Cash seems like a thing of the past and that is why we always struggled with allowance. Not so much awarding the money but the follow through. I never carry cash so after a few years of IOU’s we finally set up a cashless system that works!
Step one: Open a bank account
First, you will want to open a bank account for your child. Generally, for a young student, this is a free account. Depending on the bank your options will be to have no debit card or have it linked to yours. We chose the latter option and this works for us because our daughter is only 10. She would rarely be making a purchase without us. If you have an older teen you might want to look into a better account that gives them a debit card. If the only option you have is not linked to your account, you can use your own plastic and transfer funds in and out as your child spends the money.
Step two: Determine allowance amount and how it is awarded
Every Friday is allowance day in our house. I have one child of allowance age and she gets $5 a week. We don’t give allowance for doing the everyday stuff around the house. She has a regular set of chores (put away dishes, clean up the basement etc…) and the allowance I give her does not reflect this work because she is expected to do this as apart of our family. However, there is a list of chores that I might ask her to do with an extra assigned dollar amount (these chores are usually things I hate doing like cleaning the baseboards). Some families give allowance based on tasks completed and some have no expectations. There is no right answer – just whatever works for you and yours.
I will make a bank transfer from my account to her account using my mobile banking app. This takes me less than 30 seconds.
Step three: Keep a running tally of funds
She then splits her money in three ways: Spend, save and give. How she splits the money is 100% her decision. We keep a running tally on a dry erase board on the side of our fridge. Any extra monies (birthday, Christmas etc…) gets added to this tally. The total amount is in her account and when she makes a purchase we adjust the tally on the fridge. SO easy!
These three categories have worked so well for her. Since she has 100% control over where the money goes she puts a lot of thought into it. Our categories break down something like this:
Spend: This amount is for spending on whatever she likes at the time. For example, yesterday at the store she asked for gum at the checkout. I said yes and when we got home we deducted $2 from her spending account. Books, small toys and a trip to the trampoline park have also come out of this account. Just whatever tickles her at the time!
Save: These funds are set aside for a specific purpose. Not necessarily an expensive item but a goal that she makes. This has helped her become more responsible for her decisions. She pours over these decisions and researches options. It is pretty fun to watch her become a smart consumer.
Give: This is exactly what it sounds like, money used to give. She puts a lot of thought into creative ways to help others with her own money. Buying peanut butter for the food bank, gifts for the toy drive or cleaning supplies for the SPCA are her favorite right now.
There you have it, this is how was manage a cashless allowance system! Leave a comment to let me know how you do allowance in your house.