Paper or Plastic? Money Savvy Is Best Learned With Hard Currency.

Ages 14-15: Stick With Cash

The latest wrinkle in allowances is prepaid debit cards, which are aimed squarely at this age group. Parents are encouraged to transfer money to a child's online allowance account, which the child can access with his card to withdraw money at an ATM or to make purchases online or in stores -- and which Mom and Dad can top up when the money runs out.

My rule: Stick with cash. Even at this age, plastic of any kind isn't as real to kids as money they can see and feel. With a cashless society looming in their future, learning to manage hard currency is more important for children than ever. This is a good time to expand their allowance to include clothing, concerts and other high school entertainment, plus buying gifts for friends.

It's also time to encourage them to get a job, at least over the summer. Teens this age are permitted to work in offices, amusement parks, movie theaters, restaurants and retail stores. For convenience, you can arrange for them to have an ATM card so they can deposit and withdraw their own earnings from their own savings account. That's how my son Peter managed his money throughout high school. When he turned 18, I offered to help him open a bank checking account with a Visa debit card. Much to my surprise, he declined. "With a debit card," he said, "it would be too easy to spend money."

Next week: Ages 16-18