Perusing the search engine results for “allowance for kids” reveals something telling:
The top results don’t seem to agree with each other.
Some finance articles quote experts or outspoken parents hailing an allowance,
stating it teaches kids financial responsibility. Others seem to argue that simply
awarding an allowance (whether in exchange for doing chores around the house or
not) instills nothing in children about managing money. They say that having honest
conversations about money and finances with your kids is a better solution.
According to a recent poll, the average allowance for kids age 4 to 14 is just under
$9 per week, about $450 per year. By age 14, the average allowance is over $12
per week. Some studies seem to indicate that, in most cases, very little of a child’s
allowance is saved. As parents, we may not have needed a study to figure that one
out – but if your child is consistently out of money by Wednesday, how do you help
them learn the lesson of saving so they don’t always end up “broke” (and potentially
asking you for more money at the end of the week)?
There’s an app for that.
Part of the modern challenge in teaching kids about money is that cash isn’t king
anymore. Today, we use credit and debit cards for the majority of our spending –
and there’s an ever-increasing movement toward online shopping and making pay ments
with your phone using any of the apps that are available.
This is great for the way we live our modern, fast-paced lives, but what if technology
could help us teach more complex financial concepts than a simple allowance
can – concepts like how compound interest on savings works, or what interest
costs for debt look like? As it happens, a new breed of personal finance apps for
families promises this kind of functionality. Just look at your app store!
Money habits are formed as early as age 7.[ii] If an allowance can teach kids
about saving, compound interest, loan interest, and budgeting – with a little help
from technology – perhaps the future holds a digital world where the two sides of
the allowance debate can finally agree. As to whether your kid’s allowance should
be paid upon completion of chores or not… Well, that’s up to you and how long your
Saturday to-do list is!
