mom discovers allowance solution

The No-Cash Allowance log sheet

There are too many ways to set up allowances for kids today. For many parents it’s just easier to give up. What this mom learned led to creating a successful allowance plan.

Too many questions for parents

There’s a basketful of questions that parents ask themselves. Navigating through a maze of questions is daunting.

  • Is the allowance is a handout?
  • Must kids work for some (or all) of it?
  • Do the kids spend the money any way they want?
  • Are kids required to save some of their money? And for what? Who decides?
  • How much money to pay each kid?
  • Will parents have the right amount on allowance day?
  • Do parents need to keep track of paying allowances?
  • What about allowance apps?

My first attempt at allowances didn’t work

As a mom, these questions haunted me when it was time for allowances. I wanted my kids to learn more from an allowance than I did. They would own their money, make their own decisions, and learn that money wasn’t all for fun. Real life stuff.

Then an ugly problem reared its head. We started with cash allowances. That worked splendidly for a few weeks until I didn’t have the correct cash. Already I was turning out to be unreliable in paying my own kids. What to do?

Out of desperation, I wrote their allowances as a number. This solved the problem of accountability on my part. My kids learned that money is a number. Would they rather have cash? Turned out they didn’t care. The number told them how much spending power they had.

As for amount, my kids got a weekly amount based on age. They earned money from doing certain chores and other incentives. These numbers were written in their account as well as money received from other sources. 

Most of all, their money wasn’t all for fun because I added kid-size obligations. Buying their own school supplies was a start. By the time they were in high school they managed hundreds of dollars each semester for many of their day-to-day expenses.

Where did all this money come from? Wait for it. The money came from us.

It was money we would spend on them anyway. We simply transferred control to them. I was no longer involved in managing their money. They were completely in charge of keeping track of their funds. My allowance failure helped me create a system that would grow with my kids.  

Create a plan to that helps your kids

Consider your family as a corporation. You as parents are the CEOs and facilitators. You supply funds to the kids who each manage a department. Funding is determined by age and interests.  

Kids are responsible for managing their departments and keeping track of funds.

A seven-year-old who records allowance as a number makes more than 500 weekly deposits before high school graduation.

Kids are accountable for their decisions. 

A $10 spending mistake by a kid will be a big learning experience. A $1000 spending mistake by an 18-year-old can be a financial disaster with lingering consequences.

Parents and kids learn to treat money as a learning tool. Parents trust their kids to manage their funds. Kids trust their parents to let them manage their funds.

Parents tell me they didn’t realize their kids were so capable until they started using The No-Cash Allowance.

Try The No-Cash Allowance strategy

This concept is explained in my book, The No-Cash Allowance. The book lays out a reliable, repeatable and realistic method for kids to learn money management skills at home. 

Parents can provide a hands-on financial education in the home. Children as young as three-years-old can make age-appropriate decisions. KIds love being in control of something as simple as buying a toy with their own money.

Examples of dialogue between parent and child create a picture of real life situations. Charts, tables and illustrations show how to set-up and let children track all their money in their own accounts, initially kept in the home.

Kids see the “big picture” view of their money and learn that each decision affects the balance, a reality that will be constant throughout their lives. 

By rethinking your approach you can make your allowance plan successful. You allow your kids to manage their money in a real-world fashion. This helps them learn essential life skills like confidence, decision-making and taking responsibility.

Mom discovers allowance solution

Book, pencil and log sheets

Set your family up for success

Here’s an example of how The No-Cash Allowance works.

The kids open their accounts, add the weekly amount and record the new balance. Parent and kids go shopping. Parent pays at checkout. Kids subtract shopping expenses and update the balances in their accounts.

Throughout this experience no cash exchanged hands yet everyone knows exactly what happened. Money is deposited, balances grow, purchases are made and consequently, balances shrink. The kids took responsibility for their own spending decisions and accepted the resulting change in their account balance.

Take some time to talk and think about how to make such an allowance system work in your family.

  • Discuss with your parenting partner
  • Create your family corporation
  • Define the different departmental needs (kids)
  • Buy a copy of my book, The No-Cash Allowance
  • Read more about the book here.

Do you think your family could benefit from a strategy like this?