Our parents saved money in piggy banks, and when they ran out of money, they would take it out of the piggy bank. Therefore, the advent of credit cards for kids has been one of the best ways to learn about finances and make things easier for parents. Not only did this option make it easier, but it also gave parents and children a detailed insight into all aspects of finances. Although smaller children can keep a piggy bank where they can deposit money, the older ones need a slightly better version online that they can access at any time.
By teaching them financial literacy from an early age, you are laying a good foundation for children to grow into financially independent and stable young people. Therefore, it is not surprising that experts advise starting to teach children about finances as early as possible.
If you’ve googled terms such as “best credit card for kids”, but you left out being confused by the multitude of options, don’t worry, we’ve got you covered.
Where does the money come from?
One of the biggest unknowns for all children is the origin of money, so you will have to explain it to them in detail. If it is a question for younger children, you can explain it to them through some sort of a game. The only way to earn money is through hard work. Money does not fall from the sky, nor does it grow on magical trees, nor is it abundant in magical machines (ATMs).
An important difference between needs and wants
There is a distinct difference between needs and wishes, needs are expenses that parents are obliged to pay, while wishes can be fulfilled from time to time depending on the family’s financial situation. Needs include all expenses during the month from paying rent, mortgage, car, fuel, purchasing groceries, shoes, clothes and all small expenses that may appear unplanned during the month.
Innovative card model for children
With the development of technology, the idea of a credit card for children was developed exclusively for learning all aspects of financial literacy within one application. Everything is on the mob app that can be installed on all devices. The process of opening an account is quick and simple, where parents provide basic information about the child, and after completing all segments, the account is activated by depositing funds into it. With this card, children can shop online, earn money, donate money to the needy, invest in various stocks, and draw up a detailed savings plan. In addition to this, activity tables with duties have been designed that are easily adaptable to any age of the child.
The children complete the assigned tasks and duties within the stipulated time limit and, depending on their efforts, receive additional money beyond the allowance. This is a great way to develop habits and responsibilities that will eventually develop into commendable skills. Here you have many options from free variants, more financially acceptable and slightly more expensive ones.
Investing for children
Children can invest in various types of shares of companies and firms with the credit card option. Since everything is within one application, they can monitor the state of stocks every day, whether they are stagnating, growing, or falling. Usually, children invest in firms and companies they are fans of, such as Netflix or Apple. When they have completely mastered one type of industry, it’s time to encourage them to start investing in other industries as well.
Apart from the fact that it is very important to enrich your portfolio as much as possible, the goal is that the children are not financially dependent on only one branch and type of income, the goal is to have more diverse alternatives. Because some shares may fall unexpectedly and they can lose money, it is better to have several different ones so that they are not related to each other in any way.
Open a trust fund
One of the ways children can enrich their portfolio and financial credibility is by opening a trust fund in their name. Although the children are the owners of the account, the parents manage the fund until the children become of age or until they reach the prescribed age.
Some parents set special age restrictions and conditions, such as the completion of education, and only then can they access the funds. Parents can use the money in the fund to invest in stocks, markets, or bonds of their choice, which they believe will increase income. Usually, the money of this fund is used by the children to buy their first real estate once they can access it.