By Kimberly Palmer | NerdWallet
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Giving money to teenage children might sound simple, but it can quickly become complicated. Parents often want to set limits on how much their teens can spend, teach them about money management and protect them from fraud, all at the same time.
“It’s about knowing your kids and tailoring the approach a little bit to the child,” says Amy Spalding, a certified financial planner at District Capital Management, a Washington, D.C.-based firm. Some kids need more active help to stay organized and learn how to stay within a budget, while others need to be encouraged to practice spending in the real world.
Here are some strategies to consider when providing money to your teenager:
Start with cash
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, says Dan Tobias, a CFP and founder of Passport Wealth Management in Cornelius, North Carolina. “First, get them to understand and appreciate money with paper. Then, when you need to, you can switch to electronic methods,” he says.
That’s the approach he uses for his own three children. He gives them a cash allowance and lets them decide how to spend it, which includes letting them make mistakes.
“Don’t be afraid to let them fail,” Tobias says. Kids might lose a $20 bill, splurge on something that breaks the next day or, in his case, buy a fish and a tank that they soon don’t want anymore. Those mistakes are critical teaching moments, he says, so it’s important parents don’t micromanage their kids’ spending.
Leverage familiar apps
Once children start earning and spending their own money without you nearby, digital payments become more…
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