Automate Your (Grand)children's Financial Education
As a financial advisor, I have long been frustrated by the lack of financial planning that our education system provides. Most Americans are provided skilled teachers with tools and curriculum designed to equip them with the areas of knowledge needed to work for employers. When it comes to taking care of themselves both financially and in other areas of their lives, they are left to fend for themselves with their families as role models either providing examples of what they want or don’t want to emulate.
At times I have felt inadequate trying to pass along financial behavior and knowledge to my children. Susan and I have tried multiple ways to help them understand;
- You should always be saving some of the money you receive
- Giving to others (charity) is a part of what we do, not just moments when we see someone in need
- Knowing what you spend your money on is critical to knowing how much money you need
- You can’t (or shouldn’t) buy something when you don’t have the money for right now
- Compound growth is a powerful tool
And while we have done better teaching them some of those lessons than others, they would be quick to also tell you that in this busy life that we live, having the cash and remembering to pay their allowance has not been the most impressive of our organizational skills.
Fortunately, as a friend and peer of mine, Ron Bullis at Lifeworks Advisors, told me recently “the speed of technology changes each year is likely to be the slowest speed you can expect to see technology change the rest of our lives”.
At a recent family planning meeting, I was tasked with helping John Marshall and Amelia open bank accounts, learn how to monitor/reconcile their accounts, and figure out a way to simplify the handling of allowance so we don’t get behind anymore. I was excited to find that more than one technology startup has been focused on providing a tool for parents and grandparents to teach their (grand)children good financial behavior while monitoring their safety and spending. After doing my research I chose the Greenlight Card. While these tools could be used at virtually any age it is recommended, it is best when they are between ages 6-18.
My children now have MasterCard debit cards (at their age they are registered to me but for their use). That can be scary for some parents to think about what a child could do with such a tool, but it has incredible amounts of control for us. We have apps on each of our devices that show how much they have, what they have spent on previously and what they can spend their current money on.
We can allow them to use their debit card anywhere or limit it. We are of course blocking them from ever using the debit card on adult appropriate categories, but we also can put some funds in specifically to do dinner with a family that they are hanging out with. If they make a purchase at the restaurant that we authorized then it goes through, otherwise it doesn’t come out of the money that we put for them to pitch in that night.