We’ve taken a big step in financial training with our kids – we’re moving beyond cash pencil and paper, and into credit cards and online expense tracking. We’re moving to online budgeting!
Here’s our plan:
1) I ordered a VisaBuxx card for each kid. These are pre-paid debit cards – ours are through USBank. The cards can be funded without cost from my (or their) USBank checking account, and ATM withdrawals have no fee at USBank ATMs. Each kid can see their transactions online, as can I; in fact, I can turn their card on or off, if the need ever arises…
2) On allowance day, direct a majority of their allowance to their new VisaBuxx card. We’re all aware that when they go shopping for clothes, or shoes, or pay for activities, they are almost always using our credit card, and paying us cash. Now, they can use their own card, and have their own transaction records.
3) Keep track of everything using online budget tracking (using the envelope system) with EEBA.
One of the most important aspect of our budget training with the kids has been the envelope system: first you get the money, then you allocate the money, then you can spend the money. With a credit card, it’s hard to manage envelopes – because there are no envelopes.
EEBA fixes this. On allowance day, they’ll each get $100 loaded onto their card, in the appropriate categories, plus some additional money in cash for food and fun. When they spend cash, they’ll note it in EEBA. When they spend money from their card, they’ll be able to log in and record that to EEBA as well, and do a reconciliation at the end of the month.
Sounds easy, right? (Tongue in cheek.) Truth is, we’re just getting started on this step. I’ll report back as we go through this new budgeting process and learn better what works and what doesn’t. Stay tuned!
(Oh, and PS: our oldest just turned 15 this week. I put him as an authorized cardholder on our American Express account. He’ll never actually get to touch the card… This is a tool to start building his credit history early. AMEX will allow parents to add children at age 15. Hopefully, after three years of managing their budgets with a prepaid debit card and online envelopes, the kids will be in good shape to use credit responsibly, when the need arises.)