Financial Education for families

[darth_jim]

> When/what was the last conversation you had with your kids about money?

We've been having a lot of discussion recently about their imminent college plans.  We were very sensitive to her being saddled with debt.  When we started looking at schools with (M), we gave some guidelines core expenses (tuition + room & board + fees), how financial aid generally works, and what we could afford from college savings. While we're helping out with the base expenses, she is obliged to come up with money for extras such as study abroad.

The youngest (H) was interested in these numbers, so we went over them with her, too. However, unlike (M), she is an extreme packrat. I don't thinks she's ever withdrawn money from her savings account.

> How can we help you pay your kids money/allowance and teach them how to manage it?

It would be interesting if they could get their allowance from the ATM machine and also track their balance. While they know to look for a BECU ATM, there have been a few occasions where that simply wasn't an option and (M) incurred a $2 charge on a $40 withdrawal that, I think, she didn't fully appreciate.  

> What resources or support do you wish you had?

I would like a way for them to experience credit cards, especially since aspects like Apple Pay or card-only (e.g., airline food service, Costco gas) are becoming mainstream.  We briefly tried the "visa gift cards" that I periodically get at work for being awesome, but they're surprisingly inconvenient: they often don't work at checkout and after a while, the fees eat away.

Ideally, I'd like to set them up with a limited credit card (e.g., cap at $100) so they can gain some experience with the concept without doing too much damage.  (Debit cards scare the bejeezus out of me because they seem to lack many of the protections.)

It's been helpful having the monthly BECU paper statement sent to each. (H) reads it through, (M) may look at every third.

[darth_jim]

juliegpitt also made the suggestion about credit cards for students here.

[KristinA]

@darth_jim- Thank you for your thoughtful and detailed ideas and for kicking off this conversation. Looking forward to hearing more! Cheers, KristinA

[millca]

With the huge amount of debt Americans choose to live with as if it is a badge of honor, I would much prefer my children learn to use cash for everything they buy. This not only teaches them to save up for the things they "want" and need but also helps to encourage them to budget. You Need a Budget (YNAB.com) is a huge resource that helps encourage people to live on a budget (and they give their software away for free to students). It would be very cool if BECU's mobile apps' budgeting feature would be easier to use. Basically, YNAB runs off the concept of giving every dollar a job as soon as it arrives in your possession. So a kid-friendly BECU budgeting app would see the money that came into their account and would ask them what budgeting categories they'd like to apply it toward. Then the app would track their spending. Probably a pretty big ask for BECU to pull off, but YNAB has done a fantastic job with their app.

As for the use of debit cards, they have the same security as credit cards IF you run them as credit (and not debit) at the register. Mastercard offers BECU debit card holders the same security (and benefits) for any credit transactions that are used on the card. So when you use your debit card next time, just tell the clerk you don't want to enter your pin (that's a sign of running it as a debit card) and that you'd prefer to run the transaction by credit. They will usually walk you through how to do it. The only time I haven't been able to do that is at Costco gas pumps. They have now signed on with Visa, so Visa debit cards might be able to be run as credit on their gas pumps, but not Mastercard debit cards which is a bummer. Oh, and also Winco, requires either cash or debit cards only. I'm actually okay with both of these types of purchases being debit only as they are not likely to resort in returns or warranty claims.

If I did allow my children to own a credit card, I would insist each week that they send the total amount of money they spent on the card to the credit card company. Again, this promotes being more aware of their spending and also encouraging responsible spending on a credit card. At the end of the week, they still have to have the actual money in their account to pay for the things they bought. 

When I first got myself onto a budget, even though I paid off my credit cards entirely each month and didn't carry any debt over from month to month, I realized that the money I was making that month was being used to pay for things I had purchased a month and a half ago. Once I realized that, I immediately saw how dangerous that is. Living paycheck to paycheck is dangerous enough, but to realize that the paychecks I was receiving were going toward a month and a half agos expenses showed me just how close I was to living on the edge. I don't want my children to ever live like that. It isn't a fun place to live. So I would instead encourage them to apply each paycheck or allowance they earn, to a budget that they have designed themselves. I'd talk to them about the importance of giving (10%), saving (20%), and budgeting the rest. Then as soon as they are old enough to earn paychecks, I'll be showing them importance of saving for their retirement. It is crazy how little I was taught about retirement savings or personal finances when I was growing up. I wish I had seen the exponential growth charts of compound interest on a retirement account when I was age 16! My spending habits in my 20s would have been significantly different!

I'm glad to see BECU attack this issue and thanks @darth_jim for getting the ball rolling on this topic.

[KristinA]

@millca- Thank you for sharing your insight and personal experience. I too think back to my spending habits in my 20s and think- YIKES! We are excited to see what we can learn from others' sharing their experiences and then having the opportunity to develop an unmatched financial education platform for families. I love the give/save/budget example you used, BECU shares a similar philosophy with save/spend/share. Cheers, KristinA 

[EpikYummeh]

I like the idea of dispensing an allowance from the ATM, but, without careful bookkeeping, the kids won't be able to easily see where their allowance is being spent without tallying up receipts and plugging them into a spreadsheet.