Disclosure: I am a member of the Collective Bias Social Fabric community. I have been compensated to share my experience with you by Collective Bias and their client, MasterCard.
My husband and I have used a MasterCard for years, and now that my children are older we have found that a Prepaid Card is an excellent tool for teaching budgeting and managing expenses.
My oldest daughter Grace lived in the dorms for her first two years of college, but now she is living in an apartment. In the dorms budgeting living expenses wasn’t too hard, we just bought books, paid the school her room and board, and she covered any extras out of her part-time job income. But now that she is on her own it is a little more complicated, because now she actually has to cook in her kitchen.
We want to give her money to cover food and books, but somehow giving it all to her at once doesn’t seem like a good plan. Planning ahead is not one of her strengths, and we can see her having all her food money spent in the first few months. So we decided that the best way to go was to give her a monthly food budget by loading it onto a convenient Prepaid Debit Card.
A Prepaid Card has lots of advantages, and the biggest one is she can’t spend too much! Once she is out of money she just can’t spend anymore until the card is reloaded. So when she buys her groceries for the month she will have to learn to make them last until the next month. This will be a great way for her to get in the habit of planning and budgeting monthly, which is an important life skill to have. And while a class can talk about the theory of budgeting nothing beats the real life experience of having to make your money last until the end of the month!
Another great benefit is that is is much more convenient than cash, especially online. Grace ordered her most of her texts online this year so she could buy used and save money, and that would have been tough to do without a credit card.
A prepaid card is safer than cash too. Grace made sure to register hers online, so if she leaves her backpack on the bus she can call up the company and recover her cash. That gives us extra peace of mind if her card is lost or stolen.
Signing up for a card is easy, and you don’t need a bank account or credit history. I made a Google Plus album showing the sign up process, and you can see it here. It is even possible to personalize the card with a picture of your choice. Grace enjoyed personalizing her card, and had to get the opinion of all her friends and family before settling on a design! We can reload the card automatically by transferring money from our bank account, so once it is set up we don’t even have to think about it.
I think these cards are a perfect way to teach teens to manage money responsibly. Giving a credit card to a teen can be risky, because it is so easy for them to charge without thinking, and build up debt. With a Prepaid Credit Card a teen can learn good money habits, and learn to live within their means. Then when they have a full time job and are ready for a credit card they will have the skills they need to avoid debt.
You can learn more about Prepaid MasterCard and see if it is right for your family to Get a Prepaid Card.