Do Debit or Credit Cards Make Sense for Your Child?

Advertising & Editorial DisclosureLast Updated: 10/21/2022
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Last Updated: 10/21/2022

Teaching children about money and finances is an essential life lesson that can help them become responsible spenders in the future. While instilling healthy financial habits is a continuous practice, you could begin educating them through debit or credit card ownership.

Having a payment card can teach them money management skills, financial concepts and help them understand how to responsibly handle financial tools. It’s important to consider the benefits, drawbacks and various card options before determining if your child is ready to learn, use or acquire a debit or credit card.

The Benefits of Teaching Financial Responsibility at a Young Age

Financial responsibility refers to efficient money management or living within your means. According to the Council for Economic Education, personal finance education is included in the K-12 standards of 45 states. However, teaching children about finances at a young age can be more advantageous. Parents can start by discussing basic concepts, such as budgeting, credit score, debts, emergency fund and compound interest. Using a debit or credit card can also help them understand and practice real-world financial situations.

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    Learn about saving and budgeting

    Saving and budgeting skills can help your children be financially successful as adults. Teaching them about financial responsibility can help them learn how to spend within their means and save for unexpected events.

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    Manage finances well

    Unplanned, large expenses happen. It’s important your child understands financial literacy and responsible spending so they can maneuver various financial situations successfully.

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    Understand how to build credit

    Credit can be fundamental in financial success. It can help secure better insurance rates, car loans and mortgages. As a financially responsible individual, your child can understand how they can build strong credit and achieve a good credit score.

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    Prevent financial mistakes

    Financial education equips your children with the knowledge to prevent detrimental mistakes to their finances, such as not paying credit card debts on time or having too much debt. It can also help them determine and avoid scams.

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    Make well-informed financial decisions

    When they understand financial topics, children can assess possible impacts of their financial decisions. Knowing the value of money can help them exercise caution with their spending choices.

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    Prepare for a secure retirement

    Teaching children to be financially responsible can help them understand the importance of saving for retirement while attaining short-term plans.

An illustrative image of a father teaching his child about payment cards and a mother holding her younger child.

Should You Get Your Child a Debit or Credit Card?

For some parents, getting their children a debit or credit card is a great way to teach them financial responsibility. It can also help them build their credit history and even earn rewards. However, it’s important that parents are cautious and monitor their child’s account closely.

Teaching Your Child How to Stay Safe With Debit and Credit Cards

The foundation of financial education has typically been teaching your child the value of cash. However, with the prevalence of cashless transactions, teaching them to use and manage a debit or credit card may be today’s equivalent. Before you hand over a card, it’s important to determine if your child is ready for the responsibility.

1

Credit score

Having a credit card can help build your child’s credit score. However, credit card issuers do not approve credit cards for minors. That means they will have to piggyback on your account as an authorized user. You will be ultimately responsible for their spending decisions.

2

Safe purchases

Debit or credit cards are often safer for your child to carry than cash, which can make them susceptible to money theft or loss. While debit cards offer some protection, credit cards can better protect them against unauthorized purchases. However, children who have not fully grasped the concept of card transaction fees and interest payments may end up spending more.

3

Monitor expenditures

Debit and credit cards can help you monitor how your children spend their money. However, you may only be able to learn about their purchases after they have been charged on the card.

Benefits and Potential Drawbacks of Giving Your Child Access to a Card

A debit or credit card may be a good idea for your child, but it may also lead to issues. Access to a payment card can offer several benefits to children, such as credit building and learning to manage finances with guidance, but there may be drawbacks to consider.

