How much cash should kids carry? A practical guide for parents

Your teen is headed out for the day. First on the list of activities is a school football game and lunch with friends. That’s when your teen turns to you and asks, “How much cash should I carry?”

That’s a smart question. Games have a concession stand for snacks and drinks. And at lunch, she’ll want to leave a tip for the server. Should you give her cash, or let her use your credit card?

In this guide, we’ll explore the benefits and drawbacks of carrying cash, including scenarios where it comes in handy. We’ll also explore an alternative solution: Greenlight’s debit card for kids with parental controls.

How much cash should kids or teens keep in their wallets?

Start with a baseline of $5 to $50 for kids and teens. This amount is usually enough to cover expenses paid for in cash, such as:

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• Meals

• Beverages

• Restaurant tips

• Transit fees

Instead of giving your teen a $50 bill, use a mix of smaller bills. A combination of $5s and $10s allows them to conveniently pay for large and small transactions. They won’t have to worry about breaking a $50 bill to leave a small tip.

Don’t forget the $1s, either. They come in handy for bus or metro tickets, parking, or small purchases like candy.

When physical cash is still the best way to pay

It may seem like we live in a cashless society, but there are still times when kids and teens appreciate having a few bills on hand. Here are a few scenarios where cash comes in handy:

• Local festivals or farmer’s markets: Vendors at these events appreciate cash payments, especially if you’re buying a few dollars’ worth of tomatoes or a pair of hand-knit socks. Using a card eats into their profit, since they pay a percentage of every transaction to a payment processor.

• Tipping: Wait staff, valets, and others appreciate cash tips because they get the funds immediately. They don’t have to wait until their next paycheck to receive their money.

• Small business purchases: Food trucks and other small businesses may operate on a cash-only basis. Even if a small business accepts cards and cash, it may set a minimum for card payments. If your purchase is under the limit, you may need cash to pay.

The risks of carrying large sums

You can see where cash comes in handy. Does that mean you should skip the debit or credit card and only pay in cash? Not at all. There are risks to consider, such as:

• Accidental loss: There’s always the chance your kids will accidentally leave their wallet or purse somewhere. If that happens, they may lose it and any money they had inside.

• Theft: Carrying lots of cash makes kids and teens a target for pickpockets. This is more common in big cities, but it can happen in small towns, too. Unfortunately, cash doesn’t offer the same fraud and theft protections that debit and credit cards do. Any money kept on hand may be gone for good.

How carrying cash affects your spending habits

Always paying in cash may hurt budgeting plans. That’s because cash isn’t easy to track. It doesn’t leave a digital trail like card payments do. This can result in budget leakage, where you spend more than you plan to.

Let’s take an example:

• Say you withdraw $200 from your paycheck in cash. During the week, you spend it on extras: fast food, movie tickets, and clothes. None of those items were included in your weekly budget, leaving you short on money for necessities. With a debit card, you can easily monitor your daily spending. Cash is harder to control, since transactions aren’t saved in a single location.

That’s not to say you can’t incorporate cash spending into your budget. Some people love the concept of cash stuffing, where you keep envelopes of cash to manage spending categories. Using the same scenario, you could place money into an envelope labeled “Extras.” When you get low on envelope funds for the week, you know it’s time to curb your spending.

Teaching kids to manage money in a cashless world

Giving kids and teens cash is useful for small purchases, such as school lunch or snacks. But there’s always the chance of misplaced or lost funds. With a digital tool like Greenlight, your family can manage money without physical cash risks.

Greenlight gives kids and teens a platform to save, spend, and invest with parent approval. It provides budgeting tools to turn chores, allowances, and savings goals into a lesson kids remember for life.

Want to budget as a family? Teach your kids and teens essential budgeting skills with Greenlight’s award-winning educational money app. Try Greenlight.

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