Teenage finances

Webhomer

Hi,

I someone can help me. My daughter is 17 on Sunday and has two years left before she goes to university. We want to instil some good budgetary habits and are proposing to pay a monthly allowance into her Lloyds Bank current account so that we only pay to feed her and provide a home. She will be responsible for clothes, toiletries, entertainment, petrol etc.

I don't like the idea of her having to walk round with a lot of cash if she is going shopping but all Lloyds Bank will give her is an Electron card which is quite limited in scope. I wanted to take out a credit card with me as the primary cardholder and add my daughter as an additional cardholder, the idea being that we would have a low credit limit on it and that she would be the only user and would have to clear the account each month, but all the cards I have looked at state that the additional cardholder must be over 18.

Is anyone able to suggest a solution?

Webhomer

toastinbowl

What I would suggest is a Bank of Scotland young persons account. I had one for years (I'm 19 now and think it's safe to say that my financial habits have worked very well for me!). They give you a Solo card which is accepted in many more places than Electron.

I never had a store refuse my Solo - and now most websites accept it to (even if you have to select "Switch Card" as the method of payment!).

I think paying into her account a set amount is a very good idea but what I would suggest too is making a simple spreadsheet with her (which she can update as the year progresses). I done that and it means I can plan my cash very well.

It won't be must use (or fun) at the moment but once she goes to Uni she'll find it incredibly helpful - I have done so and still use it now to track my wages and all of my outgoings. You don't need an accountancy degree to do it, it's simple, and is a great way to watch you're money.

And if she applies for a student overdraft when she's 18, the bank might even look at the spreadsheet as proof of responsible spending - they did for me and it helped me a lot.

Anyway - Go for the Solo card just now and get her into a habit of tracking her spending!

Dave

toastinbowl

Oh or you might want to go for a money management software package - you can get Microsoft Money for £25 in most stores now. I use OpenOffice.org spreadsheet however - it's very powerful, easy to use, and free!

Dave

gizmoleeds

Never forget that it is easier to lose track of your spending when you are using a card (whatever that card may be).

If you taught her to limit herself to a set figure per week for all sundry expenses (lunches, drinks, bus fares etc.) then using cash is a good way of keeping track if this (as she could physically see how much she had left). I had an elecron card at her age (which was never refused anywhere BTW) but mostly used it withdraw cash, with which I found it easier to keep track of where my money was going.

Savvy_Sue

I don't think I've ever seen a credit card which could be used by anyone under 18.

But my sons are with NatWest, have solo cards from 11 and they can use these to pay for things in shops quite freely, which solves the carrying around cash option.

The other thing is that once my eldest hit 6th form, I made his allowance cover all his cash needs, including his bus fares to and from school. I wanted to avoid him asking ME for money late at night the day before he needed it. It's worked very well!

I also made him start doing his own laundry - again it's not just a question of knowing how the washing machine works, but also working out that you need to do it BEFORE you run out of clean pants - and help out a lot more with washing up, shopping, cooking etc. He's off in a couple of weeks, and I feel he's pretty self-sufficient.

sfboy

gizmoleeds wrote:

Never forget that it is easier to lose track of your spending when you are using a card (whatever that card may be).

I disagree, one of the reasons I like cards (I use NatWest with a Solo) is that I can check where my money is coming and going using statements, if I use an ATM I loose track of where all the small stuff has gone - that mounts up. I generally never pay with cash, it's a pain to carry around and it can get lost or stolen

toastinbowl

sfboy wrote:

I disagree, one of the reasons I like cards (I use NatWest with a Solo) is that I can check where my money is coming and going using statements, if I use an ATM I loose track of where all the small stuff has gone - that mounts up. I generally never pay with cash, it's a pain to carry around and it can get lost or stolen

I agree entirely - If I ever take out £10/20 I end up spending it all by the end of the day, even if it was just for £1.10 bus fare. It's a lot harder to track IMO.

Dave

gizmoleeds

sfboy wrote:

I disagree, one of the reasons I like cards (I use NatWest with a Solo) is that I can check where my money is coming and going using statements, if I use an ATM I loose track of where all the small stuff has gone - that mounts up. I generally never pay with cash, it's a pain to carry around and it can get lost or stolen

Perhaps "track" wasn't the right word - but what I mean is I find it easier to budget. If I have £20 a week for lunches, drinks etc then it is impossible to go over with cash as I would physically run out, whereas with a card I could only see once I log on to internet banking where it has gone after the event (and perhaps discover that I had breached my budget).

Different ways work for different people, but I would also add that I found it really annoying when queuing for my lunch when the people in front would get out a card to pay for a bottle of coke and a sandwich - :mad: they hold up the rest of the queue - and I would be even more annoyed when they refused cashback (knowing they would do the same thing tomorrow). It would be hippocritical for me to do what they were doing - if ever I'm a celebrity they are top of my Room 101 list.

nearlyrich

gizmoleeds wrote:

Different ways work for different people, but I would also add that I found it really annoying when queuing for my lunch when the people in front would get out a card to pay for a bottle of coke and a sandwich - :mad: they hold up the rest of the queue - and I would be even more annoyed when they refused cashback (knowing they would do the same thing tomorrow).

I have to disagree with speed of transaction card versus cash, if the cardholder knows the PIN and the shop assistant has been trained properly I am sure a card transaction is much faster, especially if the cash shopper insists on counting out the pennies from the dusty crevices of their handbag, or if the shop assistant needs to take their socks off to work out they need 17p change...

crana999

Can't she just take cash out from an ATM as and when needed? How much is she spending on the shopping?!

Savvy_Sue

crana999 wrote:

Can't she just take cash out from an ATM as and when needed? How much is she spending on the shopping?!

Hey, this is a girl we're talking about! She doesn't know! Plus even if you spot what you want and get the cash and go back, it may have gone, and then you've got the problem of putting the cash back in the bank (not trivial on a Saturday!)

Plus the Solo card is limited to a withdrawal of £20 cash each day (or even every other day), which I suspect isn't going to go far for a fashion conscious teenager, don't know what Electron's limit is but suspect it is equally low. Although Solo limit may rise at 16 - my son said he'd been able to get pots more money out "for ages" when I told him to make sure the bank knew he was 18!

Seriously, and because I only have boys who buy computer games, I have always felt happier with them having a card on them and using that in shops when they're on their own. If they lose the card, it can be stopped. If they lose the cash, it's gone.