Article originally posted to The Wall Street Journal.
Parents today worry that as their kids embrace money apps, they won’t understand the value of a dollar.
It’s a stressful possibility. Many of us worry that when our children use money online or in an app, it’s not the same lesson as taking $5 out of their wallets and handing it to someone else. Does money on a screen feel the same as money in your hand?
So far, those embracing these apps have found some of those fears to be overblown. Parents say the apps help their kids keep track of how many knickknacks they buy, while creating ways to teach money skills over time.
Each app has specific parental-oversight tools, so it’s on you to stay involved.
Monica Romer’s 14-year-old daughter, Ryleigh, was constantly losing cash, so Romer decided to create an account for her on mobile-payments service Cash App. She can see her daughter’s transaction history on the app and Ryleigh can pay for things with a Cash App debit card.
Ryleigh and her sister, 10-year-old Serenity, often walk to their local Wawa store in Jacksonville, Fla., to buy snacks after receiving their allowance. Before she had the app, Ryleigh would wonder why she was broke after just a few days, says her mom.
Once they started using Cash App, Romer says she began reviewing purchases with Ryleigh and asking questions like, “Did you really need to buy this?”
With the app, Ryleigh says, “I can see how much money I’m really spending.”
The teenager has another problem with paper money: “I don’t like paying with cash because you have to count it when you go to the counter.”
No more birthday checks
Numerous parents tell me that when their kids receive cash or checks, they ask their parents to deposit them and then transfer the money to them digitally.
A survey of 1,000 U.S. teens conducted last year for Citizens Financial Group and Junior Achievement found that 57% of teens said their parents give them cash, down from 71% in 2019.
The tedium of being their kids’ bankers has led many parents to get other relatives on payment apps. It’s not always easy to get all generations to go cashless, as I reported earlier.
Before Romer knew about Cash App, she helped her mother-in-law sign up for PayPal, so she could send birthday money to the girls. Now, rather than walking her mother-in-law through another app setup, Romer links her own PayPal account to her Cash App to transfer the money. Other relatives have signed up for Cash App.
There’s also the benefit of tailoring the app to your child’s needs. Some kids struggle to save money while others misplace it.
In 2021, before Ryleigh had Cash App, she went to a church convention and blew through her spending money, about $125 in cash. This past winter, she brought a debit card loaded with $100. She came home with $30 left over.
“This has helped her rein in her smaller, sillier spending,” Romer says. “She’s more mindful.”
‘You just stick the card in’
Reviewing spending in apps gives parents teachable moments with their kids about accountability with money.
Jennifer Anderson recently began using Step, a kid-friendly financial app, with her 11-year-old daughter, Baylee, and 9-year-old son A.J.
“My daughter has a hard time saving,” says Anderson, of New Market, Ala. “She’d put money in different wallets and forget where it was.”
The Andersons opened a checking account and told their kids that half of their allowance would go to savings and half would go into Step for them to spend via debit cards.
Kids like going cashless because it’s easier to buy things with debit cards.
“You just stick the card in and it’s done in five seconds,” A.J. says.
Mobile banking apps
Some banks offer youth accounts that can be monitored on mobile apps by parents and include debit cards, including Chase, Bank of America and Capital One. There are also apps designed specifically to help kids learn money management:
Fees: There are no customer fees—Step makes money from transactions when you spend. You still might incur some ATM fees outside Step’s network.
Parental oversight: Parents or guardians can sponsor minor accounts by creating a separate account from which to transfer money. Parents can view their kids’ balance and activity, add money and freeze their debit card.
Fees: Monthly subscriptions range from $5 to $15 for a family with up to five kids.
Parental oversight: Parents can send money, set debit-card spending limits at specific retailers and freeze spending. Parents can create lists of chores in the app and pay children for completing them. Kids can also invest money from within the app, with parents approving every trade.
Fees: Cash App, which is owned by Block, offers standard deposits to your bank account and instant deposits to your Cash App debit card. Standard deposits, which take one to three days, are free. Instant deposits are subject to a fee of up to 1.75%.
Parental oversight: If you have a verified Cash App account, you can sponsor an account for anyone ages 13 to 17. You can track your teens’ activity in the app and disable their access to the debit card. Parents or other adults overseeing a sponsored account must approve children’s requests to access stock and bitcoin trading.
Fees: There are no fees for sending people money from your Venmo balance or for receiving payments from other Venmo users. There are out-of-network ATM withdrawal fees, fees for check-cashing and fees for transactions with businesses.
Parental oversight: Parents can lock and unlock the teen debit card, monitor their kids’ account balances and receive notifications on their account activity. All teen transactions on the PayPal-owned app are set to private by default; only parents can update the privacy settings.