Allowance apps, in my opinion, teach kids to allocate money as children but do not prepare them to manage money as adults. In my award-winning book, The No-Cash Allowance, I recommend that kids from ages 3-18 completely own their money along with responsibility and control to manage it all by themselves.
This strategy is based on the system I used to teach my daughters to manage money starting more than four decades ago when they were pre-schoolers. Now as mothers they are teaching the same concepts to my four grandchildren without using allowance apps.
With more kids growing up spending money they can neither see nor touch, parents are the best teachers to start teaching the life skill of money management. A few rules and consistency will give kids the hands-on experience they can take with them when they leave home.
- Transfer control of money as a number to the child to manage using money you would spend on them anyway.
- Require kids to keep track of all money in and out of their account as a number, on paper or in a spreadsheet. Track money as a number.
- Increase age-appropriate funding and expenses starting at age three and continuing through high school.
Here’s what motivated me to create my no-cash allowance system. After getting married, I was shocked to see that there was no money left for fun! When it was allowance time I wanted my kids to learn about real life money management. Teaching my kids to manage money was my responsibility because I:.
- Did not want to manage their money
- Wanted them to be independent and own their money
- Did not want them asking for money
- Wanted them to know how much money they had
- Did not want them to be unaware of their spending over time
- Wanted them to track money as money represented by numbers
This mom became a facilitator, dispensing cash when needed, although my kids requested cash less often than I expected. That may have been because I was also their debit card when shopping, paying with one transaction. At home they would add up their purchases and subtract from their account, long before debit cards were available.
As a mom, I set out to teach my kids about money. What they learned reached far beyond dollars and cents. My children learned essential life skills like confidence, decision-making and responsibility. This was also possible because I was not controlling their money so they could learn from their experiences. I don’t think an allowance app could have been as successful.
While my kids didn’t have online tools, my grandkids do. My oldest grandkid is now managing his money through a credit union after using the account system in my book. His mother wanted a real-world experience for her teen that didn’t require her to be hands-on. Another teen grandkid set up her own spreadsheet to use until she’s ready for an account in a financial institution. Again, her mother wanted to be hands-off.
While researching the variety of allowance apps available for parents, I learned the following:
Allowance apps emphasize parent control
Parent control predominates allowing them online access to their kids accounts and activity, while being able to block certain transactions. In contrast, my kids were completely in charge of keeping good records. As family banker I reviewed for accuracy after the fact.
Non-monetary tracking methods
Some methods of tracking do not use real money tracking systems. Instead some apps use non-monetary using points or stars. By using a substitute for money kids are not learning how to track real money.
Paying a third-party to help parents keep track of their kids money keeps control in the hands of parents instead of giving kids their own hands-on experience managing their money, In using The No-Cash Allowance parents transfer a small part of the family budget to the kids to manage. This is money parents would spend on them anyway, so there is no extra cost for parents.
Free apps available
Some free allowance apps lack some of the functionality of paid apps. Read more about allowance apps here
Apps for tracking chores may be included or parents can use a stand alone app. Because my kids started allowances in the pre-computer age I made 3×5 job cards complete with instructions for each chore. Today I would gladly use a computer app.
Kids not in control
In general, I find that allowance apps put parents in control to the extent that kids may need pre-approval to use their money. While we had some family guidelines on spending money, my kids could make their own decisions without consulting me. I was preparing them to be adults where they would not need permission to spend their own money.
Where are the numbers?
Kids need to see the numbers, especially now that physical cash is invisible in most transactions. When approached by a developer to adapt my system as an app, I asked about printing a log similar to a checkbook account or statement. I was told that printing wasn’t an option. Another developer told me that no one was interested in printed stuff anyway.
But when I asked my daughters who are using The No-Cash Allowance written account system, they both told me that printed accounts were an essential part of the learning experience. Having a history of their money choices gives kids the opportunity to see how their money management changes over time. Seeing the numbers also provides great material for family money discussions.
Transitioning to financial accounts
Some allowance apps provide a debit card connected an institution in their system. This may not be available at a local brick and mortar institution for the parents. When my oldest grandkid was ready for transitioning his account, his parents found a local credit union where he could apply in person.. This experience taught him how to provide legal identification and talk with a financial person about setting up his account.
Using allowances apps creates an alternate reality for kids about managing money that doesn’t translate to adulthood. Parents have to let go of the bicycle so kids can develop that skill. With money parents need to be hands-off during those precious growing up years when they can only learn from their mistakes.r
When your 18-year-old is suddenly an adult there will be no guardrails about how they use their money. Your young adult child might face a challenging time adjusting to the real world of personal money management. Who will be in control then?
Watch on YouTube
Lynne Finch helps parents teach their kids about money from their first allowance to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children that money is a number with kids as young as pre-school and continuing through high school.
Buy your copy of The No-Cash Allowance now.