MAK: Hi, I’m Mak.

GRANT: And I’m G.

BOTH: And you’re here for money with Mak and G.

MAK: The only show that teaches you about finance.

GRANT: Business.

MAK: And accounting from a kid’s perspective.

GRANT: We are on a mission to demystify money to help you and your family be financially secure. Welcome to Educounting. Where my dad is passionate about financial education. Today’s video is paper or plastic, which is how we pay for what we buy.

MAK: When I go to the store with my mom, and we’re ready to leave, they ask for paper or plastic, which means do you want paper bags or plastic bags?

DAD: Hey, it’s me again. The world is changing quickly. I’ve read that almost half of the people in the US have ordered their groceries online. That’s crazy to think that probably five years ago that was close to zero. Anyway, plastic bags were introduced in US supermarkets about 35 years ago and have since grown to be four out of every five bags that are used there. In total, over 100 billion plastic bags a year are used.

MAK: Did you know you can pay for things the same way. That was paper plastic bags, but it was paper money or plastic money.

DAD: But just like we’ll find out when paying for stuff all of us are moving from paper money to plastic money. The numbers say more than eight out of every 10 purchases are now done by debit or credit cards. That’s a lot of data that’s flying around. And it’s very similar to the bags used in grocery stores with more being plastic. Many of us buy stuff online from companies like Amazon where you can’t pay with paper money, so it only continues to move towards plastic. Hey Alexa, order me a supersoaker and the LOL surprise Glen glitter series doll.

MAK: If you want to pay with paper, you can give the cashier paper money or write a check. If you want to pay with plastic use a credit card because mostly credit cards are plastic.

DAD: Since people are using less dollar bills because plastic is easier, they are carrying less dollars in their wallet. If you ask people how much money they carry, three of them would carry less than $50. Now of those three, one would have less than 10. Another would have 11 to 20. And the last one would have between 21 and 50. Now, Grant loves the $50 bill because it has his name on it right under the picture of Ulysses S Grant. Ulysses was a president and general during the Civil War, and they said he had a talent for taming horses. Hey, I probably walked around half the time with no money whatsoever. But paying with cash makes it more real. As you can see the actual money coming out of your hands.

MAK: Paying with money is easy. But when you pay with a check, it’s a piece of paper that you write your name and number on it and then sign it. It has numbers at the bottom too.

DAD: Children may never have to write a check as few people write them today. But when checks are written, they’re usually for bills like pain on your internet or your trash removal. They’re sent through snail mail, you know the one that goes in your mailbox by the street. When I lived in Switzerland, 20 years ago, I could pay my bills and use a machine located at the bank. Each Bill had this funny looking black and white splattering on the bottom that the machine looked at. And it could tell how much needed to be paid and which company to send it to all electronically. Then Bing, it was paid. It was like magic. Abracadabra.

MAK: Remember your bank account? Well, the store takes a check and looks at those numbers which are the bank and your account number.

GRANT: The store sends it to the bank who takes the money out of your account. It’s super easy.

DAD: Your cheque has numbers on the bottom, which are like an address. Just like your house has an address of say 123 Main Street. It’s called a routing number. I’m so lost. Which way did he go? When going to the store at your grandmother’s house you use the address and take a route to get there. You go down this street, turn left and then turn right. The address in the bottom tells the computer where the check needs to go to find its home at the bank. Mi casa a su casa.

MAK: If you pay with a credit card or plastic, the first thing to do is put the card into a machine. The machine checks it to make sure your card is okay.

DAD: Have you ever seen or helped your parents swipe their credit card when in pain at a store. When you swipe the computer reads the information on the back of the card. Now some cards have a gold or silver chip on them and are now inserted into the computer. It’s easier for thieves to steal your card when you only have to swipe it. But it’s much harder when you have the new chip. Europe, which is the area across the Atlantic Ocean from the US, started using chips 10 years before us. When I lived in France. They would call it a puce which means a chip or F li Rolla Sable.

MAK: Most people have a limit which means you can’t buy something over your limit like a $100,000 car but you can buy groceries, toys, computers and other stuff you need to buy.

