Learning about good financial management from a young age can have a genuine impact on consumer habits in later life.
As a result, getting children to think about their money can be an ideal way for parents to pass on good habits.
With financial lessons becoming mandatory this September as part of a number of government educational reforms, youth financial management is coming to the fore.
Parents considering reloadable prepaid cards can provide their children with a safe and controlled spending option, providing a degree of independence for their offspring.
A safe and controlled spending option
At the same time, the teen can also feel a level of maturity at being entrusted with a card while learning about fiscal awareness in the process.
The parents can remain in control of what funds go on to the card and can load money instantly on to it in the event of an emergency.
In effect, a prepaid youth card means a teenager can purchase goods and obtain cash without the risk of debt as there is no way to overspend.
Blocks on certain websites can also restrict where the card can be used for online shopping, ideal for preventing children who want to spend freely across a range of sites.
Freedom….but with limits
This restriction of use means a child can still experience freedom when it comes to purchases but they cannot go on a spending spree.
Concepts of budgeting and saving can be explored as parents can ensure their children remain disciplined when it comes to their spending habits.
Unlike credit cards or bank accounts, there is no chance of entering an overdraft or owing money, freeing up the child concerned from potential fines and bank charges.
It also means that children can shop safely, without the risk of exposing potentially sensitive personal or banking information.
Learning the basics in a structured environment
Parents can see exactly where money is being spent while they won’t need to give out their own card details when their children wish for them to make a purchase on their behalf.
The cards could be set up to limit spending to a certain amount every month. Alternatively, you could set them up so that they can only be used at ATMs should parents want to prevent the possibility of online shopping.
A youth prepaid card represents a fantastic way of learning about budgeting and financial responsibility without the risks associated with other methods of banking.
Therefore, it means children can learn the basics in a safe environment which will hopefully encourage positive financial habits for the future.
Expert Comment: The Youth prepaid card sector has traditionally not been very attractive to providers due to the restrictions placed around the age of the cardholder and the lower spend value and volumes associated with the youth sector.
However, the industry is finally starting to realise the potential of this sector and there are a few providers such as MeCard and goHenry which are designed with the aim of providing youth with the confidence to manage their money and parents with the confidence and support to enable their kids to be smart with their money. Other such as the STA ISIC Card provide students with the benefits of a prepaid cashcard and doubles up as a student ID and discount card – Amit Sharma
Amit Sharma is the CEO and Founder of www.prepaid365.com and a senior prepaid industry consultant. You can follow him on LinkedIn.