A magical thing happened when I did an allowance makeover with my kids. As a check and credit card mom I never had the right amount of cash to pay them. So I stopped giving my kids allowance as cash. Allowances would forever be paid as a number. Problem solved.
Because numbers never lie there were no more discussions about who got paid and when. There was no more dumping out of piggy banks to see how much money there was. The numbers told it all. I had a system, a plan that would grow with my kids.
This no-cash concept became the basis for The No-Cash Allowance, a successful strategy to teach children money management. Kids learn to manage cash and cashless transactions for both fun and necessary spending.
A no-cash allowance is a system in which a child controls all funds received from parents through a written account initially kept in the home. Adults act as bankers and the child as account owner.
Here’s an example of how a no-cash allowance works.
One daughter opens her account, adds her weekly allowance and records the new balance. She announces that she has enough to buy a new sweater. Her sister updates her own account and asks to stop at the bookstore. We shop. I pay using my credit card. When we get home they subtract their shopping expenses and update the balances in their accounts.
Throughout this experience no cash has exchanged hands yet everyone knows exactly what happened. Deposits were made, account balances got bigger, purchases were made and account balances got smaller. They kids took responsibility for their own spending decisions and the resulting change in their account balance.
The most difficult part for parents is giving up control and letting the kids make the decisions. Remember that scary feeling when you knew you had to let go of your child’s bicycle. You expected some bumps and bruises. The same thing happens with kids learning to control their own money.
Kids like the challenge of being in charge of their money; they like making decisions. Our mantra was, “It’s your money. You decide.”
We had to bite our tongues to avoid telling them about a spending mistake we could see coming. Yet, we knew that a $10 mistake by a kid would be a gentle lesson compared to a maxed out credit card as a young adult.
Because I believed in The No-Cash Allowance after seeing the result with my own children, I invested my own money to write and publish the book to share with parents like you. The book is about kids and allowances, but more importantly it is about kids learning to make and understand their own money decisions.
When my book finally rolled off the press our children had left the nest. We knew that our system was successful because they never once called home from college to ask for money and never moved back. Our children are now grown with children of their own, who are learning to manage their money the no-cash allowance way.
As a mom, I set out to teach my kids about money. What they learned reached far beyond dollars and cents. My children learned essential life skills like confidence, decision-making and responsibility.
I believe your family can be as successful as we were.
The bottom line is that this approach shapes behavior through positive reinforcement by empowering children to make real decisions.
In the end, this mom learned that it wasn’t about the money at all.