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Teaching financial responsibility: the smart case for giving your child a credit card

“Helping your child build their credit score is an invaluable gift."

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Nearly everything is purchased online these days.

With their colorful designs, customizable parental controls, and growing popularity among peers, it’s no surprise that kid-focused debit and credit cards have become increasingly appealing to families with young ones. Gen Z and Gen Alpha live in a vastly different financial landscape from their parents, and now, digital payments have largely eclipsed cash transactions. From concert tickets to food delivery to school supplies, nearly everything is purchased online. So, how can parents prepare their children for this new digital frontier and financial world that they themselves have not even experienced?

Ask the average parent about giving a credit card to a child, and they'll dream up a nightmare scenario: spoiled kids making endless purchases, unchecked impulse buying, mounting debt, and the development of poor financial habits. However, for the first generation growing up in an almost entirely cashless society, it makes sense for them to understand the value of money and how it’s used sooner rather than later.

Money, tree, financial responsibility, independence, financial literacyThe goal is financial independence. Photo by micheile henderson on Unsplash


According to a 2019 CreditCards.com poll, six million American parents have at least one minor child with a credit card. Winnie Sun, co-founder and managing director of Sun Group Wealth Partners and member of the CNBC Financial Advisor Council, gave her three children credit cards before they entered kindergarten. While this might seem extreme, she believes these early financial practices helped her children develop healthy money habits. In her Op-Ed for CNBC, Sun notes that her own parents added her to their Visa Gold card when she was 13 years old.

"My mom specifically told me that it was for emergencies, or if I had permission beforehand to use it," Sun recalls. "She thought it was a way to help her daughter in case she needed money, but what she didn't know then was that it also helped me learn how to handle credit early in life.”

Credit card, finance, debit card, swipe, financial literacyEarly financial education is crucial. Giphy

Financial experts are increasingly convinced that young adolescents should be included in conversations about money, recognizing that early financial education is essential for navigating today's digital economy. But when’s the right time? Andrew Latham, a certified financial planner with SuperMoney, explains that parents should assess readiness based on specific criteria.

“Parents should consider their child’s ability to handle financial responsibilities, understanding of money management and the overall need for a card. If a child can budget their allowance and has consistent needs to make purchases independently, they may be ready for a card,” he explains.

And which option is better for kids: debit or credit? Well, there are distinct advantages and potential drawbacks associated with both, which parents should consider carefully.

Credit cards

The primary benefit of getting your child a credit card is building a credit history. Credit history length makes up about 15% of your FICO score and up to 20% of your VantageScore. A longer credit history shows that someone has managed their accounts responsibly over time, demonstrating reliable financial behavior. As a result, lenders and credit card companies are more likely to approve applications and offer better terms to those with an established, positive credit history. By adding your child as an authorized user on a credit card with consistent, on-time payments, you can help them build strong credit from an early age.

Child, strong, financial literacy, credit score, money You can help your child build strong credit. Photo by Ben White on Unsplash

“Helping your child build their credit score is an invaluable gift,” writes Jae Bratton for NerdWallet. “A good credit score may help them secure a job, get lower interest rates on loans and, when the time comes, a top-notch credit card of their own.”

However, there are risks. Children under 18 cannot legally have their own credit card; they can only be authorized users on a parent’s account. As the name suggests, authorized users are allowed to use the card, but aren’t responsible for paying the bill. Therefore, parents will ultimately be responsible for all charges made on the card. If your child makes an expensive purchase, it could potentially affect your own credit utilization ratio and even damage their credit score. Jessica Pelletier, Executive Director of FitMoney, a nonprofit that provides free financial literacy curricula for K-12 schools, advises parents to remind their children that “there are firm limits…in place for authorized users.”

Debit cards

On the other hand, debit cards offer a more flexible yet tangible way for children to understand how to manage spending money. For Matt Gromada, the head of youth, family and starter banking at JPMorgan Chase & Co., he believes that early debit card access is a crucial component to lifelong financial literacy.

“Having a debit card opens the door for important conversations and real-world scenarios about the basics of finance—from spending and saving to explaining interest and how it accrues. It also gives your child a sense of pride, independence, and freedom, providing an opportunity for real-life experiences and learning,” he says.

