A new app introduced by Amazon (NASDAQ: AMZN) last week that allows teenagers ages 13 through 17 to set up an online account that’s connected to and monitored by their parents could ultimately do more harm than good.
“Well, it’s been called an allowance tool,” ‘Make Your Kids a Money Genius’ author Beth Kobliner told FOX Business’ Maria Bartiromo. “But let’s get real, it’s a spending tool to try to get teens to spend more money.”
The premise of the app is that parents can be set up to receive notifications anytime their child tries to purchase something. Parents can then either approve that purchase by responding to the text or email, or not. They also have the ability to set pre-approved spending limits per order, according to a news release from Amazon.
What’s concerning about the app, Kobliner said, is that teenagers can make purchases so easily that they won’t learn anything about saving or spending.
“I’ve been going all around the country talking to parents, teaching financial literacy to kids,” she said. “And the one thing they say is: ‘My kid thinks money grows on trees.’” Now with this, you press a button and get what you want.”
Parents, instead of allowing their kids to sign up for the app, should encourage them to use more physical money and teach them the money basics, she said. A study by the Massachusetts Institute of Technology (MIT) demonstrated that people tend to spend less money when making purchases with cash versus credit cards.
“All of that has to do with numeracy and understanding that money doesn’t just grow on trees, you have to earn it and you have to spend it wisely,” she said.. “I think this is taking the parent out of parenting.”