Kids today seem to be born technology-ready. Short of installing a tablet in their infant brains, there’s no other logical explanation for why today's little ones seem to take to all things digital as readily as they take to breathing oxygen. In fact, my own three young nephews and one niece can already just about run circles around their dad, who is a highly trained (and highly paid) IT professional. This is a marvel, of course—but can also turn into a budgeting nightmare as kids grow up to demand entertainment…in the form of apps. Here are some budgeting tips to keep your credit card (and your budget!) out of hot water with your app-loving kids, tweens and teens.

How much can kids’ in-app purchases impact your budget 

Apple, that global IT giant, recently agreed to pay a settlement of $100 million to U.S. parents whose children were able to make in-app purchases due to inadequate software controls. Google has also recently been sued for the same.

In these lawsuits, kids' in-app purchases ranged anywhere from $5 to $1,400+ (in one claim against Apple, a little girl bought $1,400 worth of virtual "Smurfberries" with her parents' credit card while playing the app-based game "Smurf Village").

These tips can offer you basic and advanced control over your kids' in-app purchasing abilities.

1. Set up in-app password restrictions from your device operating system ASAP.

Once you set up password restrictions, you can prevent your child from making unauthorized in-app purchases. This is especially important for very young kids, who likely will not understand that the payments they are prompted to authorize are not virtual, but very real.

How to set up password restrictions:

2. Carefully read the fine print for each app your child wants to download.

In the recent Google lawsuit, a NYC mom is suing to recover $69.95 of unauthorized in-app charges. Google did not disclose the need for in-app password restrictions at the time of purchase—although the information was buried inside Google Play's help pages. Luckily, following the instructions in #1 will prevent most charges.

For greater control, consider these additional options:

  • Integrate with virus protection software: Be sure to check your virus protection software to see what free apps may be available to control kids' use among multiple devices (here is an example from Symantec/Norton's Family plan).
  • Do an OS upgrade: Be aware that older versions of iOS, Windows, and Android operating systems may have different security loopholes that are less well publicized—for the tightest controls, upgrade to the newest version of the operating system for each device.
  • Install a separate parental control app: Consider ParentKit for iOS (free) and Screentime Labs for Android (free).

3. Beware of "Freemium" apps.

"Freemium" is another way of saying "a free app that doesn't do much without making in-app purchases." Freemium apps represent the bulk of the apps represented in the Apple and Google lawsuits. Interestingly, Forbes recently reported that Apple and Google have both been asked to cease from using the word "free" to describe apps that permit in-app purchases. So far, only Google has agreed to comply.

For greater control, consider these additional options:

  • Monitor app downloads: The best approach here is to completely restrict app downloads for younger kids (instead, review and download the apps together). For older kids and teens, a good approach is to teach them how to discern which apps are truly "free" and which are "freemium" by reviewing the app description prior to download.
  • Set up special restricted profiles for young Google/Android users: If you are running Android 4.3 or later, and you have a tablet, you can use these instructions to set up restricted users.

4. Consider installing an app or service that controls kids' ability to make in-app purchases…and more.

For every IT problem, there will soon be a proposed IT solution—and a happy developer succeeding where others have failed. Two new services offer some interesting new options to a) train, or b) limit young family members in what they can do online and via mobile devices.

  • Oink (for iOS): Oink is a free app for iOS users that describes itself as a "digital family wallet." In truth, it is quite similar to PayPal, but targeted to offer lessons in money management and budgeting to family members of all ages. With Oink you can set a budget for each child's in-app purchases, and Oink will automatically cut off purchasing ability when the child reaches their limit.
  • Net Nanny (for iOS, Android, Mac, Windows). There is no "Oink" equivalent for Android, but Net Nanny offers a more comprehensive level of parental controls over all things "Internet"—including in-app purchases. (And heck, even at its priciest, $99.99 to protect 15 devices, it is still a heck of a lot cheaper than shelling out $1,400 for "Smurfberries!”)
4 Budgeting Tips to Keep Kids’ App Costs Reasonable