Breaking free, financial literacy, debt, money, money management Break free of financial debt. Giphy

With debit cards, kids are limited to the amount of money available in the account, so they can't overspend beyond what is in the account. There are even modern debit cards specifically designed for kids, such as Greenlight, which offers a range of features that make parents and children feel secure and in control. There is no minimum age requirement for users, and parents can restrict spending at certain stores, set up safety SOS alerts, receive real-time notifications, and turn the card on or off remotely. This is also an easy way to transfer allowances to your child.

According to BECU, a financial cooperative, “a debit card can help your child learn financial responsibility basics such as keeping a card in a safe, dependable location, staying within spending limits, using a card for purchases, checking on balances, and monitoring for fraud.”

Of course, the main drawback of debit cards is that they don’t help establish or build a credit history. So, what’s right for you and your family? Start a dialogue today and discuss the best option for your children.

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6 states where the minimum wage and cost of living offer the best bang for your buck

The highest state minimum wage in the U.S. is now $16.28 per hour, but some cities are even higher.

Map via Wikimedia Commons (multiple creators)

State minimum wages range from $7.25/hr to $17.00/hr in 2024.

Public discourse about minimum wage and living wages has been ongoing for years, with people debating whether the government should mandate a minimum hourly pay for workers. President Franklin D. Roosevelt signed the first federal minimum wage law in 1938, setting the lowest wage a worker could be paid at 25 cents per hour. Nearly a century later, the federal minimum wage is $7.25/hr, holding steady since 2009, with people lobbying to raise it to at least $15/hr for over a decade.

However, in addition to federal law, each state has its own laws, a handful of which establish a state minimum wage higher than $15, a handful of which don't have a set minimum wage at all and everything in between. Cost of living has also been a hot topic as inflation has squeezed everyone's wallets and certain cities and states have become utterly unaffordable, especially for people in low-wage jobs or who who are just starting out in their careers. So how do minimum wage and cost of living correlate state-by-state? Are there any sweet spots with a high(er) minimum wage and low(er) cost of living?

While there’s no perfect storm of super low cost of living and super high minimum wage—for instance, Washington, D.C. has the highest state minimum wage at $17/hr, but housing costs 140% more than the national average—there are some states where the ratio is far more favorable than others. According to Insider Monkey, here are the top six states where you can get the most bang for your minimum wage buck.

6. New Mexico

The Land of Enchantment offers a relatively decent living for its $12/hr minimum wage thanks to the state's below average cost of living. According to Rent Cafe, housing in New Mexico is 8% lower than the national average, monthly utilities are 9% lower, food is 4% lower, transportation is 3% lower and healthcare, goods and services are 2% lower.

According to Smart Asset, Albuquerque, New Mexico ranks as No. 10 in U.S. cities where minimum wage goes the furthest.

5. New Jersey

The Garden State's relatively higher-than-average cost of living is counteracted by relatively solid minimum wage of $14.13/hr. Most of the cost of living in New Jersey is wrapped up in housing, which is 30% higher than the national average, according to Rent Cafe, and utilities, which are 12% higher. Goods and services are 5% higher, but healthcare is 2% lower than the national average. Food and transportation are 1% and 2% higher, respectively.

4. Connecticut

With both a cost of living and minimum wage slightly higher than New Jersey, Connecticut rolls in at No. 4 with a $15/hr minimum wage. Where the Constitution State hits hardest is in utilities, which Rent Cafe places at 30% higher than the national average, and housing, which is 24% higher. Healthcare and goods and services are both 9% higher, while transportation and food are just 1% and 2% above average.

3. Missouri

The Show-Me State says, "Show me the money!" with its somewhat respectable $12/hr minimum wage, which goes pretty far with its relatively low cost of living. Housing is the biggest cost benefit Missouri offers at 18% lower than the national average. But utilities, food, healthcare, and goods and services are also all below average, with only transportation landing right at the national average.

Additionally, St. Louis clocked in at No. 5 for a minimum wage real-world value of $13.68 when adjusting for the city's lower-than-average cost of living.

