Parents, you can raise money smart kids by doing this one thing now. Stop controlling your kids’ money. If kids don’t have the ability to make their own  decisions and learn from them, kids will not be prepared to manage money successfully as adults.

Parents, with good intentions, control allowances to protect their kids from money mistakes that plague many adults. But kids are not adults and can’t make the kind of mistakes that harm their financial future.

Life’s challenge for kids is managing money

No matter how much advice parents give kids about money, no matter how often they look over their kids’ shoulders, nothing but experience and mistakes can prepare kids to transform from a child to an adult overnight at age 18. Start early to raise money smart kids in your home. No allowance apps needed.

Parents! If you don’t teach personal finance lessons to your kids, they likely will never receive any financial education. It’s your responsibility to ensure they are ready to leave your home with the skills, behaviors and system that will help them be self-sufficient members of society and avoid the pain associated with money struggles. Vince Shorb, CEO, National Financial Education Council

Parents’ challenge is giving up control 

Remember the day when you let go of the bicycle giving your kid complete control? You knew bumps and bruises would follow. But you also knew that your child would develop skill and become a better cyclist.

Fast forward to the day when you hand over the keys to your licensed teenager, who can now operate a motorized vehicle without you. In doing so, you are trusting your teen to make good decisions.

The same is true for developing the skill of managing money. If kids don’t have control they won’t develop the skill of making decisions that lead to good financial results.

Raise money smart kids

From my successful experience teaching my kids to manage money I wrote a book to help other parents raise money smart kids. It all started in the 1970s when I gave my Gen X daughters their first allowances before they started school. 

At that time the prevailing way to give kids money was to fork over cash. But my biggest problem was that this mom was a check and credit card spender who failed miserably having the correct amounts on allowance pay day. 

Note: This was before ATMs so to get cash I drove to a bank, walked inside, wrote a check and stood in line at a teller station with two bouncy preschoolers in tow.

Direct deposit of paychecks came on the financial scene during that time eliminating payroll checks and depositing a number directly into a bank account. No checks, no cash. Just numbers. 

I was inspired to title my book The No-Cash Allowance because when I started written accounts for my kids using direct-deposit plan set up my kids to control their money. My grandkids are Gen Z and Gen Alpha and are learning to be money smart kids using the same system as their moms.

No-cash system prepares kids for adulthood

When all money is treated as a number kids use simple addition and subtraction to know how much money they control. Kids like to be in control and control of money is a big thing. 

My kids always knew to the penny how much was in their bottom line. My oldest daughter said she loved adding and subtracting money in her account and thought that every kid did it.

This system provides consistency over the years while kids develop record keeping skills, learn about cash flow, plan for the future, and review past decisions. The allowance logs also make great reading and provide opportunities for money talks.

Kids grow with the system as they manage more money and responsibility. Your kids can have many years of using a consistent system that shapes their attitudes about keeping track of the money.  My youngest daughter had 15 years of hands-on money experience before graduating from high school. 

No-cash allowance system in action

One daughter opens her account book (or computer spreadsheet), adds her weekly allowance and records the new balance. She announces that she can buy a new sweater. Her sister updates her account and asks if we could stop at the shoe store. I take the girls shopping and pay for their purchases using my credit card. They subtract their expenses and update the balances in their accounts.

No cash exchanged hands yet everyone knows exactly what happened. Deposits were made, account balances got bigger, purchases were made and account balances got smaller. Also, much to this mom’s delight, neither child asked me for more money or for me to buy something for them. They took responsibility for their spending decisions and the resulting change in their account balance.

Benefits for kids

• Money Kids want to have money like adults do. “This is my money.”
• Responsibility “I have to pay my phone bill and my school activity fees are due next week.”
• Control “If I don’t buy that today I will have enough next week to buy that jacket I want.”

Benefits for parents

• No more begging for money Your child always knows how much money they have and when deposits will be made.
• No misunderstanding  The account tells all like a financial diary.
• Money is a neutral topic When your child owns their money it’s easier to talk about it.
• Expenses become real Something as simple as buying school supplies takes on real meaning  when the money comes out of your child’s account.

Kids learn from consistent system

The No-Cash Allowance is a guide for parents to raise money smart kids using a system that lets a child control day-to-day money activities gaining hands-on experience using cash and cashless transactions including debit card, ATMs, electronic transfers and credit spending. Book overview

Parents and financial professionals who use The No-Cash Allowance system tell me they are amazed at how capable their children are when it comes to managing money and making decisions when they let them be in control.

Buy the book to get all the information you need to adapt The No-Cash Allowance for your family.

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 award winning book, 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.