Benefits and Potential Drawbacks

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How Impactful Are They Really?
  • Payment cards, especially credit cards, can help your child build credit early. As an authorized user on your account, your child can start creating good credit history that would help them qualify for their own credit card, get loans and have better insurance rates in the future.
  • Having a debit or credit card will help your child understand that their actions have consequences. It helps them learn how they will pay for purchases — from allowance or other savings — and over can create issues.
  • Children can use a payment card to cover emergencies. For instance, they may need to buy supplies while they are away from home or your teen may have to replace a flat tire.
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What Are the Potential Drawbacks?
  • As a parent or guardian, you have the responsibility of tracking your child’s transactions and figure out how much of their allowance they are spending. Even with a set of guidelines, children can end up breaking your rules.
  • Similar to adults, children can be overspenders. Giving them access to a payment card opens the possibility of expensive and uncontrolled purchases. These could be detrimental to their credit scores over time.
  • Ultimately, you will be responsible for paying all the purchases your child charges to their debit or credit card. That means you will have to also deal with poor purchasing decisions or overspending.

An illustrative image of a father explaining to his child about payment cards and assessing whether or not his child is ready for any type of payment card.

How to Know if Your Child Is Ready

While giving children access to debit or credit cards early can be beneficial, it may not be for everyone. You should assess your circumstances and your child’s readiness for financial responsibility. Below are some questions you should consider before getting your child their first card.

1

Have they successfully handled cash?

Make sure your child has hands-on experience in handling money for at least a year or two. You can think of it as a practice period. Children have to understand the importance of managing their expenses and saving money first.

2

Can they follow your rules?

Before deciding to give children access to a card, parents need to come up with rules. Will your child pay the bill from their savings or allowance? Are you going to reimburse them? Will you set a limit to the amount they can spend?

3

How much do they understand about debit or credit card services?

Do your kids have a basic understanding of debit and credit card services such as balances, interest rates and credit limits? Gauge their decision-making skills and determine how well they understand actions and consequences based on their experience handling cash.

4

Can they handle a low limit?

If you plan on giving your child access to a debit or credit card, you may want to start with a low limit. This way, they can build budgeting skills first before they access higher limits. They can prevent excessive purchases and learn how to prioritize their needs.

5

Are you ready?

You also need to ensure you are prepared to handle the possible consequences of giving your child access to a payment card. You will have to monitor their expenses. Depending on the rules you have set, you may also be responsible for paying for their purchases.

An illustrative image of parents considering the best payment card for their children.

Weighing Options: What’s the Best Payment Card for Your Child?

Depending on your circumstances, letting your children live on cash can be impractical or unsafe. In such cases, consider getting a payment card for them.

Not all children are the same. Make sure you understand your children’s needs, as well as the differences between debit or credit cards, the benefits and potential pitfalls to help you determine whether you should get them a card. Research the requirements and considerations to find the card suitable for your children.

Debit Cards

A debit card refers to a payment card linked to a cardholder’s banking account. If your child has a debit card, they can make purchases or pay bills with the money in the account. They can also use the card to make a cash withdrawal, if necessary. Depending on the issuer, you may find debit cards specifically made for younger users.

Advantages & Disadvantages of Using Debit Cards

When determining if your child should have a debit card, consider if they are prepared to have one. Many parents fail to weigh the possible consequences of giving an unprepared child access to a debit card. The best way to decide is to compare the benefits and drawbacks that this type of payment card offers.

Debit Cards: Advantages & Disadvantages

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Advantages
  • A debit card can help children learn the basics of money management. While this type of card cannot help building their credit history, it can make them a better spender. It helps them learn the importance of living within their means.
  • Using a debit card can help your children learn from financial mistakes, helping them become financially responsible. For example, they may choose to spend all their money on a gadget. While they may end up regretting this decision, it will help them realize the importance of smart spending.
  • Debit cards are typically inexpensive, especially in comparison with credit cards, and don’t have annual fees. Additionally, they allow cash withdrawal without transaction fees. The checking account tied to the debit card may charge maintenance fees.
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Disadvantages
  • Making mistakes can be expensive. Debit cards are typically linked to a checking account. If your child overspends, they can overdraw the account and you will have to cover hefty fees.
  • Debit card use will not have an impact on your child’s credit score. While that can be advantageous, it can also be considered a drawback because they are not building credit with their purchases.
  • Monitoring your child’s expenses is necessary. This prevents them from being careless spenders and offers you opportunities to teach them spending lessons. You may only learn about their purchases after the debit card is charged.

