| > Having a saving account teaches kids a lot. Growing up I always had this belief that wealth was about building a big savings account, and that rich people where like Scrooge McDuck swimming in big pools of money. This is, imho, a fantastic piece of propaganda. It's incredible how often people will say things like "Jeff Bezos is only rich because he owns so much stock!" As soon as you get your first big RSU payout you realize it is insane to keep the majority, or even a sizable portion of your capital in cash. Even Marx saw that Capital, by its definition, is in motion. The lesson of a savings account is that you should hand your money over to banks so that they can use it. But most kids aren't taught what it really means to park your capital in a bank. I remember how many times I was given the "miracle of compound interest talk" but nobody get fantastically rich from the growing interest on their savings account. Today that's even more ridiculous, interest rates are way, way down and inflation is starting to rise. Keeping more than enough money to serve as an emergency fund is the same as just burning some of it for fun. We are in an insane debt bubble, but that doesn't change the reality of how life works in an insane debt bubble. Using credit to buy things today, when interest rates are low and inflation is rising is far more rational than putting money in a savings account. A better lesson would be to use that cash to buy things that are useful and can help build skills, which can't be taken by a debt collector. A guitar is a better purchase than a bunch of digital music, a laptop to program on is a better purchase than an ipad, etc. |
I saved money all the time as a kid because I was taught that saving is good. One of the first accounts I got was a savings account. However, I soon learned that I needed to access that money so I got a checking account and started to divide my deposits between each. And on and on, you get the point.
To this day I keep a cash savings -- I need it. Yes its not earning as much as my other investments, but I don't need it to. I need liquidity and I value being able to pull large chunks of my hard earned money from the bank to do a miriad of things: spontaneous vacation, buy a car, medical emergencies, etc.
I think both devices offer something to youth. However, it seems like giving kids debit cards leans in the wrong directions as far as valuable life lessons. I don't want my kids learning to spend their money. Kids are already great a spending my money. They need to understand how money actually works (beyond spending).