Summary
When children are using money on their own for the first time, sticking with cash can be the easiest way for them to learn how to manage it. “Don’t be afraid to let them fail,” says Dan Tobias, a CFP and founder of Passport Wealth Management.
When children start earning and spending their own money without you nearby, digital payments become more appealing. You can use methods you and your kids may already know, like Apple Wallet, Venmo or other apps already connected to your phone. If a teen overspends without permission, that can lead to a helpful conversation about budgeting.
Kids ages five through 17 can use the BusyKid app, which costs $4 a month. Teens can save up to the amount of their earned income with a limit of $7,000 for 2024. Investing in a Roth IRA can be a smart next step for children earning their own money.
Kimberly Palmer is a personal finance expert at NerdWallet. She has been featured on the "Today" show and in The New York Times.