Debit Card Options for Your Child

When researching the best debit card for your child, you may realize not all cards are the same. In fact, there are certain cards made especially for younger individuals. With these, parents and guardians can help teach their kids to become more financially-savvy. At the same time, they can help ensure that the children are well-protected.

  • Options
    Fees
    Features
    Best For
  • $4.99 per month

    $7.98 per month

    $9.98 per month

    • Instant money transfers
      from parents’ accounts
    • Real-time notifications
      for card use
    • Fund request for
      immediate expenses
    • Mobile payments through
      the company’s app
    • Access to activity history
      for balance tracking
    • Offers ATM and
      expenditure controls
    • Up to five children

    First-time debit
    cardholders who
    want to learn
    budgeting

  • $0 monthly
    service fee

    • Account activity alerts
    • Set limits, including
      where and how the
      child can spend
    • Fund request
    • Free ATM withdrawal
    • ATM withdrawal limits
    • Set saving goals, assign
      chores and manage
      allowances
    • Only available to Chase
      checking customers

    For children ages
    6-17 who are
    learning how to
    spend and save
    money

  • $3.99 per month

    • Real-time updates
    • Parental controls
    • Set spending limits
    • Set weekly transfers
      for allowance
    • Set missions for
      children to earn money
    • GoHenry App that offers
      interactive quizzes and
      educational videos
    • Customized card

    For children ages
    6-18 who need
    to build their money
    management skills

  • $0

    • Parental controls
    • Can be linked to
      external accounts
    • No transaction fees
      for ATM withdrawals
    • Earn 0.10% interest on
      your kids’ checking
      account balance
    • No minimum deposit
      and balance requirements

    For children ages 8+
    and teens who need
    to learn how to live
    within a budget

  • $0

    • No ATM withdrawal fee
    • Automated allowance
    • Direct deposit
    • Earning opportunity
    • Real-time tracking of
      spending
    • Mobile app with
      interactive quizzes
      and financial tools
    • No minimum balance
      requirement

    For teens (13+)
    who need more
    financial independence

  • $0

    • Set savings goals
    • Earning opportunities
      by setting everyday tasks
      and incentives
    • Virtual and physical card
    • Freeze account using the
      company’s app
    • Share access with other
      family members
    • Create agreements using
      the app

    For teens who
    want to become
    savvy spenders
    without paying fees

Considering a Debit Card?

If you decide to give your child a debit card, you will want to get the best option possible. With the various options available, you may find it challenging to choose which one to go with. Generally, the perfect debit card is the one suitable for your child’s needs and that offers you peace of mind. The following factors can help you determine what you need.

  • Privacy: Parents need to ensure that their children’s information is protected. Be wary of what information card issuers collect. Before giving your consent, make sure the card issuer does not have any intention of selling your children’s data to third parties.
  • Protection: Some criminals use debit card accounts for fraudulent activities. If you are worried about the possibility of your child’s card getting stolen or lost, find an issuer that offers refunds for fraudulent and unauthorized purchases.
  • Security: Check the features of the physical card itself. Is it equipped with security features? If the company offers a mobile app, make sure that only authorized people can access your child’s account.
  • Insurance: Consider getting a FDIC-insured debit card to protect your child against loss if the card issuer fails.
  • Account lock: In most cases, debit cards for children allow parents to lock the account in the event of card loss. For more convenience, some card issuers offer this feature in their mobile apps.
  • Fees and limits: Some card issuers do not charge fees while others do. Compare your options and weigh the pros and cons of each. You may also want to check the spending limits and other possible fees.
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SETTING UP AN ACCOUNT FOR YOUR CHILD

The process of setting up a debit card account may vary depending on the card issuer. Make sure you read the requirements, terms and conditions, fine print and all related information before proceeding to open an account for your child. There are some general steps you can begin with:.

  1. Check the age limit for the account type.
  2. Prepare the required documents, including yours and your child’s proof of identity.
  3. Go through the application process online or in person.
  4. Add funds to your child’s account using a qualified account.
  5. Activate your child’s debit card.