2. Washington

With the highest state minimum wage in the nation (unless you count Washington, D.C.), Washington's $16.48/hr puts it in second place when accounting for cost of living. Make no mistake, Washington isn't cheap overall, with a cost of living 15% higher than the national average. Housing and transportation hit hard at 29% and 27% higher than the national average, respectively. Healthcare is pricey as well at 20% higher than average. Food costs 12% more, but utilities clock in at 7% less than the national average.

Two cities in Washington hit the top 15 for highest real minimum wage value, though, with Seattle at No. 13 and Spokane at No. 2.

map of united states with these states highlighted in green: Washington, New Mexico, Missouri, Illinois, New Jersey and Connecticut

These six states offer the best minimum wage to cost of living ratio.

Created with mapchart.net

1. Illinois

If you want the best bang for your minimum wage buck, head to the Prairie State with its $13/hr minimum wage and 8% lower than average cost of living. Housing in Illinois is 22% lower than average and utilities are 10% lower. The only expense that comes in higher than average for Illinois is transportation at 3% above average, which isn't enough to keep it out of the top spot.

However, there are some minimum wage sweet spots in certain U.S. cities that aren't reflected in these state rankings. According to Smart Asset, Denver, CO, is the city where minimum wage goes the farthest in the nation. Colorado comes in at a respectable 7th place in state minimum-wage-to-cost-of-living ratio, but Denver has its own mandatory minimum wage of $18.29/hr.

A citywide minimum wage is part of what puts Seattle at the No. 13 spot on that same list. Seattle is one of the most expensive cities in the U.S., but its $19.97 minimum wage for most workers changes the ratio in its favor.

Other cities in the top 10 include Buffalo, NY; Minneapolis, MN; Tucson, AZ; St. Paul, MN; Phoenix, AZ and Stockton, CA.

The minimum wage conversation may vary widely across the U.S., with different costs of living and different state laws on the books. But if you're looking to move someplace where your wage will go the furthest, these six states will likely be your best bet to check out first.


This article originally appeared last year.

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People say these 20 outdated financial myths could be hurting you in today's economy

"'That commodity prices, like gas and eggs, are controlled by the president.' False."

Photo credit: Canva

Credit is still wildly misunderstood.

The economy has changed a lot since we all took our high school Economics class. And it is certainly miles away from what our parents grew up with. And yet, many still hold on to certain money beliefs that come from these bygone eras. Or frankly, ones that never had a right to exist in the first place.

And honestly, there’s so much conflicting information out there (about all things, really, but we’ll stick to finances for the sake of the conversation) that it’s no wonder that so many people might just stick with what they know, even if certain money truisms aren’t all that true, and even they aren’t actually helping.

Recently, someone flat out asked, “What’s the biggest financial myth people still believe that’s actually hurting them in today’s economy?" Below are some of the most illuminating answers.

Right off the bat, we have some politically fueled myths to debunk:

1. "'That commodity prices, like gas and eggs, are controlled by the president.' False. They're actually priced on a trade market, bought and sold, with production controlled by large corporations."

2. "That immigrants are taking our jobs! Like seriously. If every immigrant, legal or otherwise, disappeared tomorrow, it wouldn't do a single positive thing for me personally, much less the broader economy."

"People are so ignorant about this. The trades would be hurting horribly if this happened,” one person replied.

Next up were long running myths that were also deeply entwined with our collective relationship to hustle culture.

Photo credit: Canva

3. "That hard work will lead to wealth. This simply is not correct for the vast majority of workers (read: anyone not C-level). The truth is that the US is a shareholder economy, not a labor economy. This means that even if someone is getting regular raises, they're likely barely keeping ahead of inflation."

4. "That your employer will be there for you when times are bad. Build and keep a savings. You are a liability to them, not an asset, and will ditch you the moment they can profit from it."

"^This. Always remember this,” someone replied. “You are a cog in the machine and if they can find a cheaper cog, they will. Oh, and HR is not your friend.”

Then there were the strategies many people implement in hopes to save money, which actually end up costing them in the long run, whether that’s with groceries or with housing.

Photo credit: Canva

5. "Dollar stores are generally a worse food value based on size/quantity. Sure, it's $1, but the $2.25 box at the grocery store has 500% more food by weight, therefore, is a much better value. You're paying a little less to get a lot less."

