Nobody would argue that it’s inappropriate for any parent to monitor and essentially spy on their 7-year-old’s spending habits. You’re the parent. Your kid is the kid. End of story.
But what about when your kid is 17?
Reasonable minds could differ there ― and probably do. On one hand, it’s your house, and if he or she is 17, your teen is still a minor. On the other hand, your teenager is practically a young adult. If your 16- or 17-year-old son or daughter had a diary or journal hidden under the mattress instead of posting their life on Instagram (let’s pretend for a minute that it’s 1975), you probably wouldn’t go out of your way to snoop through it. So why spy on their spending?
Here’s the why
First of all, ”spy” is probably too intense of a word. With any luck, you don’t have to spy in secret. Hopefully you feel comfortable alerting your kids that you’re monitoring their finances rather than watching without them being aware. Spying on your kid’s finances may seem too Big Brother, or, if you prefer, Big Mom or Big Dad. (OK, probably nobody prefers being called that.)
Of course, if you’re worried your kid is spending some of his or her money ― or your money ― on drugs or alcohol, for instance, you can make a great argument that you should spy. In that case, you probably shouldn’t feel guilty for not alerting your kid that you’re making like the CIA and watching his or her every move.
But for many parents, openly monitoring your kids’ spending is a way to teach them good habits, which may help them keep out of trouble later.
As for what age to stop “spying,” where you no longer monitor your kid’s money, that’s a hard call, and obviously it just comes down to what you feel is right. And what your kid feels. If your teen is 18 and doesn’t want to be monitored, then the spy game is pretty much over.
Logan Allec, a Los Angeles-based certified public accountant who runs a personal finance blog called Money Done Right and will be a father in April, suggests that “maybe until your kids are age 14 or 15, you need to be keeping a very close eye on their transactions. But hopefully by the time they reach later high school at age 16 or 17, you can step back.”
And then there’s Michael Foguth, president and founder of a Brighton, Michigan, retirement planning firm, Foguth Financial Group, and a father of five, who says, “I’m a believer in watching the finances of your teenage children up until their young 20s, especially when it comes to credit use. Your credit score will follow you forever and can make hundreds, even thousands of dollars of difference when it comes to buying a house or purchasing a car.”
So, whether you spy on your kids without them knowing or spy on your kids with them knowing exactly what’s going on, that’s up to you and your conscience. But if you’re going to monitor your high schooler and possibly college student’s spending habits, here are several ways you can do it.
Option 1: Open linked bank accounts with your teenagers.
It depends on the bank, of course, but your son or daughter can probably open their own account once they have a valid ID, like a driver’s license or a temporary driver’s license or maybe a high school ID with a photo. If your checking account is linked to your kid’s checking or savings account (typically, banks will structure it so that you can see into your child’s accounts without them seeing into yours), that’s an easy way to follow what your kid is spending money on.
Kristie Jones, who owns the St. Louis-based sales consulting firm Sales Acceleration Group, has a 19-year-old son away at college and monitors his spending habits by having online access to his bank account.
“We did this before he left for college as a freshman. The main reason was so that I could transfer money to him on a monthly basis,” she says.
Her son also has a job at the college and worked over the summer. In any case, because the accounts are linked, Jones can watch what her son is spending money on, and she says, “I have discussions with him every so often about the amount of money he spends on gaming, music and so on.”
She says he spends quite a bit on gaming.
Option 2: Allow your kid to become an authorized user on your credit card.
This is different than co-signing for your kid’s credit card, and in many ways it’s so much better. If you co-sign for your kid’s credit card, that card is your kid’s, and he or she can technically do what they want with it –- and if they get into trouble and fall behind on payments, you, of course, are on the hook to pay them off. And you will pay them off, if you don’t want to see your credit score plummet.
But if your child is an authorized user on your credit card, it’s a little like your teenager or young adult having a room in your house. It’s your credit card, your rules. Sure, because your teenager will have a credit card with their name on it, he or she could use it irresponsibly and spend way too much money and max it out, but because it’s your card, you’ll never be in the dark for long on what’s going on. And, best-case scenario, your teenager is relatively responsible, and you see what he or she is spending money on ― and you have conversations about wasteful purchases as they come up.
Odds are, as long as you aren’t too judgmental and lay things on too thick, your kids will appreciate the conversations. They may remember their parents enduring the Great Recession and be well aware of the dangers of falling into debt, and they likely don’t want to waste money. Granted, you may not always see eye-to-eye on what purchases are a waste, but all teenagers likely will quickly come to see bank overdraft fees and credit card late fees as the devil’s spawn –- and will likely appreciate your helping hand in steering them to good habits.
Option 3: Ask your kid to make you an authorized user on his or her credit card.
That is what Lisa Sugarman and her husband did. Sugarman, a nationally syndicated opinion columnist based in Marblehead, Massachusetts, and the author of Untying Parent Anxiety, has two daughters, 18 and 21. She says that she and her husband have monitored their checking accounts. And when her oldest daughter recently studied abroad in Dublin and got a credit card, they were made authorized users on her credit card.
You could argue that this is even better than making your kid an authorized user on your credit card. (But just a heads up: Until your kid is 21, it’s harder for them to successfully apply for a credit card. You have to either be willing to co-sign or your kid needs to prove he or she is making an income.)
What’s the benefit? You’ll have access to the account information and can “spy” on your kid’s purchases and speak up if things are going badly. At the same time, Sugarman says, she and her husband aren’t liable for late fees and missed payments. Their daughter is. “If she screws up, it’s her screw-up, 100 percent,” Sugarman says.
Not that that’s likely to happen, of course, if you’re guiding your kid and offering good advice. And Sugarman even says that her daughters have thanked her and her husband for their help.
It can be hard, though, to be a consultant and not a critic. Jones, who is a consultant, admits that she struggles with that when it comes to her son, still a teenager but very much a legal grown-up.
“I see this as a transition from child to young adult,” she says. “I try to guide by making observations ― and not telling him that he’s wrong to spend so much on Fortnite.”