Today’s Finance: The Greenlight® Card Experiment for My Daughter
What does the latest episode of The Disciplined Investor have to do with my daughter? In episode #521, I’m hearing Erik Townsend, host of MacroVoices Podcast, strongly suggesting that my daughter will come of age in a cashless society with negative interest rates. So, everything I am trying to teach her with the Greenlight® Card will be yet another ancient practice regarded as useless by a brave (depraved) new world.
In total defiance of Suze Orman, my daughter has an iPhone so she can contact me and I have a winning chance of knowing where she is. Why would I not really know where my daughter might be most days of the week? It is because I do not live with my daughter—based on the IRS definition of a dependent child. (BTW: even when I could declare my child as a dependent I would still be concerned that she would declared as a dependent twice—unless I am mistaken, a dependent child can only be declared once.)
The Greenlight® Card is a debit card that can be used with Apple Pay on an iPhone. Any purchase my daughter makes can be monitored and portions of her funds can be allocated exclusively to one retailer—like Whole Foods or Trader Joes. This card should allow my daughter to learn about compound interest because I have challenged my daughter to keep 10% of every inflow into the Greenlight® Card. I have promised her that I will match her 10% savings monthly. I will even pay my daughter $5 should she ever send me a bill, accurately accounting for my matching responsibilities (she probably will not do this).
When my daughter is successful consistently over time, she will have the “problem” of having “too much” money in her account. When the Greenlight® Card balance exceeds $500 the overage has to be transferred into a bank savings account in $250 chunks. Suze Orman will definitely disagree but I see my daughter doing quite a bit work here—and I am slowly cutting her off from my physical debit card use: I seriously expect to rarely pay (eventually) for ‘trivial’ items (physically in a store) for my daughter. When my daughter and I communicate financially, it will be done through an instrument like the Greenlight® Card. I will simply be the driver (and maybe a bag carrier) for my daughter: I will rarely reach into my pocket to pay for anything.
It will truly be a blessing when my daughter hears me say the word “wait” and she smiles. When I refuse to purchase something for her she will not be upset—she would be trained to wait for the funds to build up in her Greenlight® Card account. When she is older, her mother may invest a portion of my child support payments into the Greenlight® Card. My daughter could, say, take over all of the grocery shopping for her mother’s household (this, again, is very unlikely but would make Suze Orman happy). Nevertheless, I commend the mother of my daughter for not involving the government in our child support settlement. It would be very unlikely that my daughter would have an iPhone, this new Greenlight® Card experiment and quite a few other things had the government been involved with these finances.