Teaching Kids About Money with Mobile Apps

It's never too early to start teaching kids about money. Learn more about why financial literacy is important and which banking apps for minors are best.
By Maryalene LaPonsie

Our articles, research studies, tools, and reviews maintain strict editorial integrity; however, we may be compensated when you click on or are approved for offers from our partners.
featured_image

If you're a parent and want to hear a scary statistic, here's one: Only 33% of high schoolers who graduated in 2020 say being financially independent from their parents is one of their top goals for the next 10 years. That's according to the 2021 JA Teens & Personal Finance Survey.

There may be many reasons why teens aren't likely to prioritize financial independence but teaching kids about money might be one way to help them become self-sufficient adults. Given the prevalence of smartphones and mobile devices, using an app is a convenient and easy way to impart good money management skills from an early age.

Keep reading to learn more about why financial literacy is important and which banking apps for minors are best.

Why Should Kids Learn About Money?

Like it or not, as the old saying goes, money makes the world go round. Cash is needed for necessities such as food and shelter, but it can also pay for many of the things that make life more enjoyable, such as travel, hobbies and evenings out with family and friends.

Teaching kids about money will do all the following:

  • It will help them live independently. Being able to manage money successfully is essential to ensuring your child doesn't spend a lifetime borrowing money from you or asking to live in your basement.
  • It will keep them out of debt. Budgeting will help kids learn to live within their means. Plus, lessons on interest can help them make smart decisions about taking out student loans or financing major purchases.
  • It will allow them to reach their goals. As parents, we often encourage our kids to dream big. Having money in the bank and knowing how to use it wisely will help kids reach their goals - whether that's starting their own business or traveling the world.
  • It will help them build wealth. Even those with modest incomes can accumulate sizable savings if they know how to invest their money. Giving kids these skills could create a family legacy that will benefit generations to come.
  • It will help them live more fulfilling lives: They say money can't buy happiness, but in fact, studies do show that well-being increases along with income. That may be because those who are financial stable don't have to stress about paying bills and can feel more confident in pursuing their dreams.

However, you can't rely on schools to teach kids money management skills. Only seven states currently guarantee students will take a personal finance class in high school. That means it's up to parents to fill the gap. Fortunately, there are a number of apps that teach financial literacy.

Money Management Apps for Kids

Money management apps are a good place to start. These are often appropriate for even young kids, and many include convenient features for doling out allowances or rewarding children for doing chores.

Here are three apps in this category:

Rooster Money: As an allowance and chore tracker, Rooster Money has both free and paid versions. The app's star chart and virtual money tracker are free while Rooster Plus includes a chore management system that can tie allowances to chores. Rooster Plus comes with a free month trial and then costs $18.99 per year.

BusyKid: BusyKid is a comprehensive money app for kids that combines earning, saving, investing and giving. Parents can set chores and arrange for allowances to be directly deposited to a child's account. Then, the app can automatically save a portion of the money, and kids can choose to donate, invest or spend the rest. If you are looking for a prepaid card for kids, BusyKid has that too. The app, including a prepaid card, costs $19.99 per year.

Allowance & Chores Bot: For a simple way to track chores and issue allowances, check out the Allowance & Chores Bot app. It allows parents to set up chore checklists, arrange allowances to be automatic or occur upon parental approval and provide a history of spending, saving and chore activity. There is a free version of Allowance & Chores Bot available or premium features cost $2.99 a month.

Savings and Investment Apps for Kids

Take your child's financially knowledge to the next level by teaching them how to save and invest money wisely. Several apps in this category allow parents to set up custodial accounts that will allow kids to buy stock and watch it grow. Others teach lifelong savings skills.

Here are two options:

Savings Spree: Only available for Apple devices, Savings Spree is an app that simulates real-world situations as it helps kids learn the value of saving, investing and donating money. This app offers an engaging financial literacy game and no actual money is involved. It costs $5.99 to download.

Stockpile: If you want to let your child experiment with investing in the stock market, Stockpile is a good app for buying fractional shares. That means kids can use a small amount of money to buy a portion of shares in big companies such as Apple, Amazon and Tesla. Parents open a custodial account, and their child gets their own separate log-in for the app. Kids can review stock options and request trades which parents approve. There is no minimum balance requirement, and most trading activity is free.

