Financial Independence and Your Children’s Allowance
I’d be willing to bet that at least 70% of parents who give their children regular chores, also give them an allowance for completing those chores. Did you know that that allowance can teach financial independence over time?
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For children, having chores is an excellent way to learn a little bit of responsibility all while learning how to care for themselves and their own home.
Although, if you ask my kids, I do it just to torture them.
As parents, we want to turn a lot of their childhood into life lessons. And while chores are a life lesson in their own sense, why not turn it into a finance lesson as well.
My children have had chores since they were each about four years old, so it came as no surprise when they started asking for an allowance a few years back.
I happily obliged, as long as they played their part. But what I didn’t think about initially was how I could turn chores and an allowance into a lesson about finances as well.
Factoring the Allowance Rate
For some reason, I really struggled here personally. I didn’t want the allowance to be too little that they wouldn’t really feel compelled to do their chores to earn it. But I also didn’t want to break the bank dishing out 2 allowances each week!
We had tossed a few ideas back and forth for a while, with prices per chores, points for chores and then rewards they could “buy” with the points.
But we finally settled on a daily dollar amount. If the chores were complete for that day they would earn the whole dollar amount for the day.
So for each of my boys, they have about 5 chores each day. If they complete the chores for the week, they will earn $7.00 for the weekly chores.
Now we’re not talking difficult, complex chores here. Just small things they can do to contribute to the household each day.
Once I figured out the chore amount, I had to figure out how I was going to pay each of them.
As someone who rarely has any cash on hand, I went searching for ways that my children could be paid each week.
Kid’s Chore Apps
There are actually quite a few apps out there in which your child can have their own “debit card” and you can pay them on a regular basis for their allowance. Giving you an opportunity to easily teach financial independence to your children, in a way that doesn’t feel like work.
I had tried one in the past but I didn’t like how the program worked and had run into a few issues along the way while I was trying it out.
I wanted an app that both my children and myself could access, that gave them access to saving opportunities and more.
BusyKid is a great option for parents to have access to their children’s money and be able to send them their allowance on a regular basis.
This was the first app I tried and while the interface was easy to use and the kids had easy access to their chores each week, we ran into issues a few times where their money wasn’t accessible, or their card didn’t end up working.
Although they have a great annual price for the membership, it does add up as you add each child to the account.
Coming in at $19.99 annually for the first child, and then $7.99 for each additional, the cost can be an issue for some parents.
And if you’re like me and don’t like to pay for things on an annual basis, this is not the option for you because they do not have a monthly program where you can pay as you go.
After doing some research for a while after ending my subscription with BusyKid, I had an ad pop up on my newsfeed for the Greenlight card.
So I decided to check it out and see if it would work to help me teach financial independence to my children.
They have the same features as BusyKid, with chore tracking, customizable chores, as well as the ability to send bonuses, or extra one-time tasks for pay. But their pricing was what really drove it home for me.
It ends up being a few dollars more than busy kid in total for the year, but they bill you on a monthly basis and will take the money out of the preloaded amount you place in your parent account.
For the Greenlight card, you’ll pay $5 monthly for the first 5 children.
The program will send each of your children their own debit card, WITH THEIR NAME ON IT!, and they are even customizable with an image.
With your Greenlight subscription, you get access to the Greenlight app, which has easy load options. You can preload an amount on payday and set their chores for a regular “payday,” or you can have the funds auto-drafted from your personal account in order to pay the children.
Your child then also gets their own app login, allowing them to mark their chores for the day and track their money.
How Can A Debit Card Teach About Financial Independence?
With the Greenlight card, your child will have multiple accounts, and can create sub-accounts for specific savings or spending goals.
My children have their spending account, and then they each have a saving account. They then have the ability to create their own saving goal and can move money in and out of it as they wish and watch the savings grow! Essentially giving your children financial independence and allowing them to learn as they go. Although, the conversation is what is most important when teaching financial independence.
Wow, do I wish I had something like this growing up!
It doesn’t stop there, in your parent account you have access to control their spending, children have to get parent approval to move money from savings which gives you the opportunity to have real conversations beforehand about the negative affect of using your savings for short term wants.
Plus, you have access to parent-paid interest, giving you even more finance talk opportunity. Now you can teach children about interest and savings. And how placing money in their savings, and leaving it their, allows their money to grow on it’s own.
What Does This All Mean?
To sum everything up, teaching children about finances and financial independence is an important part of them growing into functioning, successful adults.
And to help place them on the right path, I definitely suggest taking advantage of the technology we now have at our fingertips.
I’m one of those parents that is open with her children about finances, including my own personal finances.
I share my saving goals with my children, I share some details of our financial situation to teach my children that even with a bad start, you can still achieve your goals with hard work.
This has created many conversations with my children that have taught them more than any budgeting course could in their adulthood. After the damage has been done.
It is so very important to start the conversations young, create lifelong habits that establish security for your children well before the security is even a need. So get out there and start today!
It starts with one conversation, and one small move to show your children the options that are available for them and their money.