How I Give Money to My Teenager

It’s one of the most common money questions my friends with kids ask me: Have you figured out the best way to give your teen money? My friends’ children are usually approaching ages when they need to be able to spend money without a parent nearby.

Cash can be risky and inconvenient. It’s easy to lose and hard to transfer unless you’re standing next to each other. Handing over your credit card carries its own dangers, because a spendy child could quickly rack up a big bill. Several apps and debit cards aimed at kids have popped up in recent years, but some carry monthly fees and it’s hard to know if the cost is worth it.

Find a method that works

In my house, we finally found a method that works best for us and our teenage daughter after a lot of trial and error. When she was 12 and just starting to venture to the local coffee shop with friends without me, I would give her a cash allowance, which she would use for those kinds of treats.

But the limits of cash quickly became apparent. First, as someone who primarily uses digital currencies, I rarely had cash to give her. I would constantly forget to pay her allowance, too. And if she suddenly needed money while walking home from school, I had no way to send it to her.

We explored different debit card and payment app options, finally settling on Greenlight, which offers an app for money management along with a debit card. (There are also lots of other apps parents can choose from, including GoHenry and BusyKid.) At first, I was resistant to the idea of paying around $6 a month, Greenlight’s lowest-priced plan.

But our cash system wasn’t working, so we gave the app a try and are glad we did. The convenience of being able to automate her allowance and send her money when she needs it is well worth the price. I’ve been able to send her money for food at school when she stays late or when she’s out with her friends without cash.

Build good financial habits

She’s also learning about budgeting and saving. The app makes it easier for her to move money into different buckets tied to savings goals. An app can’t replace a conversation between parent and child about money, but it can inspire us to have more of them and make it easier to follow up on spending and savings goals together.

When I spoke with Jennifer Seitz, director of education at Greenlight and a mom of three, she shared that those conversations are critical. “Parents are the number one trusted source of financial education for kids,” she says, noting that many children don’t have the opportunity to study financial literacy in school.

Spending money themselves and learning to manage a budget helps them practice the kind of lessons parents are trying to impart, Seitz says. “It makes it real to them and not just an abstract concept,” she adds.

I’ve seen that first-hand with my daughter. On occasion, she’s run out of money when she really wished she could buy a treat at the coffee shop or new skincare products. She had to either wait for her next allowance or figure out a way to earn some extra cash in the meantime, usually by babysitting.

Those kinds of experiences are critical, says Sarah Behr, a financial planner and owner of Simplify Financial in San Francisco. “The easiest thing would be for a parent to say, ‘I will pay for it,’ but that’s not setting them up for success for how to live out in the world,” she says.

As parents, it’s so hard to watch our kids experience that kind of discomfort, especially when a few taps could easily send them the money to make it go away. But I agree with Behr — we have to resist that temptation and let our kids practice managing limited resources without always bailing them out.

When you’re managing money on your own for the first time, those kinds of painful experiences are inevitable. I still remember when I bounced a check during my first month at college. The fee my bank charged only compounded the misery.