"If anyone didn't know, US grocery stores almost always put a price per unit on the price sticker (i.e., $1.23/lb or $0.0865/oz). You should be looking at these when comparing prices for exactly this reason," one person wrote.

6. "That cheapening out on your laundry doesn't impact your clothes' lifetime. You can vastly improve the life and sustained quality of your clothes by not throwing everything in the wash together. Also, most better quality laundry detergents need less to clean better, so spending a little more on a decent brand will give you better returns. I have also found they wash out better, too."

7. "'Paying rent is like throwing your money away.' The truth is renting is a better financial move than buying in a lot of markets where home prices are too high."

And yet, certain things that could definitely add value…people are afraid of, it seems.

Photo credit: Canva

8. "Not investing back into yourself. Investing doesn't always have to be some major cash return. It could be education, making your life easier so you have more time and energy, or simply relaxing. I know a lot of people who played the frugal game and are just now getting out in their 70s."

To this, someone replied, "I tell people that one of the best investments you can make early on in life is a top-tier mattress and office chair. The amount of money you'll save yourself on future medical bills is one of the best returns on investment you'll make in your life."

9. "'The stock market is just like gambling.' You are never going to accumulate enough money to retire without using the stock market. The market has always gone up in the long term. If it stops going up in the long term, society will be in pretty bad shape, and your money probably wouldn’t be worth anything anyway."

"'Time in the market beats timing the market.' The stock market can be gambling if you're into day trading and trying to achieve short-term gains. But if you're investing long term, then yes, it's a great tool for growing your wealth."

By and large, people seemed to think taxes were an elusive subject to most folks. And probably rightfully so. Along with credit cards, do any of us really ever get a basic education on this unless we actively seek it out?

Photo credit: Canva

10. "Turning down raises because 'it means a giant jump in my taxes.'"

"11. Understanding tax brackets (in the US) in general. Can't tell you how many times I heard mention that their raise/overtime/bonus will just be eaten up by taxes.Fine, I'll take your raise and pay the taxes. No one ever went broke paying taxes."

12. "People do not realize that a tax refund is their money to begin with and that they should have their deductions set up to break even or owe a little. A lot of people still think it's some kind of stimulus."

13. "That tax breaks for the wealthy will allow some of their wealth to 'trickle down' to us poors. Something is trickling down on us, but it's not money."

Speaking of credit cards, that was also a popular topic in the responses.

Photo credit: Canva

14. "Keeping a balance on your credit card DOES NOT improve your credit score. What it does do is get you comfortable having a balance on your credit card, which, when it likely gets out of control, is like napalm pouring down on your future financial hopes and dreams."

15. "Credit cards are great, but under no circumstance should you ever pay a penny of interest on your credit card. You absolutely need to pay off your entire credit card balance at the end of each month. Credit card debt is the last thing you want to have due to the ridiculous interest rates they charge."

16. "Credit cards are bad. If you use them right, you can actually come out ahead. Get a card with good cash-back rewards and use it for everything. I mean everything. If you can pay your rent, bills, and insurance with it, do it. If you can use it for work and they reimburse you, do it. Pay the balance off at the end of every month, and make sure you keep track of your ins and outs. It requires you to be responsible, but it's worth it."

There was also a lot of talk about how our mainstream views on success in general (what it looks like, how to actually achieve it, etc) are inherited myths.

Photo credit: Canva

17. "That you have the smallest of chances of becoming a billionaire. People don't understand the orders of magnitude difference between even a low-level multi-millionaire and a billionaire. At 100 million dollars, you're still 10 times closer to homelessness than you are to becoming a billionaire. Stop trying to get there. Stop voting for people and policies that promise you that opportunity. The only way these people achieve that wealth is through siphoning it away from everyone else."

"My wildly successful uncle came from true poverty and he's worth about $50 million. If you look at what it takes to get even there, it looks BARELY possible at best. He worked his ass off from his early teens, he's incredibly smart, he's incredibly good with money, AND he was lucky, and he's still only 5% of the way to a billion after a lifetime of work,"one person replied.

"18. That you need to spend big to look successful."

