How Prepaid Debit Cards Can Teach Teens Financial Responsibility

Think back to your early teenage years. What did your parents or guardians do to teach you about managing money? Maybe they set you up with an allowance. Maybe they sat you down and gave you the "money talk." Or maybe they invited you to sit in on family financial discussions.

All of these can be excellent ways to begin teaching young teens financial responsibility. Yet there's an additional resource that many parents and guardians don't fully take advantage of: prepaid debit cards. Such cards -- especially ones that are designed with families in mind -- are not only effective in teaching how to properly manage money, but also allow families to go through this process in a safe and painless manner.

Here are six reasons why prepaid cards are one key to teaching teens financial responsibility:

  • Teens develop good money habits...

    Especially if it's their primary or sole access to money, setting up young teens with reloadable prepaid debit cards can help them develop good financial habits. First, they can't simply look into their wallets to know how much money they have. This means they'll need to start monitoring their finances on a regular basis, be it through online or mobile channels. Second, most prepaid cards keep track of where purchases are made. This will help teens develop an increased awareness of where their money is going -- and may lead them to adjust spending habits accordingly.

  • ...And they become financially accountable, too.

    Some prepaid cards intended for teens allow parents or guardians to easily monitor where money is being spent. This provides a great opportunity for parents and young teens to sit down on a regular basis and review expenses. Doing so will help teens develop a sense of financial accountability that can't be attained with cash, since dollars and cents can't (easily) be tracked.

  • Prepaid cards avoid credit risk...

    Like credit cards, prepaid debit cards are accepted nearly everywhere. But unlike credit cards, they avoid certain dangers. For instance, with most prepaid cards teens can't spend more than is available on the card. This allows parents to have the peace of mind in knowing that their child won't incur debt, while giving them their first taste of financial freedom.

  • ...And they're also safer than cash.

    As previously noted, some prepaid debit cards offer parents and guardians the ability to monitor where their teens are spending, which cash does not. In addition to this, prepaid cards tend to be safer than cash. If lost or stolen, most can be cancelled and replaced relatively easily -- a benefit cash just doesn't offer.

  • Teens love the independence...

    Many younger teens in particular love the independence that comes with having their first card. To them, it's a sign of maturity when parents or guardians trust them with one -- even if their purchases are monitored and the adults in their lives control how and when money goes onto the card.

  • ...And parents love the control.

    On the reverse end, parents and guardians love the comfort that comes with knowing that their child won't be stranded without any funds -- but that they are also protected by the safety features built right into the card. With most prepaid cards, it's quick and easy for parents to call or go online to add money. And there is the satisfaction of knowing they are proactively helping their teens develop financial responsibility.

While prepaid debit cards can clearly be an effective tool for teaching teens financial responsibility, it's important for parents and guardians to shop around before selecting a card. Certain prepaid cards are specifically designed with parents and teens in mind -- giving parents the ability to have control over how their teen is spending money. Using a card like this will help your teen develop into a financially savvy and responsible adult, while keeping the risks of offering them more financial independence at bay.

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