How Do Teens Manage Their Spending Money?
What methods do your teens use to have access to money as they get into high school? My oldest is entering high school next year and will start to do more on her own and I'd like to hear what options your teens use to access spending money without carrying a lot of cash. Thank in advance for your recommendations!
Apr 25, 2023
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Our teens have Capital One Teen Money accounts - no fees, they get a debit card, and I can re-load it (from our account or their savings account), freeze it and see their purchases from the Capital One app or website. I like how much info I get and how easy it is to manage. The account also has the ability to set savings/spending goals, but we haven't used that feature. Between that and Venmo they hardly ever need to carry cash for anything. https://www.capitalone.com/bank/checking-accounts/teen-checking-account/
We bank with Chase, and my 8th grader has a Chase First account that gives her a debit card. It is free, there are no fees, and it is easy to transfer money between the two accounts (they are instant even though they say next business day). She has had it for a year plus and it's been really convenient for both of us. I'd look into what type of kids' account your bank may have that includes a debit card.
Credit cards have better protections than debit cards. Just put your teen on your credit card and set a budget of $xxx. Ask them to make a list of their spending so you can compare to the bill. Putting them on your card means that they start to develop a credit score, which is quite useful for a young adult.
I opened a student-dependent account for my child at Bank of America, which was associated with my account. No fees, I could directly transfer money to her, and I could see all her debit card transactions in my app, as well as check for fraud. When my child went on an out-of-state school field trip, I also made her a user on my credit card in case of any emergency.
Debit card! But mine usually has about $20 on him as well.
My 14 year-old has a capital one teen checking account. It was super easy to set up and has been great, comes with a debit card and is linked to my accounts so I can transfer her allowance over once a month, etc. She's also a soccer ref and is able to get paid directly into that account for her work.
We've been using FamZoo (https://www.famzoo.com/). This allows us to pay our kid's allowance via deposits into a debit-card account. The app provides a bunch of options for setting up budgets within the account, paying for extra chores, etc., and of course monitoring spending. Our kid isn't much of a spender, so frankly we only use the app as a way of handling her allowance. The goal of the app is teaching financial literacy. It's convenient enough that we plan on continuing it when she's in college next year.
A ggod description can be found here: https://www.fool.com/the-ascent/personal-finance/famzoo-review/
We use the cash app to the kiddo's phone, one amount for weekly school lunches and the other for allowance, and we work together to casually talk out savings and financial planning weekly. Two separate amounts is kinda the "bucket" system for them to budget, and helps frame the lunch money as lunch money and not to be skipped in favor of saving it for something else.
We started out with a Greenlight card originally; that allowed us to actually make deposits sort into separate budgetary accounts for them (save, donate, spend) and provides an ATM style Visa card to spend with. My child just didn't care for using a card, especially after tap to pay with phone became an option.
Debit cards. At around the time they started high school, each of my kids (now young adults) opened teen checking accounts at Wells Fargo, which are just normal basic checking accounts (although the word is a little funny given that neither of my kids has ever had, nor needed, paper checks!) except that it's hard to overdraw the account (instead the transaction will be declined), and it's a joint account with one or more parents/guardians. When the kid turns 18, the account automatically becomes a regular checking account. With their checking and savings accounts held jointly with me, at the same bank I use, it's easy for me to monitor and to transfer money between theirs and mine as needed, and they use their debit card or any payment app linked to the account for buying stuff. I'd guess most banks offer something similar.
Later we made them "authorized users" on one of my credit card accounts, which turned out to be helpful enough that I kind of wished I'd done it earlier, but that was for buying things I'd agreed to pay for (college visit travel, emergencies, the occasional "how about you order pizza for dinner tonight"), not for their regular personal expenses. At 18 they can get their own credit card. If, before age 18, you want the better fraud protection of a credit card (vs debit) and it makes sense for your teen's spending patterns, you could consider getting an authorized-user card on an account that you don't use for anything else and let them manage it.