19. "That you deserve something you can’t afford because you work hard. Deserves has nothing to do with it."

Lastly, we have the myth of the savings account. More specifically, the myth of how helpful it really is.

20. "Just save money.' No. You need to do more. Most savings are not beating inflation. As a result your money is shrinking by doing that. One of the most insidious ways our money is effectively being stolen is just by having inflation make it worthless by the time you'll go to use it.The easiest thing I am aware of is to put it in an index fund that automatically reinvests. These are automatic funds that follow a set algorithm of stocks (an index) and do not have a human element in the decision making. They regularly outperform professionals. They typically do very well compared to inflation, and require zero maintenance."

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Middle class families share how much money they have in savings and it's eye-opening

"I transfer money each paycheck but always end up needing to transfer it back."

Photo by Karolina Kaboompics/Pexels

Many middle class families are sharing that they have nothing in savings right now.

According to an April 2024 Gallup poll, 54% of Americans identify as part of the middle class, with 39% identifying as "middle class" and 15% identifying as "upper-middle class." That percentage has held fairly steady for years, but for many, what it feels like to be a middle class American has shifted.

Notably, inflation caused by the pandemic has hit middle class families hard, with incomes not keeping up with cost-of-living increases. Housing costs have skyrocketed in many areas of the country, mortgage interest rates have risen to levels not seen since the pre-Obama era and grocery bills have increased significantly. One government study found that cost of living has increased between around $800 and $1,300 a month depending on the state since 2021, putting a squeeze on everyone, including the middle class.

One woman shared that her family is just getting by and asked other people who identify as middle class to "chime in" with what they have in their savings account.

"I swear, every paycheck I am putting money into my savings, but needing to transfer it back within a few days," shared @abbyy..rosee on TikTok. "My registration is due. My husband's registration is due. He needed two new tires, even though they had a warranty. That's $300. My oldest needs braces, he needs a palate expander, that's $120 a month. Not to mention groceries are $200 more a week. Forget about feeding your family great ingredients because who has $500 a week to spend on perfect ingredients to feed your family?"


@abbyy..rosee

somethings gotta give #savings #middleclass #relatable

She explained that her husband makes enough money that they should be able to live comfortably, and that she quit her job because the cost of daycare was more than she was making.

"At some point, something has to give," she said. "What is going on? How do I save money?"

People in the comments chimed in with their savings account totals and it was quite eye-opening. Many people shared that they have $0 saved.

"We make the most money we ever have and have zero savings. We live paycheck to paycheck and every month I don’t know how we get by."

"I think the middle class is 1 personal disaster away from bankruptcy."

"Y’all got savings accounts?!?! 😂"

"I used to freak out if I had under $10k in savings, now I’m happy when I have over $150. 😫"

"We make almost 100,000 a year with no savings!!!! It's always something!!"

"I'm lucky if we have $500-$1K for an emergency. every single time we start saving something happens. the vet, the cars, the kids... something."

"Savings account? I transfer money each paycheck but always end up needing to transfer it back. My husband makes great money too but we are scraping by."

"$803 but we have to pay a $750 deductible this week b/c my Husband hit a deer soooo… back at it 😭 It’s exhausting. Constantly draining it, refilling it, transferring."

Some people shared that they do have some savings, but several said it was because they'd had an inheritance or other chunk of money come their way. Many people shared that their savings has dwindled as increased costs have taken their toll. Some people gave lifestyle advice to save money, but most agreed that just the basics have gotten so expensive it's harder to make ends meet much less put extra into savings.

Thankfully, the inflation issue appears to be waning, but even just plateauing at their current financial reality isn't ideal for many American families. Middle class is supposed to be a comfortable place to be—not rich, but well enough off to feel secure. That's not how many middle class folks feel, though. Most Americans don't have anything close to the amount of money saved that is recommended across the age spectrum, but at least hearing that others are in the same boat is somewhat comforting.

It can be vulnerable to put your financial reality out there, but it's helpful to hear what other people are doing and dealing with so we all feel less alone when we're struggling. Perhaps if people were more open about money, we'd all be able to help one another find ways to improve our financial situations rather than lamenting our empty savings accounts and wondering how to change it.


This article originally appeared last year.

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