Credit Cards

Credit cards allow you to make immediate purchases you will pay at a later date. By granting your child access, you are offering them more financial freedom. However, you should ensure they will not accrue debt. Make sure you and your child understand the benefits and drawbacks of having a credit card. In doing so, you can also determine the best type of credit card for them.

Advantages & Disadvantages of Using Credit Cards

Credit cards offer many advantages. They can help build your child’s credit history and instill good financial habits. However, there are also potential drawbacks you should be wary of, such as fees, charges and your child’s irresponsible spending decisions. Knowing these factors can help you determine if it’s the right time for your child to get a credit card.

Credit Cards: Advantages & Disadvantages

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Benefits
  • Many parents make their child an authorized user on their credit card account to help them build credit early. That’s because the length of using credit can positively impact credit score calculations.
  • Credit card usage can help teach your child good spending habits. They can begin to learn how their spending affects their finances and lead to debt. They can also get into the routine of paying their monthly charges on time.
  • Giving your child access to a credit card early can teach them the difference between wants and needs. You can also provide insight on how to avoid impulse decisions when it comes to spending.
  • Credit cards can serve as a safety net, especially for emergencies. It also provides a cashless payment method which can decrease the opportunity for loss or theft.
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Drawbacks
  • A parent's bad credit history on that card can transfer over to the child as an authorized user. In case of late payments, default or bankruptcy, those negative marks may show up on the child's credit report.
  • Credit cards can also hurt your child’s credit scores. Due to the ease of use, a credit card can give your child purchasing power that could cause them to overspend.
  • Despite having clear guidelines on how to use credit cards, children may end up breaking your rules. In this case, they may incur a large bill.
  • Depending on the credit card type and issuer, you and your child may incur numerous fees and charges. Typically, credit cards come with annual fees, balance transfer fees, foreign transaction fees and overdraft fees. Late payments can also lead to expensive penalties.

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CREDIT CARD OPTIONS FOR YOUR CHILD

If you think that your child is responsible and ready for a credit card, then it may be time to give them access to one. It’s important to find the best option for their circumstances and needs. While making them an authorized user on one of your accounts is possible, there are other options available.

  • Secured: A secured credit card allows you to set limits on how much your child can use. The amount is based on how much is deposited in the account.
  • Service station: If your child has started driving, you can consider getting a service station card. Also known as a gas credit card, this type of credit card gives them authority to make small purchases in convenience stores at gas stations.
  • Low-limit: If you want your child to have their first credit card but don’t want to give them too much purchasing power, you can opt for a low-limit credit card. Some card issuers offer low-limit credit cards with a $500 maximum limit. You can also find cards with a low interest rate and low or no annual fee.
  • Emergency: You can also get an emergency credit card under your name and list your child as an authorized user. This can provide a safety net for them in the instance of an emergency.
Considering a Credit Card?

There are many factors to consider when looking for the best credit card for your children. Shop around and compare your options. Research different card issuers and card types. Make sure you also weigh the pros and cons of each. By doing so, you do not only ensure that your children are getting the best option but that they are also well-protected.

  • Research: You and your child should research different credit card options and discuss them. You can also review credit card ratings and compare their features online by visiting the card issuers’ websites.
  • Co-sign: A child may not be able to get a credit card under their name because of limited credit history or the lack of an income source. You can choose to co-sign their account in this instance. However, you will be responsible for paying their bills should they fail to do so.
  • Authorized user: Most parents add their children as authorized users to one of their existing accounts. This can help your child start their credit card journey without having the sole responsibility of paying for their purchases. Depending on the issuer, this option may help build your child’s credit history.
  • Secured cards: Signing your child up for a secured card can help them become responsible budgeters. You can deposit a certain amount to their credit line, limiting how much they can spend.

Ways to Get Your Child’s Name on a Credit Card

Generally, children under the age of 18 cannot get a credit card under their name. If you want your child to have a credit card, you can add them as an authorized user on your account. Depending on the card issuer, there may be a minimum age requirement for authorized users.

1

Is your child ready?

Your child’s maturity and responsibility needs to be at the level where they’re ready to make smart purchasing decisions. If you don’t think they’re ready, it’s best to wait on giving them a credit card. If they are, be sure you also check what spending limits can be in place for authorized users via your issuer.

