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Parents: Teach Your Teens Not to Make 3 Big ATM Card Mistakes

Parents: Teach Your Teens Not to Make 3 Big ATM Card Mistakes

When does a single iTunes song cost $35.99? When the purchaser uses a debit card to buy it for 99 cents, goes over his bank account balance, and gets slapped with a $35 overdraft charge. This happens more than you think — often to young people.

These days almost any basic checking or savings account comes with a free ATM or debit card. That means even a first-time bank-account holder — like your teen — will have immediate, convenient access to his cash anywhere, day or night. Great news, right?

Nobody but you is going to teach your teenager how to handle that card responsibly. The bank won’t do it. Teachers won’t do it. So it’s up to you. Here are a few common pitfalls of mismanaging a debit / ATM cards — and ideas to teach your teen how to avoid them.

Mistake 1: Wasting money on ATM fees.

If your teen is out with friends and needs cash, she’ll be tempted to use her ATM card at whatever machine is close by. Usually, that will mean an ATM not owned by your teen’s bank — and using it to pull out a few bucks will probably result in a high fee.

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Bankrate.com’s 2011 Checking Account Survey found the average ATM charge in the US was $2.40. Plus, your teen’s bank might charge an additional fee for using another institution’s ATM. That could mean paying $4 or more just to access $20 — an insane 20% interest charge just to pull out her own money! If your teen uses her ATM card regularly (say, once a week), she could pay hundreds of dollars per year in needless ATM fees.

The lesson: Plan ahead.

Teach your teen to plan ahead, to withdraw money only from her bank’s ATMs, and to do so before she needs the cash. You can also use this opportunity to teach your teen how to budget.

Mistake 2: Overdraft charges.

Most bank accounts allow overdrafts on ATM card usage at stores or for other purchases — and charge high overdraft fees for the privilege. Worse, your teen won’t have any notification he’s about to go over his account balance — and get hit with a big fee — until it’s too late.

If your teen spends just a few dollars over his balance using his ATM card, that mistake could cost him $35 in overdraft charges (the average fee for overdrafts in 2011, according to Bankrate.com).

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If this happens regularly, because your teen does not keep accurate records of his account and does not know how much he has at a given time, your teen could face hundreds of dollars in fees each year. Over time, these mistakes can negatively affect your teen’s credit report — which can be extremely costly in the long run.

The $35.99 iTunes song

This actually happened to someone I know. She bought a few songs on iTunes using her ATM card; and the last song apparently took her bank account into negative territory. Meaning that last song, at 99 cents, actually cost her $35.99!

The lesson: Know what’s in your account at all times.

Teach your teen to keep accurate records of his bank account, and to monitor it regularly, so he never spends over his balance and gets hit with nasty overdraft penalties. Tell your teen the above story to illustrate why it really does pay to know how much he has in his bank account before using his ATM card.

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Related suggestion: The “carry-the-receipt” rule.

If your teen uses her debit / ATM card at a store, a gas station, the movie theater and an ATM — but doesn’t keep a record of these transactions — how will she know at any given moment how much money she actually has in her account?

Teach your teen to carry each receipt, for every withdrawal or purchase she makes with her ATM card, until she’s back home and able to record these items in whatever she uses as her official record for managing her bank account — her checkbook register, for example.

I purposely fold my receipts and tuck them into my wallet so they stick out. That way, I can’t help but notice them when I pull out my wallet, and therefore I can’t forget to record them. Only after I’ve recorded a receipt in my checkbook register will I throw it away (or file it).

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Problem 3: Physical danger from thieves.

ATMs attract muggers and other bad characters, because they know that anyone using one is just a few seconds away from having cash in their hands.

The lesson: Use ATMs only in safe situations.

Teach your teen to minimize the danger of ATM withdrawals by limiting her ATM usage to certain situations, like these:

  • Use an ATM only during the day, if possible.
  • Find an ATM indoors, either enclosed in a vestibule at a bank or inside a store, such as a supermarket, someplace that is populated and well-lit.

Taking the time today to teach your teens how to handle a debit / ATM card responsibly can make a huge difference in their financial future — the difference between enjoying the card’s convenience over the long term, or suffering serious financial problems from mishandling it.

Featured photo credit: Junk ATM/Robbie Hyman via Shutterstock

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Published on November 20, 2018

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The truth is, there are many “money saving guides” online, but most don’t cover the root issue for not saving.

Once I’d discovered a few key factors that allowed me to save 10k in one year, I realized why most articles couldn’t help me. The problem is that even with the right strategies you can still fail to save money. You need to have the right systems in place and the right mindset.

In this guide, I’ll cover the best ways to save money — practical yet powerful steps you can take to start saving more. It won’t be easy but with hard work, I’m confident you’ll be able to save more money–even if you’re an impulsive spender.

Why Your Past Prevents You from Saving Money

Are you constantly thinking about your financial mistakes?

If so, these thoughts are holding you back from saving.

I get it, you wish you could go back in time to avoid your financial downfalls. But dwelling over your past will only rob you from your future. Instead, reflect on your mistakes and ask yourself what lessons you can learn from them.

It wasn’t easy for me to accept that I had accumulated thousands of dollars in credit card debt. Once I did, I started heading in the right direction. Embrace your past failures and use them as an opportunity to set new financial goals.

