Allowances Don’t Teach Kids About Money - You Do

Many parents tell me they feel guilty about allowances.

They aren’t consistent about when and how they give their kids money. They wonder if allowances should be tied to chores. Even how they dole out money can be a problem. Cash is easiest, but much of what kids want to buy — downloads of a favorite show, a toy on Amazon, a realm in Minecraft — requires plastic.

I’ve used our daughter as a guinea pig to test all kinds of allowance systems and apps , starting when she was just 3.

We started with divided piggy banks that had sections for spending, saving and sharing. (Money Savvy Pig and Moon Jar are two options.) We moved on to apps when more of her purchases moved online. We used iAllowance; other trackers include Bankaroo, PiggyBot and Allowance & Chores Bot. But then she landed a steady customer for her pettending business and at 13 was old enough to have her own bank account. Now she earns and manages her own pocket money. She

uses our accounts for iTunes and Amazon purchases, as they require a credit card,

but I transfer money from her account to ours once a month to cover them.

Along the way, she learned to make choices, delay gratification and save up for stuff she wanted, including a laptop. I’m not certain, though,

that we can credit the allowance.

Research indicates that parents’ behavior — the example they set — and the discussions they have with their kids about money are much more important in shaping

their future financial health.

WATCHING WHAT YOU DO

One 2015 study for the Consumer Financial Protection Bureau, which reviewed

research in developmental psychology, education and consumer science, found parents were “critical” in fostering financial well-being in children.

Parents don’t have to be money experts to talk about

the importance of delayed gratification or the difference between wants and needs, says report researcher Elizabeth Odders-White, associate finance professor at the University of Wisconsin, Madison.