Credit lessons for kids advised

Can children learn to manage money with an app?

Yes, but apps are not the only way, said Laura Hendrix, associate professor and extension personal finance expert for the University of Arkansas System Division of Agriculture.

Parents may see advertising for debit cards such as Greenlight and Step, which are geared for children and teens. The cards come with phone-friendly and parent-friendly features such as controls that disallow overdrafts and purchase limits.

“There are other ways to teach these same money lessons but, for example, Greenlight does put it into a fun package and it is probably easier for many parents to just follow the Greenlight package and directions than to try to learn and share on their own,” she said.

Parents can use programs with their banks as well.

“Families can do most of these features shown in Step, Greenlight, and other ‘kid cards/apps’ with their current bank by opening an account for their teen or child, obtaining a debit card, and installing the app on the child’s phone,” Hendrix said.

Hendrix used bank debit cards with her children to help them understand the realities of spending with plastic.

“Children younger than middle school are very concrete thinkers so middle school age seems more appropriate to teach about using plastic to represent mon

ey,” she said. “I helped my kids build credit and learn about using credit by co-signing for a credit card with a low spending limit and I made sure the balance was paid every month.

“Accounts can have limited funds, can be set to block overdraft spending, and parents can set a limit on the amount allowed,” she said. “Parents can set them up so the parent receives a text when money is debited or credited on the account. Many banks offer checking and savings accounts designed for kids and there are usually dozens of designs to choose from for the debit card.”

While the apps can have their benefits, “traditional accounts can perform many of the same tasks with potentially fewer challenges, they just may not have the fun, kid- or teen-friendly visual packaging,” Hendrix said.

“However, the built-in money management lessons that come with these apps may be more convenient for parents than trying to incorporate other financial education resources with their traditional bank account,” she said. Use of trade names does not imply endorsement.

To learn about extension programs in Arkansas, contact a local Cooperative Extension Service agent or visit www. uaex.uada.edu. Follow the agency on Twitter and Instagram at @AR_Extension.