For example, after accepting that you’re thousands of dollars in debt create a plan to be debt free in a year or two. This way when you’ll be at peace even when you get negative thoughts about your finances. Now you can focus more time on saving and less on your past financial mistakes.

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How to Effortlessly Track Your Spending

Stop manually tracking your spending.

Leverage powerful analytic tools such as Personal Capital and these money management apps to do the work for you. This tool has worked for me and has kept me motivated to why I’m saving in the first place. Once you login to your Personal Capital dashboard, you’re able to view your net worth.

When I’d first signed up with Personal Capital, I had a negative net worth, but this motivated me to save more. With this tool, you can also view your spending patterns, expenses, and how much money you’re saving.

Use your net worth as your north star to saving more. Whenever you experience financial setbacks, view how far you’ve come along. Saving money is only half the battle, being consistent is the other half.

The Truth on Why You Keep Failing

Saving money isn’t sexy. If it was, wouldn’t everyone be doing it?

Some people are natural savers, but most are impulsive spenders. Instead of denying that you’re an impulsive spender, embrace it.

Don’t try to save 60 to 70% of your income if this means you’ll live a miserable life. Saving money isn’t a race but a marathon. You’re saving for retirement and for large purchases.

If you’re currently having a hard time saving, start spending more money on nice things. This may sound counterintuitive but hear me out. Wouldn’t it be better to save $200 each month for 12 months instead of $500 for 3 months?

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Most people run into trouble because they create budgets that set them up for failure. This system won’t work for those who are frugal, but chances are they don’t need help saving. This system is for those who can’t save money and need to be rewarded for their hard work.

Only because you’re buying nice things doesn’t mean that you’ll save less. Here are some rules you should have in place:

  1. Save more than 50% of your available money (after expenses)
  2. Only buy nice things after saving
  3. Automate your savings with automatic bank transfers

These are the same rules that helped me save thousands each year while buying the latest iPhone. Focus only on items that are important to you. Remember, you can afford anything but not everything.

How to Foolproof Yourself out of Debt

Personal finance is a game. On one end, you’re earning money; and on the to other, you’re saving. But what ends up counting in the end isn’t how much you earn but how much you save. Research shows that about 60% of Americans spend more than they save.[1]

So how can you separate yourself from the 60%?

By not accumulating more debt. This way you’ll have more money to save and avoid having more financial obligations. A great way to stop accumulating debt is using cash to pay for all your transactions.

This will be challenging, depending on how reliant you are with your credit card, but it’s worth the effort. Not only will you stop accruing debt, but you’ll also be more conscious with what you buy.

For example, you’ll think twice about purchasing a new $200 headphone despite having the cash to buy them. According to a poll conducted by The CreditCards.com, 5 out of 6 Americans are impulsive spenders.[2]

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Telling yourself that you’ll have the discipline to not buy things won’t cut it. This is equal to having junk food in your fridge while trying to eat healthy–it’s only a matter of time before you slip. By using cash to make your purchases, you’ll spend less and save more.

A Proven Formula to Skyrocket Your Savings

Having proven systems in place to help you save more is important, but they’re not the best way to save money.

You can search for dozens of ways to save money, but there’ll always be a limit. Instead of spending the majority of your effort saving, look for ways to increase your income. The truth is that once you have the right systems in place, saving is easy.

What’s challenging is earning more money. There are many routes you can take to achieve this. For example, you can work long and hard at your current job to earn a raise. But there’s one problem–you’re depending on someone else to give you a raise.

Your company will have to have the budget, and you’ll have to know how to toot your own horn to get this raise. This isn’t to say that earning a raise is impossible, but things are better when you’re in control right? That’s why building a side-hustle is the best way to increase your income.

Think of your side-hustle as a part-time job doing something you enjoy. You can sell items on eBay for a profit, or design websites for small businesses. Building a side-hustle will be on the hardest things you’ll do, be too stubborn to quit.

During the early stages, you won’t be making money and that’s okay. Since you already have a source of income, you won’t be dependent on your side-hustle to pay for your expenses. Depending on how much time you invest in your side-hustle, it can one day replace your current income.

Whatever route you take, focus more on earning and save as much as possible. You have more control than you give yourself credit for.

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Transform Yourself into a Saving Money Machine

Saving money isn’t complicated but it’s one of the hardest things you’ll do.

By learning from your mistakes and rewarding yourself after saving you’ll save more. What would you do with an extra $200 or $500 each month? To some, this is life-changing money that can improve the quality of their lives.

The truth is saving money is an art. Save too much and you’ll quit, but save too little and you’ll pay for the consequences in the future. Saving money takes effort and having the right systems in place.

Imagine if you’d started saving an extra $100 this next month? Or, saved $20K in one year? Although it’s hard to imagine, this can be your reality if you follow the principles covered in this guide.

Take a moment to brainstorm which goals you’d be able to reach if you had extra money each month. Use these goals as motivation to help you stay on track on your journey to saving more. If I was able to save thousands of dollars with little guidance, imagine what you’ll be able to do.

What are you waiting for? Go and start saving money, the sky is your limit.

Featured photo credit: rawpixel via unsplash.com

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