Dave Says: Should Teens Have Debit Cards?

Checking account and debit card for teenager?

Dear Dave,

I’m a single father with a 14-year-old daughter. I want to teach her to avoid the financial mistakes I’ve made. Do you think I should open a checking account with a debit card for her? I think the practice in dealing with money before she gets out on her own would be good for her.  

– Paul

Dear Paul,

Getting your daughter a checking account with a debit card is a good idea at some point. But I’d suggest that you first give her a year or two to deal solely with cold, hard cash.

Have her create four envelopes, one each for giving, saving, entertainment, and miscellaneous spending.  Then, anytime she earns some money, she can divide it up and put some into each of the envelopes. Once she’s done this for a while and you’re both comfortable with the situation, then you can think about opening a checking account for her.

The problem with giving her a checking account right off the bat is that the money is all lumped together. There’s no division between the concepts of giving, saving, and spending. These are some pretty important things she needs to learn while she’s being educated about money. Also, when the time is right and she can handle the responsibility of a checking account, make sure you work with her every month in balancing her checkbook. Sit down with her, one on one, and help walk her through the process. This will reinforce the idea that it’s a necessary part of handling money properly. After a few months, she’ll get the hang of it and be able to do it on her own. And it will also give you peace of mind that she’s taking care of her checking account the right way!

– Dave

Budget trouble!

Dear Dave,

A friend of mine loaned me some of your books and even took me to one of your live events. Since then, I’ve been trying to work the Baby Steps, including building my emergency fund and creating a monthly budget. However, I’m having trouble transitioning to living on a budget. I get paid in the middle and end of each month, but my bills are due at different times. Can you help?

–Brenda

Dear Brenda

In your situation, I recommend using a two-column approach when you sit down each month to create your written budget. In it, one column would represent the first of the month, while the other represents the fifteenth. Place the income you’ll receive for each pay period at the top of each column, then work your way down spending every dollar on paper for that pay period, until all the money is gone.

If your cable bill is due on the tenth, then it would go under the first column. If your electric bill is due on the twenty-first, it would go in the second column. Once you’ve got this in place you can adjust the categories where you might have a little more flexibility. A good example of this might be clothing. You can budget for any new clothes you need in the pay period that has the fewest bills.

When you do this, you’re not just spending every dollar on paper before the month begins. You’re also spending every dollar on paper before the pay period arrives!
 

– Dave