9 Feb 2012

Helping our teens learn money management

Up until last month, our boys, aged 14 and 12.5 received their pocket money in the form of a credit on a spreadsheet maintained by my accountant husband. Then, when they wanted something, they checked how much money they had and we paid for it from their balance.
This prevented them losing cash or wasting the money on sweets and it mainly worked well. However, it was difficult to check up at a moment's notice how much they had and Son1 regularly went overdrawn by using our registered credit card on Apple and Xbox to make unauthorised small amount purchases.
My husband recently decided to reorganise their finances, moving their savings to a higher interest children's ISA and we decided, at the same time, that they were old enough to have their own debit cards and manage their own money.
So, we've begun transferring their pocket money into new young persons' bank accounts from which we will be expecting them to buy their own magazines, withdraw cash as needed for things they want and register their cards for their own Xbox points and Itunes purchases.
This could go horribly wrong, but we think it's good to start them early on making their own small financial decisions rather than wait for them to head off to university with a freshly minted bank card and no common sense.
They have been instructed always to check their balances before making a cash withdrawal and to keep an eye on their finances using the online facility. We will also keep a watchful eye on this to make sure they don't end up overspending and their decisions are sound.
Somehow, I think that they will be much more cautious about using their 'own' money when they can see it disappearing from a bank account than they have been about watching it disappear from a spreadsheet, knowing that there are no consequences and they can always overspend. These debit cards have no way to go overdrawn, apparently, and in any case, they aren't often out and about armed with their cards without us being there too.
Still, I feel a little bit nervous about the whole thing, I have to admit, although this may be more to do with letting go of a little bit of control over their lives. This is something that, inevitably, must happen of course, it's just hard to "loosen the apron strings".
I'd be interested to find out how any one else has approached this... and what the results were.