Mom’s Version of a Bank Fee
For several months, BabyGirl has been working and earning a little money. Since then, I’ve been trying to teach her how to manage her money and track her own spending. Even at 16, I do not think she is responsible or mature enough to have her own personal checking account, so I set up a teen prepaid Visa through my bank as a learning tool. By the way, have I told you all how much I love USAA lately? This bank is THE BEST EVER! I really like this card because:
- It allows her the freedom to spend wherever Visa is accepted.
- Her spending is limited to the account balance only, no NSF fees.
- She gets an email when she’s within $20 of her account balance.
- She gets an email when I make a deposit.
- She’s able to login and see her account through a special interface geared towards teens.
- She can login at anytime to track her spending and check her balance.
- I can login from my account interface to monitor her spending.
- I can see “where” she’s spending and how much.
- I can limit her daily spending (if I choose to).
- I can limit the number of ATM transactions.
- I can limit the maximum daily ATM withdrawals.
- I get an email when she tries to exceed any of the limits I’ve set.
- I get an email when she tries to spend more money than she has.
- I can suspend usage at any time.
- I can set up automatic “allowance” deposits from my account.
- When I transfer money, it is available to her immediately.
- There are no fees.
- There is no expiration.
Ok, back to BabyGirl…
Although I do not tell her HOW to spend, I am actively involved in her money management and I do monitor her spending. For example, when she gets paid or has collected a significant amount of cash, we go to the ATM and make a deposit into my account. Then, I make online transfers per her instructions.
Thankfully, I’ve already taught her how to save consistently, so she’ll tell me to send $xx to her savings account first. She multiplies the total deposit by 20%, then round up to the next $5 increment. I’ve always recommended at least 20%, but I do not say anything if she chooses to save less. It’s her money. But most of the time, she saves more than 20% without my prodding. Then I take whatever amount she tells me and transfer it to her personal savings account at ING. I am joint owner on the ING account, but I allow her to have complete control. She manages it on her own, so what goes in and what comes out is completely at her discretion.
After she pays herself first, then she does the math to tell me what is left. I transfer the exact amount she tells me to her prepaid Visa card. And this is where the fun begins…
Although she has online access to the Visa account, she does not check it often.
Although I’ve setup a compressed version of my spreadsheet on her computer AND gave her a mini notebook to carry in her purse, she does not consistently record her transactions. I can provide the resources, but I can not (and will not) make her use them.
Although I’ve explained how important it is to know where her money is going, she rarely saves the receipts and has to rely on memory to know how much she spent and where.
And therein lies the problem…
Throughout the month, I monitor her account and track her spending in a separate tab on my own spreadsheet. She knows this, but I don’t share my details. Then, at the end of the month, we sit down together to review HER notes and reconcile the account. For two months straight, she was not able to tell me EXACTLY how much money she had left.
Both times, I explained to her how important it is to track her own money – either by keeping receipts or writing them down in a notebook or spreadsheet. I also told her to NEVER rely on the bank OR mommy because it is not OUR money. Besides, banks and mommy make mistakes. Then I explained the impact of a “small” banking mistake and how it could cost hundreds of dollars. I even used an example from Single Ma of yesteryear and reminded her of what we experienced as a result. She remembered. It wasn’t a pleasant memory for me either. So if nothing else, I was hoping she’d see how important it is to maintain her own records – with accuracy. I told her, “no one else should be more interested in your money than YOU.”
Unfortunately, this month, it happened again…
When I asked her how much money she had left, her estimate was $17+ higher than it should have been. She did not remember 2 transactions over the Thanksgiving weekend and had no record of them. When I asked about each purchase, her response was a nonchalant “oh, I forgot about those.” Umm, wrong answer buddy! Since this is the 3rd month in the row, I’ve decided to take a different approach.
This time, mom has imposed a financial penalty. After I told her the correct balance and showed her the actual transactions to date, I reduced the balance by another $10. When she asked why, I told her to consider it a bank fee for my services. Hmph! In the real world, banking errors cost money. She thought I was unfair for taking her $10, but I told her she’s lucky I didn’t take more. I went on to explain if she was spending from a real checking account and assumed the account was $17 higher, she would have incurred a $22 NSF fee – the first time. $27 the second time. And $35 each subsequent time. After 5-7 NSF fees in a given year, the bank could close the account. She was genuinely surprised by the information, then I asked “would you rather me take $10 or $22?” She said “you can take my $10 this time, but it won’t happen again.”
*checks the box on lesson #2*
Lesson #1 was here.
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Fantastic post. I’m not a mom yet, but I love reading about you and your daughter work together on her finances. It gives me some great ideas for the future. Thanks for sharing!
wow that is a great example of good parenting! i’m still trying to learn at 28 years old the lessons you have been, and continue to teach her now. kudos to you!
