A startup called Current is today launching a new way for parents to dole out allowances to their kids: with an app. The company offers a Visa debit card that would allow teenagers to shop in stores or online using funds from their own bank account, which is funded through allowance money that mom or dad transfers from their own bank account. Parents can use the accompanying mobile app to set chores, track spending, encourage saving and more, allowing kids to learn about money management through practice.
As a parent who already gives out an allowance to a slightly younger user than Current is aiming for, I know from personal experience that one of the biggest challenges is simply having the cash on hand at the appropriate time. There isn’t as much need to carry cash these days, and as a result, an ATM trip has become a special occurrence.
Explains Current founder Stuart Sopp, the idea for the startup came from his own experience as a dad.
“I worked on Wall Street for seventeen years as a trader and manager,” he says. “Now as a father, I wanted to build something with financial discipline that would help [my daughter.]”
Current can help parents move away from cash by digitizing the child’s allowance – but it’s more than just an app-connected debit card. The mobile app for iOS and Android helps parents set expectations and guidelines for their child, not only in terms of how and when money can be earned, but also in how it’s spent.
The app allows parents to set up chores that have to be first completed and reviewed before the allowance is paid out, or parents can choose to auto-transfer an amount of their choosing on a weekly basis.
By combining the app with the Visa debit card, kids get a sense of autonomy, but spending can still be monitored and controlled at parents’ discretion. For example, parents can set spending limits on how much can be blown through in a day, or pulled out of an ATM. (You’ll want to do this, too, as they’re set at typical levels by default – $500 from ATMs and $2,000 in daily spending.)
In addition, parents can block the card from being used at certain categories of businesses that aren’t kid-appropriate or require parents’ knowledge and permission – like casinos, bars, airlines, and more. Parents can even block select merchants, but only after an initial transaction has taken place.
The wallet also offers built-in savings features, including the ability to round-up purchases to the next dollar to save the change, or transfer money in from the “spending wallet” – the child’s main bank account.
Another feature called the Giving Wallet encourages families to work together to find charities they want to support by searching through the two million 501(c) charities in the U.S., then set aside monthly donations.
The app itself is well-built, fairly easy to use, and works with any bank account or credit union. It only takes a few minutes to set up, and then lets parents manage all aspects to the service with just a few taps.