Debit Card Apps for Kids

Paying with plastic is the norm nowadays, but it can pose a challenge when it comes to money management. It can be easy to lose track of spending if you aren't careful and learning how to responsibly use a debit or credit card should be a key component of financial education for teens.

The following apps offer a kids debit card that can be used with a parent's guidance and supervision.

Copper: The Copper Banking app was built with teens in mind. Parents can open accounts for up to five teens under their account, and each teen gets their own debit card which is managed through the app. Parents can easily transfer money to their child's account, and teens with jobs can have their paycheck direct deposited too. Kids can set up savings goals and have money automatically applied to those goals whenever money is added to the account. There are no monthly fees for Copper debit cards, but there may be a cost to have a retailer load money into an account.

GoHenry: This is another of the banking apps for minors, and it offers a suite of features that make it appropriate for children as young as age 6. The app allows parents to create chore lists and pay allowances while children can set savings goals and track progress. The app comes with a kids debit card that can be set up with parental limits. GoHenry is free for the first month and then $3.99 per month per child after that.

Beyond Apps: Lessons for Teaching Your Kids Financial Responsibility

Money apps are a convenient way to teach financial literacy lessons, but they aren't your only option. Sometimes it's good to use offline methods to teach about money. They can provide hands-on experience with cash and open the door for kids to ask any questions on their minds.

Here are a couple ideas to get you started:

Plan a major purchase together.

Whether you are going on vacation or buying a major appliance, invite your child to help you research the available options. This hands-on activity can help them learn how to compare prices and think critically about what makes for the best value.

If you don't have a major purchase in your future, similar lessons can be taught by letting your child grocery shop with you or by giving them freedom to buy their back-to-school clothing within a pre-set limit.

Don't cover their balance at the register.

This lesson is hard for parents and children alike. The next time you are at the register with a child who is short on cash for their purchase, don't jump in to cover the difference. While we don't want our kids to be disappointed, especially if it's an item they've saved for, teaching kids they can only spend what they have is a powerful lesson.

To avoid potential tears, help kids calculate the total cost, including tax, before they head to the register. If they are a few dollars short, offer the chance to be paid for a few chores when they get home and then head back to the store after those are done to make the purchase.

Match their savings.

You can encourage kids to save by matching whatever they put in their piggy bank or savings account. Expand on that lesson by explaining that many companies will match a portion of workers' contributions to retirement funds such as 401(k) accounts.

If you want to take it one step further, set up your savings match to be similar to what employers offer - such as 50 cents on the dollar up to a certain percentage of your child's allowance.

Break out The Game of Life.

Although not a perfect representation of real-life, classic board games such as The Game of Life and Pay Day can get kids thinking about what sort of money decisions they may need to make in the future. As a bonus, a family game night can be a good way to connect with kids without any screens involved.

Teach the magic of compound interest.

Compound interest is what turns modest savings into a comfortable next egg in retirement. Unfortunately, it can be a difficult concept to illustrate and understand. Still, there are some relatively easy ways to demonstrate how it works to your kids.

The marshmallow game is one option, or you could use real money. Give your child a penny and tell you are going to show them how that penny can turn into more than $10 over the course of ten days. Each day, double the amount of money they receive. So on the second day, they receive two pennies, on the third day hand over four pennies and so on. By day 10, your child should get $5.12 to bring the total to $10.23. Reinforce the lesson by explaining this is why it's wise to leave money in savings and investment accounts for a long time.

FAQs About Kids and Money

How safe are money apps for kids?

Major banking apps for minors should be as safe and secure as their adult counterparts. Still, you should review an app's privacy policy and permissions before signing up for any service.

When are kids ready for money apps?

While some apps may have features that can be used by younger children, most money management apps say they are best for kids ages 6 or older. However, you may want to wait until middle or high school for a kids debit card.

Should I give my child an allowance?

Parents have differing opinions about whether to give children an allowance, but it is hard to teach kids to manage money if they don't have access to cash. If you decide not to give your child a traditional allowance, consider finding additional jobs they can complete to earn money.

