(From Producer Gil Reisfield)
Remember when you were young and got an allowance from your parents? How did they pay you? If you're like me, you pocketed cash from your folks. But a growing number of kids these days are getting funds transferred into an account, which they spend with a debit card.
According to a Spring 2007 study by Teenage Research Unlimited, 20% of teens ages 12 to 19 report having debit cards in their own name. We met one of those teens on the show this morning. Becca Kreitman is an ambitious young teenager with a passion for acting on stage. She's only entering into her senior year in high school, but already she's well versed in the ways of plastic. Becca has a new debit card from PayJr. which she personalized with a photo of her dog Sophie.
"It's really taught me how to budget my money, because I know that's something important that I'm going to need to know for the rest of my life," says Becca. "And I can see where my money is spent. I can keep an eye on it."
Lori Kreitman, Becca's mom, believes "we are becoming a paperless society. Plastic is basically the new cash and checks."
But not every parent is so sure this is the way to go. Last week, iVillage conducted a poll asking, "Do you favor giving your teens debit cards for their spending?" Sixty-percent said, "No: I think they are too young." Forty-percent said, "Yes. It would help teach them financial responsibility."
The cards can also be pricey. There are activation fees which can range from $5 to $20, loading fees that can range from $0.50 to $2.50 and monthly fees that can range between $0.99 to $3.50. As one recent article pointed out, "high fees mean that the cards are not for everyone - training your kids in the ways of finance can be expensive."
Child psychologist and Today contributor Ruth Peters thinks pre-paid cards have the potential to be useful tools for parents who want teach their children about financial responsibility, provided parents supplement these life lessons with certain behaviors of their own.
"Parents need to be money-conscious role models themselves and practice what they preach," says Ruth. She also believes it's very important for you, as a parent, to talk to your children about their spending. Ask them if their purchases were worth it and be on the lookout for what she calls, "irresponsible consumerism," or buying retail when they can get a similar item for less money at an outlet mall.
Ruth also tells parents not to be afraid to let a kid "fall on their face" every once in a while. If they run out of money because they budgeted poorly, don't back them up. Sometimes, "allowing them to fail" can be a powerful lesson in the ways of financial responsibility.
What do you think?