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When it comes to teaching younger children about money, I’m of the mind that cash is king. Banknotes and coins are real and concrete. You spend it, and there is less of it left in your wallet or their piggy bank.
That’s an important lesson for kids to grasp before they’re allowed to have a piece of plastic in their wallet. It’s why my son has been receiving a weekly cash allowance since the age of six but hasn’t seen a credit card or an online bank account up close yet.
But now that he’s in his tween era, I’m starting to see the need to pair the weekly cash handout with something a little more advanced. Most of what he wants to buy, these days, is only available online, which has led to some convoluted family accounting.
Ditto for the money he periodically gets from grandparents or his aunt and uncle for birthdays and Christmas, which tends to come in through digital transfers and currently sits in a bank account in my name that he has no access to.
So, what’s the best option for kids dipping their toes into digital banking? Based on my research so far, I’m looking at two main contenders: RBC’s MyDoh app and Wealthsimple’s kids and teens account.
Both come with a prepaid physical card for the kid, no monthly fees and strict parental oversight, such as real-time notifications whenever the child makes a purchase.
Of MyDoh, I appreciate that parents can add money to the kid’s account even if they don’t themselves have an RBC account – for a big-bank product, this is both unusual and welcome. I also like that the app lets kids build a budget and set savings goals.
With Wealthsimple, by contrast, a parent must have a chequing account with them – not just an investing account – to open a kids and teens account. The app functionalities also sound a bit less elaborate, though they still cover all the bases from my point of view.
One big plus for the Wealthsimple kiddie account is that its prepaid card works for cash withdrawals, with ATM fees reimbursed.
But the one key feature that has me leaning toward Wealthsimple is that the account pays interest on deposits – anywhere between 1.25 per cent and 2.25 per cent depending on the parents’ status at Wealthsimple (which, in turn, depends on how much they have in net deposits or total assets at the company).
A chequing account that actually pays some meaningful interest on deposits? That’s one money lesson I’d like my kid to learn early on.
If you have tweens or teenagers at home, which account did you choose for them and why? I’d love to hear from you: ealini@globeandmail.com
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