Why give a debit card to a kid?
Your experiences as a child shapes you as an adult. The things you learn and interpret, develop your character and personality. That is why it is important for children to grow up independently although under a parent’s tutelage. This allows them to learn from their mistakes. Similarly, handling their finances, enables them to take better charge of their finances after growing up.
Most kids are encouraged on the habit of saving. Piggy banks came into practice to encourage
Children to save for future requirements or for their desired toys. This practice helped them maintain the equilibrium as an adult.
Responsibility and maturity is attained by children at different ages. With maturity kids learn to be more responsible and after becoming responsible adults they tend to handle their money better. To nurture the children of our society into responsible adults we need to instill lessons that make them respect money. A bank account with a debit card can prove to be a step in the right direction. It allows the child to manage his expenses, under the supervision of his/her parents. This means he/she is given a budget and they can spend it however they feel like until they reach the minimum balance in the account. Also, they will educate themselves on how to earn rewards and discounts from the bank, which initiates ‘good financial learning’.
Features of Children’s Debit card
Today there are a variety of savings bank account and debit card options for minors. With banks coming up with diverse debit card plans parents should analyze the way in which they think the child should use the card and accordingly enroll the minor in one plan. For instance, the ‘Kids Advantage Account’, a plan put forth by HDFC is a popular scheme among Indian parents. The debit card allow a withdrawal limit of Rs.2500. It also includes a shopping limit of Rs.10000 with no overdraft on card value. This means the minimum balance has to be maintained, below which the card cannot be accessed. Similarly, there are several plans like this and as such parents could choose from know from various plans that would help your child learn important financial lessons.
Parents also benefit if they start maintaining an atm card for their kids instead of handing out ‘liquid pocket money’. In this manner you are definitely going to teach your child the basics of personal finance at home such as to plan a budget after receiving income, spend on things that are necessary and affordable and try to save as much as possible.
This definitely does not happen overnight, or as a matter of fact over a week or month(s) also. It is a procedure where you sow the seeds years before it bears you fruits. The child at first, will overspend, not keep the minimum balance required, will be denied access to payments and then learn the value of the procedure. It also allows parents the access to their bank statements, to get an idea of where the money is going.
Monitoring their card activities can be important as the parents would get insights on their children. There are one too many types of debit card and selecting the best for your child should be your priority. It is advisable to opt for the card which allows you to set a minimum limit and no access to spending over that. It might place them in unwanted situations, but that is what shall help them learn valuable lessons.