With debit cards, credit cards, ATMs, online banking, mobile banking and electronic transfers pretty much the way of the world, today’s tech-savvy money culture raises the question: are kids getting financially desensitized?
One example is the local ATM. To the awestruck eyes of a young child, the ATM probably looks like a magic box that gives away free money. Pretty cool concept if you’re a kid. But us adults know something a child may not: that $20 ATM withdraw was hard-earned and definitely wasn’t free!
To a wide-eyed four-year old, a credit card looks like an enchanted key to the kingdom. Little do they know the key charges a 15% APR and $30 fee for late payments.
How to Dispel the Myths
What’s a parent to do? Sit down and talk to your child about the magic behind these and other money miracles. A great place to start is to save your ATM receipts and enter your electronic transactions in your checkbook. When your statement arrives, show your kids where that seemingly free money really came from.
Pull out the ATM receipts and let your child match them to your statement. You don’t have to share how much money you have in your account, but you can explain that the ATM really doesn’t give away free money.
You can also do this with your credit card statements, but with one big difference: interest. Explain that a credit card is different than a debit card. If you use a credit card you may have to pay extra money. A debit card doesn’t work that way. Depending on their age, they may or may not understand every single concept you share with them, but one day it will all make sense.