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Teaching kids to manage money can be tricky, especially when financial accounts are involved. As more parents embrace technology, part of educating children about finance comes down to managing savings accounts and sometimes even dealing with debit cards.

Issuing banks generally have age restrictions in place when it comes to opening financial accounts.  Choosing the right debit card and subsequent account is essential to laying a solid financial foundation for kids.

Age Limits

When you choose a bank and account for your child, check age limits first. Most banks only issue a debit card to kids 13 and older if they also have a parent on the account with them. Some banks set the age limit at 15, while others make kids wait until age 16 until they can open an account. In most instances, kids cannot have their own account without a parent until they are 18 years old.

Choose a Bank Invested In Financial Literacy

When determining which bank with which to work for your kid's first debit card, choose one that is as invested in your child's financial literacy as you are.

Banks that show a vested interest in the financial education of your child are those that offer literature about money management for kids, workshops and classes to teach kids how to manage debit cards and financial accounts and participate in other community activities that reinforce financial literacy among younger age groups.

Avoid Fees

Look for a bank account with a debit card for your child without a ton of fees. Scrutinize the first few bank statements from this account and make sure there are no fees that the bank did not apprise you of. Most banks will offer a free or minimal fee account for kids.

The last thing you want is for your child's first bank account to be riddled with unnecessary fees just as they are learning to navigate their finances.

Maximize Technology

Take advantage of the myriad technological options at your disposal. Encourage your kids to use their mobile wallets if they are proficient with this form of technology and learn how to use these applications as well.

The more that you can learn how to use technology to help your child manage their money, the more prepared they will be when it is time to fly solo with their debit card.

Budget Together

Budget money together each month so that you can account for what your child has spent, where the bulk of their money is going and how they might be able to engage in better money management habits. Teach them how to create a budget, stick to it and what to do in instances where they have ventured outside of their budgetary constraints.

Use a program or app to budget money, so that you can revisit what you have done each money and shift anything that needs to be done differently. This will also set your child up to budget on their own in the future.

Set Up Card Alerts

Create alerts once your child is issued a debit card. This will alert you to where and when they are spending money, the amounts and can help you to track their debit card use. This is something that you can change down the road, but in the initial months of them having a debit card, it helps you to provide the necessary oversight to encourage good financial habits.

Card alerts can also help with safety, as you can easily track where your child is spending money and in what amounts. This may help you to caution your child against overspending and mitigate any overdrafts.

Avoid Overdraft Protection

It might be initially tempting to set up overdraft protection on your child's account, so that they never have a negative balance. However, this may only encourage your child to engage in reckless financial spending if they know they have your account as a back-up.

This can ultimately cause issues with your own account if your child is consistently over-drafting their own. Instead, talk with them about the ramifications of causing overdrafts on their accounts and the penalties for doing so when managing a financial account.

Encourage Direct Deposit

If your child has a job from which they are earning a regular paycheck, set up direct deposit on their bank account. This allows them to automatically access their earnings and use their debit card based on the money they earned in a pay period.

Direct deposit also mitigates the need to deposit a paper check. However, caution your child about direct deposit timing, as sometimes it takes a day or two after payday for the deposit to fully process. This is good information for your child to learn early in preparation for direct deposits down the road.

Funnel Money Automatically To Savings

One of the most important parts of initial financial literacy is teaching kids good savings habits early. In addition to setting up an account with a debit card, set up a savings account as well.

Set up automatic transfers from the checking account into the savings account. Don't get a debit card for the savings account to avoid the temptation of spending that money.

Set Up Transfer Capabilities

One of the benefits of allowing your child to have a bank account with a debit card attached is the ability to transfer money to them when they need it. No more having to run lunch money to school or figure out what to do if they run out of cash on a school trip.

Set up transfer capabilities on the card and account that allow you to easily move money in and out as needed.

Teach ATM Safety

Kids with newly minted debit cards might be eager to take money out of their bank accounts when it's time to spend. This is the perfect time to teach them about ATM safety.

Tips include avoiding the use of ATMs at night, checking their surroundings before taking money out, never using an ATM that seems suspicious or is in a dark place and what to do if approached by a thief. These are important tips that they will use for the rest of their lives.

Set Spending Limits

Kids with debit cards and newly opened financial accounts are not yet accustomed to the budgeting necessary to cultivate healthy spending habits.

To help them initially, set spending limits on the account. In most instances, banks will create limits for kids that do not exceed a certain amount when they are using their debit cards. This may also help to guard against fraud.

Make It a Family Venture

If you have younger child, include them in conversations about debit card use and financial accounts for those of your kids that are of age to have an account.

Family conversations about money management teaches everyone in the family how to cultivate and maintain good financial habits. If you have younger kids, watching how their older siblings deal with a debit card will teach them, from an early age, what to expect when it is time to open their own accounts.

Reinforce Online Safety

A child with a debit card is likely to use that card to make online purchases. Reinforce online safety habits early, so that your child does not fall prey to online security risks.

Talk to your child about safety parameters when entering debit card information online and take advantage of whatever fraud protection your bank offers for the account in question.

Encourage Cards Over Cash

Given the protections offered for debit card users, it has become a safer form of payment than cash. After all, carrying around wads of cash can make your child a target.

Encourage your child to carry their debit card when they are out with friends or traveling versus cash. This not only reinforces their physical safety, but also, has the added benefit of any fraud protection offered by the issuing bank.

Maintain Open Communication

One of the biggest mistakes that parents make is failing to leave the lines of communication open when it comes to talking about money. Maintain open communication with your child regarding their debit card use, safety habits, financial accounts and planning.

The more you talk now, the more likely your child will be to come to you with any future issues regarding their finances.

When your child has reached the appropriate age to teach them about money management via a debit card, taking the right steps will get them off to a solid start.

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