Managing Everyday Spending: A debit card is a great starting point for teaching students and teens how to budget their own money while managing every day spending responsibly.
Beyond the Basics – Building Credit: Keep moving forward in your financial journey by practicing smart credit card use, developing a strong repayment history, and building up your credit score.
Master Your Financial Independence: Discover how combining the strategic use of debit and credit cards can lead to healthy spending practices, responsible budgeting, and a robust financial future filled with more opportunities.
The decisions teens and young adults make concerning how they choose or not choose to spend their money can have a profound effect on their future financial well-being. Building healthy habits for debit card and credit card use at an early age will create budgetary disciplines that'll lead to financial independence and long-term stability.
A debit card can be a valuable tool in teaching financial responsibility by providing hands-on experience for how to manage a bank account, track expenses, and make responsible spending decisions. A relatively straightforward process, a debit card is linked to a checking account and pulls money directly out of it each time a purchase is made. It can also be used to withdraw cash at an ATM.
It helps financial newbies learn to budget, better understand the impact of their spending decisions on their overall finances, and develop a sense of ownership over their money.
Financial Benefits
Tip for Responsible Debit Card Use: Set up low balance and transaction alerts to help you keep tabs on your debit card spending.
For most young adults entering into a new level of financial maturity, a credit card is the segue to level up their finances. Unlike a debit card, a credit card adds a new layer of financial responsibility while managing a monthly bill. It’s important to remember that using a credit card means you’re making purchases with borrowed funds (also known as a line of credit) and payments will need to be made monthly. (Note that not paying your balance in full will result in interest charges.)
Financial Benefits
Tip for Responsible Credit Card Use: Open a designated club account for all your credit card purchases to ensure that you'll have enough money to make a payment or pay off the entire balance each month. Each time you make a purchase, move the amount of the purchase from your checking into the club savings. When your bill is due, simply use those funds to make your credit card payment. Savvy cardholders understand that making regular, on-time payments is important for building a good financial reputation.
Learn More: Consider our 3 Tips for to Find the Best First Credit Card for Young Adults blog to help you find the best credit card to get started with!
There are times when it makes perfect sense to use a credit card and pay off the balance at the end of the month. At other times, using a debit card is the smarter choice to help regulate spending and preventing interest from accruing on borrowed money.
Consider adding these smart spending practices into your daily routine:
Learn More: Discover a few best practices for effectively managing your money with our Embracing Financial Independence: A Guide for Young Adults blog.
Developing healthy spending habits and understanding responsible credit use is the foundation for creating financial independence and achieving your goals. At Peach State FCU, we offer a variety of financial resources that are tailored to fit the needs of those who are starting to build their financial independence. From getting a checking account and debit card to managing your first credit card and continuing to learn along the way, we're here to help our young members thrive!
If you'd like more information or have questions, contact us today! Or, if you'd like to continue exploring and learning, check out a few of our favorite reads below.