We all want to teach our children about financial literacy. Online banking, ATM machines and apps specializing in personal finance aren’t new to our children’s generation, and some money experts claim parents should stop treating debit cards as a special gift and more like a privilege and a tool towards achieving financial savvy. Perhaps the decision about kids debit card use isn’t about whether or not to give your kid a card, but when.
CEO and co-founder of Greenlight, Tim Sheehan believes he’s found the perfect solution. Greenlight is an app, card and a tool for training children to make sound financial decisions and learn basic money principles.
Sheehan, a parent to four kids, developed the idea for Greenlight out of necessity. After surveying thousands of parents, he learned most were encountering the same challenges. For one, they weren’t carrying cash around.

“There were all these circumstances where we’d have to hand out cash for various school programs or extracurricular activities,” Sheehan tells Parentology. “We were making our purchases with debit cards, but needed to give our kids money, so we wondered what that would look like.”
Sheehan also realized schools weren’t teaching personal finance topics. Suddenly, he had a mission. “We had to take an active role to ensure they were getting good information, so we could raise financially smart kids.”
Greenlight is a parent-controlled digital bank account for children. Once you open an account for your child, they receive a personal identification number (PIN) enabled debit card that can be used to make purchases, but can’t be used at automated teller machines (ATMs). There are almost 800,000 people using the card so far. So when should your kid get their first debit card? And why is that important?

When Should Kids Get Debit Cards?
Sheehan encourages parents to start teaching money principles as early as possible. The typical Greenlight client gets their first card at the age of eight. Think that’s too young? According to the Money Advice Service, a publication developed by two doctors at the University of Cambridge, basic beliefs and attitudes about money are formed early on. “By the age of seven years, several basic concepts relating broadly to later ‘finance’ behaviors will typically have developed,” the report claims.
Consider, too, that a young child living at home with no bills, mortgage or financial responsibilities has unfettered access to disposable income without the risk.
Sheehan says young kids are in a perfect place to learn new skills such as savings and investments. Just be sure to address your own financial demons first. Statistically, children learn about money from their parents first. If you have an uncomfortable relationship with finances or have difficulty talking about money, your child will pick up those behaviors too.

Why Do Kids Need Debit Cards?
A debit card such as Greenlight encourages smart spending and savings habits. Sheehan identifies the main concepts:
The app teaches kids to earn. They learn quickly that money is finite and can disappear as quickly as it’s earned. “Earning is automated,” Sheehan says. “You earn via chores or allowance, and it’s easy on parents because the funds come out automatically once the chore is done.”
The spend concept also comes with parental controls, meaning you can choose where your child is allowed to spend their money. For example, you can assign $20 at Target, $30 at a clothing store, etc. “This encourages your child having to make a trade-off decision between spending and saving,” Sheehan says. “It’s a different story when it’s their money and not yours.”

Kids are encouraged to make savings goals. Then they can work with their parents and actually see how they’re tracking towards those goals. “My daughter Clara had a $900 goal to go to Germany with her high school class,” Sheehan says. “We told her we’d pitch in too, but she saved most of the money herself through babysitting, chores, etc.”
Greenlight also incentivizes saving with a parent-paid interest rate, which typically starts at 18%, but can be adjusted up to 100% dollar-for-dollar matching. “The parent-paid rate teaches kids the value of saving and compound interest,” Sheehan says. “All of a sudden, your kids are spending wisely and saving by default.”
Sheehan is in the midst of developing a Greenlight investment program. “It’s coming up, and it’ll be better than what’s on the market today,” he says enthusiastically. “We’ll walk kids through the research and show them the real work involved in mutual funds and other investing products.”

Parents can either approve or decline the investing decisions their children have made. If they approve, even a fractional share purchase, the transaction will go through. “It’s about the learning process, what to invest in, and how to make sound financial decisions that benefit them now and in the future,” Sheehan says.
Kids Debit Card Equals Education
All of these elements work together synergistically to provide a holistic overview of the nature of money – a valuable lesson for both parents and kids. “We worked hard to ensure everything integrates and plays off each other, and that’s what makes Greenlight special,” Sheehan says. “All of these learning and earning opportunities together in one app — kids can see the balance in their accounts, when money was deposited, any direct deposits, transactions, etc.”
Sheehan adds, “I want all kids – not just those with wealthy, educated parents – to grow up with an understanding of how these things work and how to best take advantage of them. I want them to understand the benefits of saving and the reasons not to make a purchase. I think this is working because it’s tangible, practical and part of their real life.”
Further Reading
Want to learn more about working with family finances? Parentology has covered a broad series of financial literacy topics, including saving for retirement, basic principles of financial literacy, and how to teach your kids about money.
Kids Debit Card: Sources
Tim Sheehan, CEO and Founder of Greenlight
Greenlight
When Should You Give Your Child A Debit Card
Money Habits Are Set By Age 7