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This debit card for kids can jumpstart financial literacy

If I need cash, there’s one sure bet in my house: my kids’ piggy banks. Thanks to the tooth fairy, birthday presents and allowances, they are stuffed with wads of crinkled bills instead of loose change. Sometimes the kids actually remember to bring money with them to the movies or on a trip, but half the time it’s not enough and the other half they lose it. Yes, I know these are great learning experiences for my budding money managers, but frankly I’m not sure how instructive it is to learn only about cash when they are likely to be living in a cashless society running on BitCoin.

I really wanted to get credit cards for my kids, but it runs too many risks. They do have their own bank accounts, so when the piggy banks get too full or they receive a generous gift from a grandparent, they can make a trip to the bank to deposit money. I explored getting them debit cards connected to those accounts, but I was worried about fraud and overdrafts. And I considered using a prepaid gift card. Then I heard about Greenlight.

Greenlight is a new debit card for kids. It works just like a regular debit card, but kids can’t take cash out or get cash back with it. It’s just for making payments. The thing I find most useful with Greenlight is the parental controls. You can turn the card off if it’s lost, you can transfer money directly from an app on your phone to your kids and, best of all, you can dictate where your kids spend money. It’s a combination of Big Brother and the Nanny State, but before you get all outraged, remember these are kids we’re talking about.

Here’s how it works. Using its app, a parent opens a Greenlight account and links it to a bank account. Then the parent can add kids to the account and will receive their cards within 10 days. Parents can set it up to fund a monthly or weekly allowance and, if desired, limit where the money can be spent. I send my son money for Chipotle after school, so that way I know it can’t be spent at GameStop. Each time your child uses the card, parents get a notification. You also get a notification when the card gets declined. Greenlight charges $4.99 a month for up to five cards.

Greenlight also works with Apple Pay and can be used online. This has really been helpful in teaching my kids about spending because so many of their purchases are online. They used to pay me cash and then I would use my credit card to buy a PlayStation download or movie. Now they get to do it. They  enter their own card number and click ‘purchase.’ It’s one less thing for me to do.

My kids love the new system. They are getting the same amount of money, but they are spending it now. Yes, they are spending more, but I don’t think this is a bad thing. The reason I give them allowances is so they learn to manage money. Cash just wound up getting stuffed in the piggy bank, and maybe they were learning a bit about saving, but that’s not the only lesson I want to teach.

So what don’t I like? It took me awhile to get setup with my bank. Once the initial setup was done, the rest of the process is easy and straight forward. I do wish that instead of specifying stores kids can spend money at that I could block a store or two. Also, my kids also don’t have smartphones so they don’t have access to the app to request more money — and that means a few urgent calls and texts when they’ve run out funds.