What expenses should my kids pay themselves?

The answer will be different for every family, but you may want to require younger children to use their allowance to pay for wants such as toys and treats. Some families ask teens who drive to pay for their own gas and pitch in toward car insurance as well.

How can I encourage my kids to save?

Matching a child's savings can be a powerful motivator, but you also want your kids to see the benefit of saving for themselves. Help them set goals and then use a money app to help them track their progress. Once kids have a taste of success, that may be all that is needed for them to develop the self-discipline to save on their own.

Experts Discuss College Student Finances

MoneyRates spoke with several financial experts on the vital importance of teaching kids about money and financial responsibility from an early age.

Meet the Experts

Barbara O'Neill

Professor, Rutgers University

Teresa Pelletier

Vice President, Fidelity Investments

Bolun Li

CEO of fintech platform Zogo

Taylor Burton

Cofounder of Till Financial

Why should kids be financially literate from an early age? Why do parents tend to keep kids out of money discussions?

Barbara O'Neill: Kids should be financially literate from an early age to take maximum advantage of the awesome power of compound interest, to help avoid expensive money mistakes in later life, and to develop future-mindedness that can inform positive financial actions (e.g., saving).

Parents tend to keep kids out of money discussions because they are very busy living their day-to-day lives, they are not sure how to start financial conversations with their children, and they may want to “shield” their children from harsh financial realities.

Teresa Pelletier: Research shows that children begin developing attitudes and behaviors about money as young as age six or seven, and according to additional research by the FINRA Foundation, more rigorous financial instruction leads to positive behavioral formation and better outcomes such as improved credit scores and lower credit delinquency. However, research also shows that only 27% of young adults know basic financial concepts such as interest rates, inflation, and risk diversification. Simultaneously, households or individuals who are less financially literate have been found to be more likely to take payday loans, pay only the minimum balance on a credit card, take on high-cost mortgages, and have higher debt levels. Having a low level of financial literacy can make young adults less financially secure, less able to make financial decisions, and more vulnerable to financial issues. Additionally, an individual having a low level of financial literacy can also impact the financial literacy of their children, due to how early children start to develop money behaviors. This, in combination with the fact that for many people conversations about money are seen as “taboo,” leads to many families either not including their children in financial discussions at all or actively passing down negative money habits.

Bolun Li: There's a strong case to be made for promoting financial education from a young age. Once they leave the nest, young people are typically confronted with an array of major financial decisions regarding student debt, credit cards, housing, car ownership, retirement planning, and taxes. At the same time, access to complex financial instruments is becoming more widespread than ever. Successfully navigating this new reality and avoiding costly mistakes requires a certain degree of financial savvy. Additionally, a growing body of research indicates that financially literate individuals tend to be less vulnerable to fraud, make savvier spending decisions, carry less debt, experience less money-related stress, and be more likely to meet their financial goals over the long run.

Taylor Burton: Kids today often have a smart device in their hands before they can even walk, entering them into the economy earlier than ever before. Gen Z and Millennials are also openly discussing personal finance, investing, etc. in a way previous generations never did. As a result, it's necessary to start teaching kids about financial literacy at an early age to ensure that they have a solid foundation to build off of as they begin to make more sophisticated spending decisions. However, this doesn’t change the fact that conversations around money are often awkward, leading many parents to avoid them altogether. Even though “money talks” may be uncomfortable at first, it's important to break the ice and start teaching your children about financial literacy at a young age. Just like playing a sport or an instrument, practice makes progress. Kids learn by doing, and the earlier they start thinking about money, the easier it will be for them to develop smart financial habits.

What are some good tips to teach minors about responsible money management? What are the most important lessons about money to instill in kids?

Barbara O'Neill: Adults can use every day experiences as teaching tools (e.g., trips to a bank ATM or using a credit card). They can give children an allowance to manage and help them to create a personal budget for it and consider matching a child’s savings similar to a 401(k) plan match.

