Too young for credit cards but too old for piggy bank change? Here's how to help your kid navigate a cashless world

Globe and Mail

6 hours ago

Sweden is home to many things: Nearly 100,000 lakes, a cozy fika coffee culture, and delightful words like kaffesugen (the intense desire to drink that coffee). But what doesn't Sweden have?
Much cash.
That's what Jessica Dickson and her family discovered when they recently vacationed there.
'They didn't accept cash anywhere. Anywhere at all,' said the Calgary-based aesthetician and mom of four. 'I had all this cash and couldn't use it.'
Although Sweden, an early proponent of digital payments, has recently backpedaled amid security concerns, it's not the only place moving toward a cashless society. Many European and Asian countries are doing the same – and Canada isn't far behind.
According to a study by Payments Canada, only 31 per cent of Canadians use cash for day-to-day purchases. And observers note that more and more businesses are posting 'no cash' or 'card only' signs in their storefronts. Even some school vending machines offer only a tap option.
So where does that leave children in the in-between years of, say, ages nine to 12 – too young to handle credit cards, Apple Pay and e-transfers, but too old to dump piggybanks to buy summertime popsicles?
'We are living in a digital world, which impacts this age group,' says Robin Taub, a chartered professional accountant and Toronto-based author of The Wisest Investment: Teaching Your Kids to Be Responsible, Independent and Money-Smart for Life. And unlike in the U.S., where 'venmo me' is a popular request, and many teens use Cash App or Greenlight, similar electronic payment options are less common in Canada, she says. 'It feels like a lot of families here are just cobbling it together on their own.'
If that is your experience, too, here are some tips from experts and financially savvy parents to help your family meet this particular money moment.
While it's not uncommon for some parents to give their kids supplementary cards attached to their own credit cards, that approach comes with the risk of abuse. Luckily, there are other ways to go.
One option is the RBC-backed MyDoh, a money management app designed for kids and parents. It allows parents to transfer funds to a digital or physical prepaid card, set spending limits and monitor transactions. Kids can use it for in-store and online purchases as long as the business takes Visa.
Bank cards and digital payments are the norm for teenagers today. And that's a good thing
For one-off situations – such as a trip to a theme park or stadium, many of which don't accept cash – try reloadable prepaid cards (the kind found at grocery stores and pharmacies). But keep in mind that most come with steep activation fees, so a $4.95 fee on a $50 card means your child will have only $45.05 to spend.
Some parents may prefer to open a bank account for their kids so they can get them a debit card. If you decide to go this route, be sure to set up a weekly or transaction limit, advises Kevin Maynard, vice president and chief operating officer for the Canadian Foundation for Economic Education. Without those boundaries, their babysitting savings could go in an instant.
And if their account is attached to yours, turn on notifications, adds Maynard. Primarily used as a tool to thwart fraudsters and thieves, alerts will also help you know if your child impulsively spent $250 on flashy shoes.
'It's a very simple process. And you know exactly what's happening,' he says.
Just be aware that a financial institution might have numerous restrictions, including giving a younger child a debit card. Jessica Glazer, who runs a headhunting business in Montreal, recently experienced this situation with her 13-year-old son. At first her bank refused him a debit card because they worried he might blow through the money he'd saved from his bar mitzvah, even though he planned to invest it with his mom.
'I was like, 'But I need him to have a bank card for when he needs to buy a bus pass or whatever. There are certain things he needs a bank card for,'' said Glazer.
The bank eventually gave it to him.
Whether you go with a prepaid card or a debit card for your kid, it's important to talk about ground rules in advance, says Taub.
Will your kids have to ask permission before purchasing anything, or only above a certain threshold? What will the repercussions be for breaking rules? And if a card is to be used for emergencies only, what exactly does that mean?
'Because some kids will try to rationalize that going out with their friends is some kind of emergency,' says Taub. 'Conversations need to be had.'