2

Check account requirements

Each card issuer may have specific authorized user requirements and some may not even offer this option. Additionally, they may impose minimum age limits and require your child’s name, birthday and Social Security number.

3

Know what fees can incur

Credit cards typically charge fees — annual, late, transaction, etc. In some instances, adding authorized users can increase the cost. It’s important to review your account guidelines to avoid additional charges.

4

Complete the application process

The application process may vary per provider. Some companies allow cardholders to add authorized users through their online accounts or mobile applications. You may also contact your issuer with questions about the process and authorized users.

Prepaid Cards

Another increasingly popular payment card option for parents is a prepaid debit card. It is a type of payment card that people use for various purchases. It can also be used for ATM withdrawals and bills payments. Similar to debit cards, spending is limited to the amount available on the account. However, prepaid cards are not connected to a checking or bank account.

Advantages & Disadvantages of Using Prepaid Cards

Prepaid cards are a great way of teaching children about money management. Since they have a limited balance, it prevents overspending. You can also reload it with additional money at any time. There are some drawbacks to using prepaid cards that you should be aware of before getting one for your child.

Prepaid Cards: Advantages & Disadvantages

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Benefits
  • It is easy to get a prepaid card. You don’t need a bank account and there’s no credit check involved.
  • Prepaid cards are easy to use. They can function like debit cards. You can use them to make purchases, pay bills or in some cases, even withdraw from ATMs.
  • A prepaid card can be a safe choice for a child. If it is lost or stolen, the loss is limited to the amount available on the card.
  • Depending on the card, there may be additional protection against theft or loss.
  • A prepaid card is a great tool for budgeting. Your child can practice properly managing their finances and become responsible spenders.
  • Since a prepaid card limits spending to a specific amount, your child will not end up incurring debt.
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Drawbacks
  • One of the biggest drawbacks of prepaid cards is hidden fees. Review the fine print and read the terms and conditions thoroughly before getting one for your child.
  • There may be fewer purchase and fraud protections with prepaid cards in comparison with debit and credit cards. Be sure to check the card’s security terms.
  • Unlike credit cards, prepaid cards cannot help your child build their credit history.
  • The money your child keeps on their prepaid card will not accrue interest.

Prepaid Cards Options for Your Child

There are various prepaid cards available for your children. Compare features and fees to find the best option based on your child’s needs and the goals you have set. Find some of the best options, as well as their fees and features, below to help you get started.

  • Options
    Fees
    Features
    Best For
  • $5.99 recurring
    monthly fee

    $25.99 for six
    months

    $39.99 for 12
    months

    $59.99 for 24
    months

    • Parental control
    • Instant money
      transfers between
      family member cards
    • Scheduled transfers
    • Card activity alerts
    • Temporary lock card
      feature for protection
    • Fund requests to other
      family members
    • Family expense
      reimbursements
    • Payments checklist
    • Separate funds through
      envelope budgeting
    • Split payments
    • Set savings goals
    • Family billing

    Families with children
    who want linked
    prepaid cards

  • Up to $3.95 for
    the card ($0 to
    sign up online).

    $1 monthly fee
    ($0 for New York,
    Texas and Vermont
    residents).

    • Free early direct
      deposit
    • Easy ATM Access
    • Free money transfer
      to other Serve
      cardholders
    • Free to add
      subaccounts
    • Fraud protection
    • Text alerts
    • Mobile app
    • No minimum balance

    Cash-based budgeting
    methods without cash

  • $0 to $7.95
    monthly fees

    • Direct deposit and
      bank transfer
    • Mobile check deposit
    • Send money to family
      and friends
    • Pay bills automatically
    • Free ATM network
    • Different card options
    • Cash back opportunity

    Cash back opportunities

  • $3.99 per month

    • Temporary lock feature
    • Add allowance in
      seconds
    • Identity security
    • Monitor your children’s
      investments and
      spending
    • Accepted in stores and
      online

    Parental savings match
    for childrens’ efforts

  • $0 monthly fee

    • Fund from bank
      account, direct
      deposit or paypal
    • Virtual and physical
      cards available
    • Accepts Western
      Union deposits from
      200 countries
    • Freeze and unfreeze
      card easily
    • Free ATM withdrawals

    Online purchases and
    international deposits

Considering a Prepaid Card?

