I recently posted about using a new online service to pay my children’s pocket money and how it was helping them to understand the value of money, changing their attitudes towards spending and helping them to save.
So how does it work...?
With PKTMNY you open a central parent’s account and then each child you sign up receives their own individual account. Through the parent’s account you can see your child’s account details and set all amounts and limits.
You manage regular pocket money payments by setting the weekly amount and what day it’s paid on. You can set tasks such as ‘wash the car’ as incentives for children to earn extra money or if your pocket money system works on completion of chores. One off payments can also be added for any reason. All these payments come from the parent’s account balance which can be funded using credit, debit card or standing order.
The child gets a pre-pay Visa Debit card as part of their account. From the parent’s account you can control the limits for the card and where it may be used. The limits you’re able to control are the amount your child may spend a week and in one transaction and where the card may be used; on the high street, online and/or for ATM cash withdrawals.
This is where the learning starts to happen. The home screen displays their balance as a chart and if they've set a savings goal (which I recommend as incentive to save) how close they are to achieving their goal.
They also see their weekly pocket money amount and when it’s due, any set tasks and their spending limits. They can set wish lists which are very handy for friends and family looking for birthday and Christmas presents who can be added to your family account.
Finally there’s a visual representation of what they’re spending where.
I've been using the account for 2 months and have already found it to be a beneficial way to begin introducing my children to financial skills and sense. These are the benefits I've found so far...
- · Child’s account is a child friendly simulation of a bank account/debit card statement teaching them how to use read these documents.
- · Encourages discussion about financial sense & safety – limits are transparent so you can explain what you've set and why. Children need to be warned to keep their debit card safe and their pin secret.
- · Reduces begging for things all the time when you can tell your child they can choose to buy themselves or save for an item with their own money.
- · With a savings goal set mine are more reluctant to spend on little things when it increases time to meet the goal.
- · Learning to value money and time it takes to save bigger amounts has made them more protective of the toys they have (especially when paid for themselves).
- · Mine are saving because they can see the coins adding up on screen and see it as a game/challenge to meet the target.
I recently read an article that did not positively rate this account as a sensible financial option mainly because of fees attached to the account. Initially I was also put off by paying fees for any kind of account as it doesn't seem financial common sense. After trialling this account most my attitudes to the fees which PKTMNY clearly outline have mostly changed…
Registration & Membership
Registration is £5 per family and a one-off payment. I accept this for a genuine and reliable service, it’s not a huge fee to cover the Customer Services and Admin PKTMNY provide and there’s only a few pre-pay card companies (for adults) that don’t charge for the card initially.
The monthly fee is £1 per child. This one really put me off; the thought I was paying an extra £1 for pocket money monthly that they wouldn't get seemed silly. After using the account for all payments and no-longer handing over cash I am won over. As a parent think how much in little bits of change your child has squirrelled and forgotten in bags and other places around their room and then how much they drop and lose around the house, in the car etc. At least this was the case here and I'm sure it covers £1 per month.
Credit/Debit Card fees
Adding funds to the parent account using a credit card incurs a fee of 1.21% and a debit card 50p. PKTMNY hope to reduce fees as the service grows but as a new business is unable to absorb the fees they’re charged for accepting these payment methods. The answer which is the way I have got round the charges is to credit your account by standing order which is free.
If the child withdraws cash via ATM they are charged 50p – this is the one I can’t swallow but is easily remedied by blocking them from using the card for cash withdrawals. On my children’s weekly pocket money this is a fifth so in perspective a huge amount. I would not open a bank account where I was charged for cash withdrawals and would teach my children to avoid them too. Some parents feel it is a good way to teach children caution in withdrawing cash and the charges and fees involved in banking but I am still unconvinced. I like the debit card so my children don’t carry cash so it’s not currently an issue but as they get older if they were to require an account that allowed them to withdraw cash I would look elsewhere.
That said this I accept PKTMNY’s explanation of the fees they are charged and that they may not be able to absorb them and hope they can reduce this in the future.
WHAT – Your (insert age here) year old has a Debit Card..?!!
Yes and I really like it, no more bits of money here there and everywhere with the chance of them dropping and losing it when they’re out.
The card is contactless but only for a maximum of £15 in an individual transaction and you can set a lower individual transaction amount on the card too. On top of this if the card is lost or stolen it can be immediately made inactive through either the parent’s or child’s account.
With credit and debit cards regularly being used by parent’s nowadays I think allowing a child to use one is a practical way of demonstrating that they are not a magical source of endless cash.
This post is part of a project with BritMums, sponsored by PKTMNY, highlighting it's launch. The new tool allows parents to easily pay and monitor their children's pocket money online, whilst allowing their children to earn, save, spend and manage their money in a totally safe and fun way.