DAD: 

In the US, you see an average Mac spending amount of around $10,000. But that depends on several things like your age, or, um, so Oh, old your salary. And if you pay your bills when you are supposed to, most of the time, you have to be 18 years old to get a credit card.

MAK: If the machine beeps approved, the store lets you leave, then every month the credit card company, as above your purchases or charges.

DAD: Sometimes you don’t get approved. I had it happen once not because I was over my limit. But because someone saw the numbers on my card and started buying stuff for themselves. That’s called stealing. Because I didn’t say they could do that. Some of the things thieves like to buy with a stolen credit card are drones. electric toothbrushes. That was the same sound for the drum, sorry, makeup and shoes to name a few. With the monthly bill, you can see all your purchases together. Hey, this is very important as we start to make sure we don’t spend more money than we have. Okay, that probably sounds a little weird. But we’ll get to that in our next podcast,

MAK: You can then write one check to pay for everything you purchased on your credit card instead of a check each time you go to the store.

DAD: You can read a check, or you can tell the credit card company to simply take the money each month from your bank account. So why does someone get a credit card because it’s a simple swipe being done, then you go to the next door. Plus many places online will only take your order if you have a credit card. Plus, you can get huge benefits by having a credit card. Every time you use your credit card, you can get points which allow you to get money back for free, free airline flights and free hotels for a free vacation. lo ha yay. Or other free stuff. It can be huge. I went back to Spain this year with Mak and G and the family. I had our hotels and two flights paid for free with the points for my credit card. Yeah, baby, my favorite four letter word is free.

GRANT: What happens if you don’t have enough money to pay for all of your purchases, then you might be able to get more of that later.

DAD: Okay, kids, this part is for the parents and it might get a little boring, but make sure they listen. Credit cards are a tricky thing. They can get people into trouble when they don’t have the discipline to live within their budget. But there are so many benefits that you can receive simply by utilizing them for spending that you normally do. Our Costco credit card returns over $800 per year every year, while my other credit card gives us great free flights and hotels. So who wants to throw away that kind of money or miss out on a vacation? So how do you start, a big percentage of teenagers start with debit cards. Even though we didn’t speak about them, the card is attached to a bank account. Generally, you can’t make a purchase in excess of the money in the account. There are various cards out there in which a parent can set limits on spending. The card also allows access to cash which can be done without a fee. Credit cards on the other hand, generally charge a fee to take out that cash and sometimes you really do need access to it. Credit cards usually require the holder to be 18 on their own. Some cards are designed for teens and can be started a little earlier but not by much. However, you can get a card earlier if you put them as an authorized user on your account. A benefit of having a card is that it starts to build credit history for your child. However, it has risks. If there are any credit issues from you or your child that could affect both of you. So make the decision very carefully. And I’d be cautious taking into consideration the maturity level and discipline of your child. A good place to start is with that debit card first age isn’t as much of an issue. I’ve seen that some companies don’t have an age restriction at all. And you can attach it to their own account which you have control over. Now it brings it full circle within our discussion. Should they get one? I believe they should. We’re trying to open the conversation up to making the right decisions. Since we’re in the 21st century transactions occurred digitally, and all the data can be reviewed together. If you give a child cash to begin the process, you don’t know if they spent $4 of their $5 allowance on cokes at a vending machine, lost it or gave it to someone else. And a big key to financial health is tracking all of your expenses. Plus having a debit card limit spending which is a real issue in the US. consumer debt is at an all time high. Let’s walk before we run. Okay, it’s better to be able to give them guidance before they go out on their own to get a credit card. And by having a debit card under your control. You can review their purchases and have discussions about their activity. That’s my quick two cents. Thanks for being here, where it’s fun to talk about money and learn things on money with Mak and G and remember, start young and grow wealth.

MAK: We hope you liked this episode. Now it’s time to grab your mom.

GRANT: Or grab your dad.

MAK: Because it’s now time for you to talk to your parents about what we’ve discussed. Join us for our next episode on paper or plastic too. Thanks for joining us. If you haven’t yet, be sure to subscribe, rate and review this podcast.

GRANT: We want to help you succeed. And if you want more insights on financial education, check out www.moneywithmakandg.com for lots of extra stuff which is growing all the time. Thanks for listening. 

DAD: Bye!