Last week i mentioned a thought-provoking article that i read in the Washington Post – one which looked at the dangers of sending our children out into the world without the basic life-skills needed to do everyday tasks. It made me realise that there are, in fact, a lot of areas where we too could improve. My kids don’t know how to iron a shirt, or use the ATM, and God-forbid one of them ever gets lost! And so, Life Skills Class 101 was born! Please, feel free to join us on our journey!
Lesson 1 – The Bank Card!
Opening a new bank account, or moving onto your first ‘real’ one, with an actual debit card (as opposed to those ‘silly little bank books’ – as my now Very Grown Up almost 13 year old jokingly refers to them 😉 ) is a big step. It’s exciting and overwhelming all at the same time, and it can even be a little scary, especially for us parents!
Getting a bank card signifies so much… freedom, independence, hours of online shopping… (oops, no, that last one just slipped in there… scratch that!) Yes, i know, it’s not like my little bird is going to fly the nest just yet, but getting her own card is one of the many little steps that she’s taking on her journey into adulthood. To make sure that my daughter understands the importance of this step, i want to make sure that she knows exactly what it is that she’s getting into.
We going passed the bank later today, to change her account from a children’s account with a bank savings book, to the long awaited ‘Teen account’ which comes with it’s very own debit card. The great thing about this account is that even though miss Kayla gets to ‘manage’ her account online (with a little help from us, of course), Dad and i can still access and check everything through our own login in portals.
Before we head off to the bank, though, there are a few basics that my daughter needs to know. These are the ‘pearls of banking wisdom’ i’ll be sharing with my daughter…
Miss Kayla, my child on the edge of ‘financial freedom’ 🙂 , never forget, things go a lot smoother if you remember the basics…
1. Your bank card is going to be issued to you with a pin. It might not be a number you like. Don’t panic! We can go out to the the ATM (that stands for Automatic Teller Machine) and change it straight away… In fact, it is a good idea to go and change it straight away. The bank does it this way for security reasons. Once you’ve changed your pin for a new one that you’ve picked, it is extremely important to memorize it. You need your pin to draw money, and to pay for purchases in store and online. If you forget your pin, you won’t be able to use your card again until you go into your bank, with your identity documents, and sort it out in person. It’s inconvenient (you can’t draw money or pay for anything), it’s not fun (you have to go and que at the bank), and depending on your bank, they may even charge you (all the little amounts add up).
2. You’re going to need to provide a signature – on the back of the card, and electronically, on a digital pad. When you purchase something in a store you, you might need to sign on the store’s digital pad. It’s important that you remember your signature! Practice a couple of times before hand and be sure that you’re happy with your signature… it’s going to be your signature for the next couple of years at least!
3. Your bank card is sensitive – Magnets can ‘scramble’ the magnetic strip on the back of your bank card… It’s very important to make sure that your bank card doesn’t come into contact with any magnets. That magnetic clasp on your wallet is probably fine, but just don’t go trying to stick your bank card to it 😉 . Even long enough exposure to a cell phone can cause magnetic damage, so it’s best to leave your card inside it’s proper space in your wallet when you’re not using it.
4. I don’t expect you to be doing any online shopping just yet, (i know, ‘worst mom ever’, right! 😉 ) but you need to know what everything means. That little three-digit number on the back – that’s the security code, and you’re going to need it for making online purchases (one day…). It proves to the online merchant that you actually have that card in your hand, and that you didn’t just memorise someone else’s number, or obtain the number through some other dishonest means.
5. A healthy savings routine can set you up for a good, solid financial future. Your bank account should be for more than just spending! Expenses and luxuries should be budgeted for, along with a little cushion for unexpected ‘financial hiccups’ (hopefully not too many of these), and the rest should be put aside for your future… Those luxuries are nice now, but i promise you, the house or the car is going to feel a lot nicer!
6. There are two types of transactions – ‘Debit’ and ‘Credit’. If you pay by debit, it means that the money comes out of your account straight away, and if you pay by ‘credit’, it means that the bank gives you a certain amount of time before they take the money out of your account. Here in Spain (at least with our bank), a Teen Card does not have a credit option, so there’s no need for Dad and i to stress too much right now 🙂 .
6. You need to keep track of how much money you have, and how much money you spend (balance tracking) – In some countries, certain types of transactions always go through as credit, and only go through your account a day or two later. If you don’t keep track of how much money you have and how much money you’ve spent, then your account is going to go into overdraft when first transaction goes through.
7. Overdraft is there to help in emergencies, but is NOT the best strategy! The bank will ‘cover you’ if you’re a little short on funds, but charges you a lot for doing you that ‘favor’. It’s best to keep track of what you have, and not let your balance dip below zero. Overdraft is definitely not there to buy a new pair of earrings or some shoes that you saw that ‘just can’t wait…’
I’m excited for our daughter’s future, and this opportunity for her to learn and practice using financial tools while she’s still at home, safe, where we can offer her support and guidance. There’s a lot of information, and she’s still pretty young, so we’ll have to see how it goes… but i look forward to helping her wherever and whenever she needs.
Does your child have their own bank account?