Boy writing in no-cash allowance account

Boy writing in no-cash allowance account. Copyright: Dmytro

Looking for the best allowance app for your kids? The many choices and configurations available make it a daunting mission indeed. However, sometimes simple is best. 

Allowance apps do move kids away from cash-only systems by digitizing the money. This helps kids understand that money can exist as a number. After all, they are growing up in an economy that is becoming more virtual.

Parents setup, supervise, and establish controls for their kids. They can require kids to get permission before buying something. Parents can be kept up-to-date on their kids’ money activities through text messages, alerts, and notifications.

Some apps allow parents to set up real-world transactions like taking out a loan from the parents, or earning interest on their account.

Do you really need an allowance app?

With all that’s involved on your part, do you really want to be micro-managing your children’s allowance? Isn’t this simply adding another chore to your already-long list of responsibilities?

Allowance apps can be free, require purchase or subscription. However, like all software they create and define their own digital system for families to manage allowances. But are they really helping your kids make the transition from kid money to adult money management?

Compare your child’s online allowance experience to your first years as an independent adult. No one controlled or instructed you on how to manage your money. You didn’t have to ask anyone for permission. Every spending decision was entirely up to you. Every mistake was entirely yours. 

A different allowance system

Imagine a system in which your kid is in charge and you are only the facilitator. After all, your banker doesn’t care how you use your money as along as you maintain a positive balance and pay any necessary fees required.

In reality, all kids want the same things when it comes to money. Kids want money because money buys stuff. They want to be like adults by making their own decisions.

In order for kids to learn to manage their money they need three important essentials: money, control, and responsibility. With that in mind, what would be in an allowance system that could work for kids from age three through high school graduation?

Show them the money

Show your kids money as a number, not cash. Pay allowances through a written account. You do the writing for younger kids, until they can do it themselves. Eventually the accounts would transition to financial institutions, e.g. saving and banking.

Kids who keep track of every transaction in their account become very aware of the effect on the balance. In addition to requiring good record keeping, the account creates a log of their money activities. This creates great information for money conversations between parent and child.

An allowance should be modest enough to encourage kids to want more money, along with the ability to get more. Initially earnings come from certain for-pay-chores at home. Kids add additional earnings from doing chores for family and friends, or a part-time job when older. 

Transfer control to the kids

Responsibility for record keeping transfers from parent putting the accountability on the kid. Similar to learning other skills, kids need to be in control of the tool, in this case, the money. Children cannot ride a bicycle if the parent doesn’t let go.

Children learn to spend their money better if allowances are given on a set schedule, providing them a reliable inflow to manage. This allows kids to make decisions and learn from the results. A $10 mistake by a kid is a gentle lesson, while a maxed out credit card by a young adult can be a nightmare.

Any money parents allocate as allowances is money they would spend on their kids anyway. No additional funds needed. Parents are simply transferring control of the money to their kids.

Make the kids responsible

Kids want to be in charge of their money. They deserve to be independent and not have to always ask for money or permission to spend their money. 

Giving them hands-on control helps them develop decision-making, the essence of good money management.

When the kids own their money, they have to figure out how to manage their own funds. They also are required to meet certain age-appropriate spending. Think: pay the bills. For example, buying their own school supplies requires them to make choices for their day job.

With age will come more funds and responsibilities, thus creating a flexible system that grows with the kids.  Such an experience develops money confidence that transitions to adulthood where every decision counts.

Be amazed when you give your kids money power

Consider your kids as adults-in-training and give them the tools they need. When you provide a hands-on financial education at home instead of an allowance app, your kids can develop an essential life skill that will help them as adults.

Sometimes simple is best. Transferring ownership and control of allowances to your kids is simple, powerful, and effective. You’ll be amazed at how capable your kids can be, when you give them the opportunity.

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