No matter how you decide to answer the allowance question, the fact remains that you have to pay it somehow.
While paying with cash can be a good way to teach younger children how to visualize their money, older kids are likely to want to use other methods of money management.
You probably don’t buy things with cash very often; a cash-based allowance doesn’t adequately teach your kids to manage their money in a society that’s increasingly cashless. Here are 3 modern tools for paying your child’s allowance:
1. Mobile Deposit
I recently started using mobile deposit to help my son keep his money in a high-yield savings account. I still pay his allowance in cash, but I feel bad about having him take the savings portion down to the local credit union for deposit, since the yield is so low. So we had an age appropriate discussion about interest and then I wrote him a check for the amount he had accumulated for savings. We used the iPhone to deposit the check in his Capital One 360 kids savings account, and he loved it.
This is a good way to start getting kids used to mobile banking, as well as the concept of shopping around for the best place to keep their allowance money.
2. VirtualPiggy.com
This interesting web site allows you to create accounts for your children and then set spending limits. You can also create a list of approved stores for your kids to shop at. You can transfer some or all of your child’s allowance to the site, and then your child can shop for what he or she wants.
Of course, the shopping portion only works when the kids are within the set spending limit and shopping at the approved stores. This makes it possible for you to help your child learn about online shopping, learning to manage money that they might not see or touch. Plus, you have a great deal of control. VirtualPiggy can also help you and your relatives figure out what to get as gifts, since it’s possible for your kids to create wishlists.
3. Prepaid Debit
Another option is to give your child a prepaid debit card. Usually, it’s possible to load the card from your bank account, so you can arrange the transfer of the allowance to the card each month.
A prepaid debit card can be a good way to help your child learn how to manage credit card spending. It’s training wheels for plastic. Encourage your child to track his or her spending, and make sure that you check in as well.
You do have to watch out for fees when you use prepaid debit, though. Many of these cards come with monthly fees and other fees. Shop around for cards with low (or even no) monthly fees. There are a number of prepaid debit cards out there that aren’t as bad as some of the celebrity endorsed prepaid options.
If possible, though, a better idea might be to open a joint account with your child (if he or she is old enough) and get him or her a debit card. You don’t have to worry about fees, and you can usually transfer the allowance into the account as needed.
What do you think? What are the best modern tools for helping your child manage his or her allowance?
(Photo: Hobbies on a Budget)
3 Modern Tools for Paying Your Kid’s Allowance from personal finance blog Bargaineering.com.
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