I was looking at some better ways to give cash to my teenage daughter for allowance and lunch money. I don’t think she’s old enough for a credit card, especially since we’ve already had to deal with an identity theft issue once last year. Do you have any good advice on a simple way to give her money without having to take out cash all the time?

A.R.

Dear A.R.,

Thank you for your question. There are some really interesting ways to teach our children about the responsibility of earning and spending money. It is also very important to teach our children the pitfalls of bad spending habits.

When I was a teenager we earned money by babysitting, raking leaves, shoveling snow, or waitering. Payment was made in cash back then. We would have some way of saving the money—in an old book, a piggy bank, a strong box, or just under the mattress. The money always called to me to spend it right away. Luckily, at my bar mitzvah, my mother insisted on opening a bank account, and gave me a passbook (ask your kids if they’ve ever heard of a passbook). This was the only way I was ever able to hold on to what I’d earned, because it wasn’t easily accessible all the time.

Today things have changed with the introduction of mobile payment. There are a few options we now have to allow us to give our kids cash on the go, while at the same time limiting their ability to spend without stopping.

First off, one can go to a store and buy a prepaid gift card. Pick the ones that can be replenished by the store of purchase or that give you an online option. These cards have one or two drawbacks. If the user goes to a restaurant, a little secret is that the restaurant will pre-charge slightly more than the bill to make sure that they can add a tip later. Thus, if their card only has $20 on it, and their bill is $19, they might still get declined. That is a situation we definitely don’t want our kids in. Also, these cards have an initial cost of between $3-6. This isn’t terrible if your child is good at holding onto them, but you don’t want to constantly have to buy new ones.

I think the best option in this regard is PayPal. I am a huge fan of this Israeli-based company. They’ve been around a long time, have amazing support, and pretty much revolutionized online payment systems. Plus, if you have a problem with a charge, you can dispute it by phone or online.

Recently, PayPal has offered student cards. The way these work is that the parent opens a PayPal account or uses their existing account. Under the parent’s account, one can sign up for a student card or cards. The student gets his own real credit card that works just like a regular credit card. They get balance notifications and receipts for payments. But the best part is that the parent sets the spending limit by transferring money onto the card. The parent can then get alerted if the student charges over a certain amount, or is getting near his/her limit. Some stores have even started using their own PayPal acceptance devices. Keep in mind that if your child needs more money, you can always send more from your smartphone or from your PayPal account. It’s a great way to introduce children to credit cards and money management without the risks of ruining their credit.

Now, if your children are enterprising and like to earn their own money (or you’d like to teach them the value of a dollar and get them working early), there are new, hi-tech ways for them to get paid. For instance, PayPal is one of the safest ways of transferring money today. There are also new startups, like Square.

If your child has a snow shoveling, lawn mowing, or babysitting business, s/he can offer to accept payments via PayPal or Square (or a similar service).

Each service has different benefits. PayPal, as the most established, is like having a bank account. However, you can accept money transfers via email or their mobile app. Indeed, many banks now use PayPal’s platform for their mobile payment options.

Square (and other similar services) allow you to go to a local store like Target or 7-Eleven and purchase a Square card reader. This is a small device that fits into the headphone jack of your phone or tablet and syncs with the Square apps so you can accept credit card and debit card payments. How cool would it be for your child to offer babysitting or lawn mowing jobs the option to pay with a card? The only challenge with this is that, like other Merchant Service providers, Square takes a small cut of every payment.

I know some parents want to give their teenagers what they never had, but when I talk to my friends about this, I always think of this commercial I once saw for credit repair. It shows a parent who gave his college-age child a standard credit card. The boy then charges books, food, and a vacation on the card. It’s a little dramatic, but I think it proved a point. Without proper guidance, our children don’t have a good idea of how to spend and save.

By Shneur Garb