| How is this book different than the many others about kids and allowances? Many books about allowances create an artificial money situation using cash where the kid spends the money mostly for discretionary spending or as directed by parents. A no-cash allowance is realistic because it places continuing control of cash and non-cash money in the hands of the child. This creates a child-size version of real-life money management and responsibility that is similar to that of an adult. What is a no-cash allowance? A money management system in which a kid controls all funds received from parents through a simple written account. Adults act as bankers and the child as account owner. How does this book prepare children to manage money as adults? The idea is for a kid to receive larger amounts of money and increased spending responsibilities over the years. By the time your teen graduates from high school, he or she can be controlling enough money to cover most day-to-day and personal expenses. A teen can safely learn to use credit and debit cards with checking and savings accounts. How old does a child have to be to have a no-cash account? Any child who can count to 100 can have a no-cash account. My youngest daughter started when she was 3 years old. Wouldn’t a child rather have cash than writing in an account? Having an account makes a child feel grown-up. Kids like to have control and having their own written account gives them that. Kids also learn that the balance changes with each spending decision unlike a cash allowance that disappears when spent. How can one expect a child to keep a written account? Very simple. Without a record of the money, there is no money. Every transaction is written in the account. Young children will need help with writing but even a young child can make money decisions. How does a child spend without having cash? The child can spend using credit in the account with the parent paying for the purchase. The child subtracts the amount from the account, much like a debit card purchase. How does a parent decide how much allowance to put in the account? You can start with setting a weekly credit, an amount that is added every week. This is an age-based amount that is never withheld. You then can add earnings from doing certain types of jobs. Other funds can be deposited in the account for certain spending responsibilities for the child. School supplies or clothes are two possibilities. Learning to manage money requires having money, so parents have to be willing to transfer funds to the kid to control within family guidelines. What’s the advantage for a kid? A child who has real control of money is capable of making good choices. Ownership is the key. Parents have to give up control so the child can learn to make choices, good and bad. Any money choices made while still living at home will be learning experiences. Spending choices made after your child becomes a legal adult can be disastrous. What's the advantage for a parent? For a parent it is much easier to write a number in the account instead of paying in cash. In fact, that’s the reason I started written accounts with my children. Also, because the parent is the banker the adult knows what is happening with the account. Shouldn’t parents be teaching by example and advising their kids on how to spend money? With all other skills parents know that they themselves do not have to be experts (athletes, musicians, artists) in order that their kids can learn these skills. The kids just need an understanding of the rules and practice with the tools. Their skill is honed by the mistakes they make and correct. However, when parents take control of activity and “do it for them” kids don’t learn the skill. Imagine your child learning to play softball when you do the batting and you play the infield. Imagine your kid learning to play piano when you stop practice every time they hit the wrong key. Parents know that the wrong notes are normal, and offer encouragement. Money management is another skill that kids learn by practice. The best time to learn is while growing up and the best place to learn is in the home. The No-Cash Allowance gives parents the guidelines for setting up this hand’s-on financial education for kids from pre-school through high school. back to top |