I am picking up notes as I am reading that. What a great financial training program! I cannot wait to do that with my kids. I love the way you have handled everything with BG so far. I want to do exactly like you have with my kids when I have them.
I may even copy and save the post in my notes for future reference.
Works for me. Unfortunately, some people never learn the lessons.
We have recently started our child on an allowance since we felt he was ready for the responsibility. In a few short months, it has been rather amazing to see the changes in his buying habits now that he has to pay for some of the things he wants. He is less interested in stuff (a new toy) and more into experiences – a trip to McD and time in the video game area followed by a stop at Dunkin Donuts, all paid for by him.
It also funny that he has become VERY aware of allowance day and how much he is supposed to get. ther no trust with him – he counts the money to make sure the amount is correct! Ha! I wasn’t even mad at him. That’s my boy…
He has also been more willing to pony up without argument. He wanted membership in an online club at a level that required a fee. After checking it out, we agreed, but he had to pay part of the fee from his allowance. He agreed without any argument and is holding up his end without complaint. Pretty amazing for my particular eight year old.
Ha! This is great! It’s great to see some many new tools exist.
my teen has that card as well. Absolutely love it. I am going to incorporate your system to teach her financial responsibility though. She tracks her spending pretty well but to run it like an actually account is awesome!!! Love this post.
It would have been nice if my parents could have done the same with me. I turned out OK but it took me a while to get here. BG has an advantage because you’re giving her knowledge early on. Good for both of you!
I love that. I wish we had some sort of tool like that here in the Bahamas. I’m a new mom and I hope that I’m as good as you when it comes down to financial training.
I don’t think I’ve ever posted here, partly cause I”m ashamed and have nothing to say, lol Anyhoo – my 15 year old has this type of card through Wachovia (I hate them) and she will be the one to break the cycle of debt in our family – she can tell you to the half penny what’s going on with her account, when where who and how and she’s meticulous about how she’s dealing with her money and her spending.
I, however, didn’t know I could get her a ING savings account – I have one. So I think for the new year I’ll get her one so she can also start saving more.
This makes me wish I had kids old enough to do this with. Great parenting, SingleMa!
As you already know, it’s much better for her to learn it this way than the HARD way, like so many of us (namely ME). Lord I WISH I learned things like that long before I did. The money stuff is hard but it’s such an essential lesson it makes me wonder why it isn’t taught all the way through school… of that’s right, because then kids would care EVEN LESS! LOL
I wish I’d had financial education like this growing up!
So after commenting in a previous post about how I don’t really keep track of my money, My account is overdrawn this week. I can’t remember the last time that happened which is good because it used to happen every other month a few years ago. I gotta do better.
I can’t wait teach lessons like this to my children. Nice work Single Ma!
Hi Single Ma! You are a great role model. I have learned so much from this site, i wish I found it sooner!
I wish I could put my fiance on a card like this…but i feel like I have tried everything. If you knew how much money he has wasted on bank fees, you would be shocked!
It’s some where in the range of $3000 for the year….and counting!!!
I know you’re probably thinking we need Dr Phil instead…LOL…but any suggestions you have would be appreciated.
Hi Single Ma. I enjoy reading your blog. I have a 16yo daughter too. Although she doesn’t have regular employment at this time, she earns cash by babysitting and by providing child care every Sunday at church. We also give her a small monthly cash allowance ($6/week) and a hypothetical clothing/cosmetics allowance every month.
You and I have fairly similar attitudes toward teaching financial responsibility. My daughter has a checking account (for two years now) with a debit card. This summer we gave her a credit card and she’d proven to be very responsible with it (and she’s already building good credit because of it). In addition to her checking account, she also has a savings account and a CD. Her checking, savings, and CD are all with WaMu at the moment though I’m considering a move to ING in the future.
The trick I taught my daughter when we first opened the checking account was to put $50 in it and forget it. That $50 isn’t even entered into her check register. She knows it’s there in case of a dire emergency but for the most part it sits ignored. She has never once dipped into that $50.
Right now she’s responsible for keeping track of her cash and checking account spending as well as her savings. I don’t keep track of how much she saves and how much she spends at this point. I do keep track of her hypothetical clothing/cosmetics allowance in my YNAB budget and can tell her at any moment how much she has available. In the year that we’d been using this system, she hasn’t once gone over budget.
Although I’m very happy with the system we have and with her degree of fiscal responsibility, I’m starting to feel that she needs to take a more direct hand in all of her budgeting next year. I want her to have a full year of budgeting all of her money and spending before she heads off to college. Budgeting one’s dining and entertainment expenses is one thing but budgeting for clothes, toiletries, furnishings, books, fees, etc is another matter entirely.
I commend you on the valuable lessons you’re giving your daughter at this age. And the excellent example you’re setting with your own finances.
Oh and I’m going to link to this. You never fail to make me laugh.