Teresa Pelletier: In today’s digital world, it is important to teach kids the basic concept of using money as a medium of exchange. Fidelity Investments has a few programs and products to help teach children money management. In May, Fidelity launched the industry’s first brokerage account designed exclusively for 13- to 17-year-old teens. Fidelity’s Youth Account can be accessed through the Fidelity mobile app and allows teens to save, spend, and begin investing, offering tailored educational content and tools for each step of the way. One of the best ways to learn is by doing, which this app allows teens to do. Parents and guardians can also monitor the account, which can foster organic opportunities for money conversations and lessons. In addition to the Youth Account, Fidelity has free resources available to all parents, teachers, and kids through Fidelity Financial Forward. The site contains financial education resources refined from our ongoing financial literacy program, which creates FinLit education programs across the country both for children and for teachers to ensure they have the resources available to educate their classes.

Bolun Li: I believe it's vitally important for minors to understand the importance of building and managing credit effectively. Without this grasp on credit, many young people see credit cards or other forms of credit as “free money,” as one of our Zogo users so aptly described it. They then use credit to buy things they can’t really afford or don’t really need.

Taylor Burton: Make a plan: Teach your kids to make a plan around managing their money. This plan should start around the time your child receives his or her first cell phone (usually between 8 and 12 years old). Creating a plan will enable your child to prioritize what’s most important to them and make the most of their budget. A great way to help kids visualize money is by setting goals for both spending and saving. This allows them to see the big picture related to saving for longer-term purchases (such as a car or a new phone) and also get experience buying things they may want in the near-term.  

Help them prioritize: Instead of placing strict spending controls, have a conversation that will help teach your kid how to prioritize their expenses. This will help them become more self aware about managing their finances. Showing kids what spending means and how they can make smart financial decisions will build a foundation to make them into successful economic actors later in life.  

Make it real: Include your kids in spending decisions so they can gain real world experience managing money. Back-to-school shopping is a perfect time to give your kids a budget and let them practice making purchases that they care about. It’s also important to expose your kids to the reality of paying bills as the economy increasingly moves towards digital payments. Sit down with your kids and show them how you pay for things like phone bills and streaming services. This way they will learn about the recurring costs attached to the amenities they use on a daily basis.

What are the most important lessons about money to instill in kids?

Barbara O'Neill: Pay yourself first (PYF), live below your means, don’t borrow more than you can afford to repay, and help them to learn to budget for needs vs. wants. For young children, teach them dollar and coin denominations. Teach them decision-making when it comes to money using rule of three product/service comparisons.

Taylor Burton: Teaching kids how to save and invest is crucial, but it's even more important that they learn how to spend. Like it or not, we are living in a spending economy, and wealth doesn’t come from saving. If your child doesn’t have experience paying for real world expenses like bills and groceries, there’s a high chance they will struggle when they leave the nest. Giving kids input on relevant financial decisions like back-to-school shopping is a great way to introduce them to the spending economy and plant the seeds for good money habits down the road. - It's also important to nurture your children's entrepreneurial spirit. During the pandemic, Gen Z leaned into their passions as a way to make extra money, often online, during a period of shutdowns and remote schooling. Whether it's a traditional gig like lawn mowing or an online business like an Etsy shop, encouraging your kids to pursue side hustles will give them valuable practice managing money.

Do you have any apps, games, or programs that you would recommend to teach kids money management?

Barbara O'Neill: Next-Gen Personal Finance Arcade and Jump$tart Clearinghouse.

Bolun Li: There is a wide array of great resources that young adults can consult to broaden their financial knowledge. These include Zogo, of course--our app-based solution has gamified financial literacy to make it fun, accessible, and rewarding. Additionally, there are a number of excellent podcasts and publications out there that can break down complex financial concepts and make them easier to understand. It’s certainly worth the 5-10 minutes a day it takes to get to grips with these topics.

Taylor Burton: Family banking platforms are great tools to teach kids about money management and replace awkward family conversations with real actions and experiential learning. At Till, we emphasize collaboration and encourage kids to build smart financial habits long-term by leveraging family and community support. By utilizing secure and accessible financial features with the support of family and community, Till opens up financial literacy while advocating for kids to have greater economic influence. Because Till does not rely on subscription fees, it is truly accessible to all families.

 

Give Us Feedback - Did You Enjoy This Article? Feel Free to Leave Your Comment Here.