Plus, members aged 13-25 can earn up to $300 by opening a checking account with a debit card, enrolling in e-statements, actively using their debit card, completing the Smart Money courses, and maintaining their account in good standing for 12 months.
As your teen embarks on their financial journey, Goldenwest’s SMARTStart checking account, debit card, and comprehensive financial literacy program provide the tools they need to succeed. Learn more at Goldenwest Credit Union’s website.
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