Prepaid cards can give your child access to a payment card while allowing you to limit their spending. While some parents may find this type of card a great option, it may not be the case for everyone. Make sure you consider your child’s readiness and circumstances before getting a prepaid card. Before you decide on a prepaid card, make sure you research and review the issuer, card options and your child’s needs.

  • Purpose: If you are looking for a card that can help your child learn money management and budgeting, but want to set limits on their spending, then a prepaid card may be a good option. However, make sure the card issuer allows you to control the account while still giving your child freedom to make purchasing decisions.
  • Licenses: Check if the card issuer has the necessary business licenses and authority to offer financial services to you. You can review the company’s website and read customer reviews.
  • Fees: Know the terms and conditions of the prepaid card. Find out if there are any hidden fees and certain penalties.
  • Consumer Protection: Your child may be vulnerable to fraud and other similar issues when using a prepaid card. Learn what consumer protection features and services the provider offers.

Setting Up an Account for Your Child

Getting prepaid cards is easy and there is no need to set up a bank account for your child. You can find prepaid cards on websites and online sources, through retailers, banks and credit unions. You can also easily fund them through direct deposits, ATMs, mobile devices or stores. Depending on the card, you may also be able to check your child’s card balance through text alerts, email notifications, mobile apps and company websites.

An illustrative image of an expert explaining about credit or debit card checklist.

Expert Advice on Giving Your Child a Card

Teaching children about financial management can help prepare them for future financial obligations and set them up for success. MoneyGeek reached out to several industry experts for their insights that could help you determine if debit or credit cards are a good option for your child.

  1. What do you think is the best approach in teaching children about financial responsibility?
  2. What tips can you give parents who are considering giving their children access to payment cards, such as debit, credit or prepaid?
Rachel Cruze
Rachel Cruze

#1 New York Times Bestselling Author, Host and Financial Expert at Ramsey Solutions

Kirk G. Meyer
Kirk G. Meyer

Registered Financial Consultant, Registered Social Security Analyst and Owner of KG Meyer, P.C.

Paul Scarfone
Paul Scarfone

Financial Coach and Owner of Dollar Whys

Resources

Understanding debit or credit card options for your child can be complex and take considerable research and consideration. The following resources can help you learn more about financial topics as it relates to children and find tips for teaching your child about money matters.

State Laws and Protection

  • Conference of State Bank Supervisors: Learn about state laws and statutory requirements for opening bank accounts for minors in this interactive map.
  • Federal Deposit Insurance Corporation: Learn about cybersecurity basics and get tips on how you can protect your children against identity theft, frauds and scams. You can also find out how to report suspected theft, fraud and scams.
  • Federal Trade Commission: Learn about the Children’s Online Privacy Protection Rule and how it can help protect your children when they interact with websites or online services.

Financial Education & Online Courses

  • Financial Counseling Association of America: Get expert advice on financial responsibility. This organization offers its services to consumers having trouble with debt management and repayment.
  • Financial Educators Council: Get access to different resources aimed at teaching kids about financial responsibility.
  • Junior Achievement USA: This is an organization dedicated to teaching students on how they can prepare for the workforce and give them hands-on experience to learn more about financial literacy.
  • My Classroom Economy: Access classroom materials and program guides that were created specifically for children learning about finance and economics. You can find materials suitable for children in elementary, middle and high school.
  • National Endowment for Financial Education: Help your children learn more about finance through the NEFE’s financial education programs.
  • Society for Financial Education and Professional Development: This organization offers financial education programs and professional development workshops to students and individuals in the workforce.

About the Author


Nathan Paulus is the director of content marketing at MoneyGeek. Nathan has been creating content for nearly 10 years and is particularly engaged in personal finance, investing, and property management. He holds a B.A. in English from the University of St. Thomas Houston.


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