Teaching Teens to Manage Money in the Modern World

Times are changing and sometime we struggle to keep up. When I grew up my parents provided me with pocket money. Their aim was to introduce me to the financial world and to equip me with financial discipline. The process was simple I received money in hard currency and had to decide myself how I want to spend the cash. I had to make sure that I had to pace my expenditure to ensure that the money lasted until the next "pay check" or rather allowance.

For me at least it was a simple process. Budgeting did not really exist in my world. I was able to feel the volume and weight of the cash which gave me a pretty good idea of how fast my money flowed from my pocket. On occasions I did loose control of my expenditure and did spend money out of control. Most of the times when it happened I really felt bad about it. I hated that physically feeling of loss as the volume and weight of my money got less. The loss was real and tangible. Following such an event it made me think twice before I spend my "hard earned" cash.

Since those days many things changed. For instance physical cash is slowly disappearing from our personal financial worlds. Firstly there were checks. I remembered a time that it was almost unthinkable not to have a check account. Personal check accounts are still around but are quickly disappearing. I have given up my check account a long time ago. These days most of my transactions are is done through the virtual world of money, it is quick and convenient and operates with the click of a button.

My kids are growing up and are becoming teens. I still use the same process introduced by my parents to teach my kids financial discipline. They receive an allowance and will have to budget there expenditure until the next allowance. As parents we realised that providing the kids with cash alone will not be sufficient for them to gain the financial discipline they need as it does not give them the skills necessary to function in the digital world. The virtual financial world is not tangible and presents itself as meaningless set of numbers. The tangible loss felt when a wrong decision was made has been lost. By removing this tangible component from the learning process the process of teaching our teen's financial disciple has become more complex.

To bridge the gap moving a world of cash to the digital financial world we have to introduce an alternative teaching tool. This tool presents itself as a plastic card. The though of giving your teen a credit card is scary to say the least of it. I know that I will never do it - the recklessness of youth and credit does not mix. Fortunately there are still debit cards. At least with a debit card your teen can not surprise you with a huge debt bill as debit cards prevent you from spending more money than what you have.

Debit cards do have a down side. My parents had some control over my day to day expenditure as my mum kept my money within a safe and I had to ask her open the safe so that I could gain access my cash. She always knew how much money I had in my "savings account". This level of control does not exist with a debit card as it is easy to swipe your card and gone is the money. Fortunate Discover Financial Services have launched a debit card with parental control. Parents can now monitor day to day expenditure and set limits on your kid's expenditures. In my mind this product is a must have for all teens. It presents itself as the perfect tool for parents to teach teen's financial discipline within the virtual world of money.