Give the Kids Cash Instead of a Credit Card
There are many tips on how to give your child a credit card. Find the one with the lowest interest rate. Don’t sign the card because you could ruin your own credit. Let them know that yes, this is real money, and yes, they must return it on time and in full.
Beth Kobliner, author of the new book Make Your Child a Genius (even if it isn’t) , takes a different perspective on the topic. Her advice to parents: just don’t do it. Don’t take the card to them. In an interview with PBS News Hour, she notes that cash is best used with children:
When it comes to everyday lessons, the best way to teach your kids the value of a dollar is to give them real dollars. Use cash with your kids. When my daughter was 13, she wanted to go shopping with friends for school clothes. Other parents gave their girls a credit or debit card and set spending limits. To me? I embarrassed my daughter by giving her $ 50 … in cash. Reason: I knew that when she got to the checkout with more than $ 50 worth of merchandise, she would have to make a difficult choice and put something back.
Cash tells the kids that money is finite, unlike plastic. A famous study by the Massachusetts Institute of Technology showed that people will spend twice as much money on the same product if they pay with a credit card rather than cash. While plastic may seem like play money, the money seems all too real.
The advice may seem a bit archaic – who carries money with them these days? – but for those just starting to develop a financial sense, the tactile experience of owning real dollars creates the knowledge that what they spend has been earned. When I was 12 or 13 years old, I remember being so proud to buy a swimsuit at the mall with the dollar bills and coins I had saved up for that particular purchase. It must have hurt the store clerk very much now that I think about it, but the exchange of real money seemed significant and powerful.
Kobliner also recommends using cash in front of your children to show them that there are limits and choices must always be made. It’s hard to teach this lesson when all you have is a seemingly magical piece of plastic.