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.
