Current - Money Management for Kids
Since our daughter was 6 we have followed a simple but effective philosophy for teaching her about money. This was inspired from articles we read (I mean my wife read) about targeting a weekly allowance tied to your child's age, in our case we started at $6 a week. Common wisdom among many parents we knew was to tie allowance to chores and start later than we did. We didn't follow that path and felt that we wanted our kids to have a meaninful amount of money that allowed them to save for things like legos (which are expensive) and also make good choices about small and big purchases. We didn't want to get nagged to buy things for them and wanted them to learn how to save and save up for things they wanted.
If you want to read more about this, I would point you to this article and this book called The Opposite of Spoiled by Ron Lieber. About 1 chapter into reading it I was already armed with insight and understanding on how to raise kids who thoughtfully consider the value of money.
I particularly like this quote:
"We give our kids chores so they can learn to work and contribute. They are part of a family and it is important for each of them to do their part, and appreciate the contributions of one another.
We give them money—an allowance, totally independent of chores—so they can learn how to manage money."
Since that time, our kiddos are now both getting allowance, and we have increased a dollar each year. For now, the age based approach is working well ($1 for every year they are alive) and means on their birthday they get a "raise".
In addition to that, our kids set aside 10% of their allowance (rounded to the nearest dollar) to save for charitable giving.
I have to say. From our point of view, this has been a remarkable success. Our kids know that they can't ask us to buy stuff for them and they have a decent amount of purchasing power at any time. Saving for something like a $50 lego set can be done by saving for a few weeks or months.
However, as our kids get older managing allowance, remembering to give it to them and handling cash has gotten challenging. In the begignning it taught our kids how to count and tally up their funds, but for our eldest daughter we wanted something a bit easier to deal with. That's when I found Current, a debit card for kids.
Current is one part debit card, and one part mobile app. You can set up rules to transfer money each week for your kids, and then your kid will get a notification and have the tools to allocate that money to savings and charity. They can also use the debit card to make purchases in store o online.
In my view of the app here you can see how much money Sarah has in each bucket. You can also see that there is an allowance transfer in each week for $10 and Sarah has a transfer out of $1 to her giving account. You'll also notice a savings category with $90. When Sarah starts middle school next year she wants an iPhone, so we told her to start saving now. It will take about a year. She did all the math and knows how much she has to save. We also borrowed a trick from the book, The Opposite of Spoiled where we match her savings and tax her savings spending if she is using it for items that are not targeted savings.
The best part of this system is that it's all automated, and my kids have what appears to be a real bank account without the hassles of getting a joint account etc.
Current isn't free, it costs $36 a year and I went ahead and paid for 2 years for $48 which is a big savings over the year.
There are a lot of features of the card. You can set spending rules on what kind of purchase are allowed or blocked (like internet filtering), you can donate directly to charities, you can include payment for chores (which we won't be using) and you can set a rule to round up all purchases and use that money to allocate to savings (a purchase of 3.41 would add 59 cents to savings).
Current is backed by Metropolitan Commercial Bank, which is FDIC insured. You can read about the security of the card, and you can also enable two factor authentication for both kid and parent. Finally you can link a kids account to two parents which can be helpful for your household.
We've been using Current for a few months now and it's greatly simplified things, while also empowering our daughter to manage her money and learn some very important things about how to spend, save and give.
Sign up using this link and get $3 off (and I'll get a referral). They also have a free trial now.