From Apps to Accounts: Here’s Where Kids Are Storing Their Money
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Where does this episode fit in The New Money Rules for Kids series?
This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. Listen at schwab.com slash Washington Wise.
Here's your money briefing for Wednesday, November 29th. I'm Arianna Aspuru for The Wall Street Journal. This is the third installment of our series, The New Money Rules for Kids. So far, we've looked at how kids are learning about money online and how some kids are using social media to amplify their small businesses. Now comes a tough decision. Where should children keep their money? Nowadays, it's a lot different than just keeping your cash under a mattress or even walking into a bank with all of your buddies stacked on top of each other in trench coats. Kind of like what happened in the 1994 movie reboot of The Little Rascals.
What is your account number? Uh, seven.
When do children typically move from cash to digital money and why?
Seven. Seven.
Try eight. Eight? Eight? And while things have changed quite a bit since those days, the importance of having a place to put your money remains the same. But with new tools like payment apps and online banking, how could a kid's first financial account set them up for success later on in life? That's after the break.
Listen at schwab.com slash washingtonwise.
Kids who have some money have lots of options for how to hold on to it. For starters, some of it might still be in cash. Even with so many online interactions with money, our family and tech columnist Julie Jargon says very young kids still get cash for birthdays, for doing chores, and things like that.
But as they get older, kind of to the 10, 11, 12 age range is when they typically start using these apps when they have phones or iPads where they can start keeping track of their chores.
We talked earlier in this series about how some people are concerned that paying with something like a card instead of cash can lead to overspending. But there's a flip side to consider. For one, it's easy to misplace cash.
What research explains how digital payments change kids' spending behavior?
If you give a kid, you know, 30 bucks and you ask them a week later where it went, they probably won't be able to tell you where it went. Like, well, I don't know. I mean, I'm the same way with cash. You spend it, it's gone, you forget where it even went. Whereas if you have a record of it, you can see and you can maybe feel a little guilty about the frivolous things that you spent money on. And you see that balance inching towards zero, it might make you pause.
This idea is kind of the opposite of what a lot of people think about when paying digitally. But there's some research to back it up. A recent study from Notre Dame found that people actually pay strategically with cash when they want to forget about a purchase and use a card to remember it. There are a few places where a kid might want to have their money in something other than cold, hard cash. We're going to walk through a few of these options. First up, payment apps, just like the ones for grownups. Cash App, Venmo. You can send and receive money, hold a balance on the app, all connected to a bank account.
How do mainstream payment apps like Cash App and Venmo work for teens?
Both Cash App and Venmo give parents the option to track their child's activity on the app. Here's Julie again.
They actually have sponsored accounts now so that if you're a parent or a guardian, you can sponsor an account for anyone that's under the age of 17. And you have to be at least 13.
The account is linked to a bank account. But many times for a kid, it can act like a digital wallet. They can see their balance and even use that money through a physical card they can sign up for through the app.
A lot of kids really like to have a card, a physical card. So even though they don't want physical cash, they still want something to hold a lot of times rather than just, you know, using their phone to swipe at a retailer.
With Cash App and Venmo, parents still have some oversight where they can monitor what their kid is doing in the app and flag it if something isn't right.
Parents can lock and unlock their teen's debit card, they can monitor their account balances, and they can receive notifications of activity that's happening on the debit card and through the app.
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Chapters
7 chapters
1
Where does this episode fit in The New Money Rules for Kids series?
0:00–1:07
2
When do children typically move from cash to digital money and why?
1:07–2:56
3
What research explains how digital payments change kids' spending behavior?
2:56–4:03
4
How do mainstream payment apps like Cash App and Venmo work for teens?
4:03–5:56
5
What features do kid-focused fintech apps like Step and Greenlight offer parents and kids?
5:56–8:20
6
Why might parents choose a youth bank account and how do checking and savings compare?
8:20–9:44
7
How much of allowance should kids save and what saving rules do experts recommend?
9:44–10:30
Speakers
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