Suze Orman – thank you. Your prepaid card is a good thing for the millions of unbanked adults out there who have no other palatable financial options. Your fee is low and you give them an option to only using cash, and having to pay to have checks cashed. You are also doing a good thing by getting Transunion to gather data on these prepaid cards in the hopes that one day, this data could help get these cardholders some kind of credit score that could bridge them to the traditional world of credit.
BUT, Orman claims that her prepaid card is a good way to teach kids about money. I disagree. It is not the best option for our kids. Nope, not by a long shot. Continue reading
This week a teacher in North Dakota reached out to me regarding a question that was raised in her classroom about how someone builds a credit rating if they don’t apply/use a credit card. A great question that not only teens have, but also many adults. Here’s my response:
Establishing credit does not take a long time- so there is no real emergency to do so.
More important is to get it right – to use it wisely and understand it’s purpose and role in your life. My suggested approach would be for students (teens) to get a checking account and tie a debit card to the account. Manage that wisely for a period of time – don’t spend more than you have. (That will not establish credit – but it will give you some practice managing cash flow – and learning to live within your means.) Next would be to apply for a student credit card with a $500 limit and manage that wisely. Choose the card wisely – all cards are not equal. Increase your limit when you NEED to only for things you NEED.
This will help you and your students.
I thought the following story from The Wall Street Journal might be of interest as well:
Since 2007, Money Savvy Generation Foundation along with Dr. Mark Schug, PhD of Economics and Financial Literacy Consultant, and the Brewers Community Foundation have trained third grade teachers in the Milwaukee Public Schools so they could teach their students the basics of personal finance.
Each year the program is closed with a visit from the Milwaukee Brewers player that helped fund the program. The player’s message? Save and invest for the day when you cannot rely on your talent to make money. Kids love the visit and really listen when Brewers players come to their schools and teach! Continue reading
Over 5 years ago I met Chicago City Treasurer Stephanie Neely when we both volunteered as Principals for a Day at a south side elementary school in Chicago. I gave her a Money Savvy Pig so she could give it to her then 4-year-old son so they had something visual at home to help them talk about money. Over the holidays, the Treasurer shared her story with the Chicago Examiner of the impact the Money Savvy Pig has had on her son becoming a “determined saver”. Here’s a link to the article: http://www.examiner.com/city-hall-in-chicago/federal-program-teaches-youth-about-money
Since that first meeting, Treasurer Neely has become a wonderful partner and advocate to help reach young Chicago Public School students with lessons of financial literacy. With the Treasurer, through The Money Savvy Generation Foundation, we created a truly unique and rewarding program called the Financial Education Initiative for Students and Families. To see a video of the impact from the 2011 program, click below.
Thank you, Treasurer Neely, for sharing the Money Savvy Pig with your son – and for making financial literacy a priority in Chicago. Because of you, and the other program supporters, over 200,000 Chicago Public School elementary students have learned about the basics of personal finance over the last few years. Lessons that will last a lifetime. Thank you!
