| How is this book different than the many others about children and allowances? Many books about allowances create an artificial money situation using cash where the child spends the money mostly for discretionary spending or as directed by parents. A no-cash allowance is more 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. How does this book prepare children to manage money as adults? The child receives larger amounts of money and more 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 learn to use credit and debit cards with checking and savings accounts. The money can be transferred from you and combined with earnings from part-time employment. What is a no-cash allowance? A money management system in which a child controls all funds received from parents through a simple written account. Adults act as bankers and the child as account owner. 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. Children like to have control and having their own written account gives them that. Children 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 manage an account. 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. 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 can put controls on the account if the child abuses the rules. How does a parent decide how much money 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 household work. Other income can be to fund spending plans and from value-added activities. What’s a spending plan? The child is assigned certain expenses and responsibility for paying them. The money for spending plans is money that parents would be spending for the child anyway, so in effect, you are simply transferring control for these expenses to your child. Examples are school expenses or a clothing fund. What are value-added activities? Just as there are no guidelines for giving children money, there are no guidelines for how you use it in raising your children. The convenience of the no-cash allowance system makes it easy for you to reward, or penalize your child. As a parent you can decide what behaviors you want to encourage or discourage. Financial habits to encourage might include saving, making charitable contributions, and investing. Personal behaviors could include following house rules, getting school work done on time, and following afitness routine. Because control, responsibility and decision-making is given to the child, the no-cash allowance lets children make small, recoverable mistakes with real money in order to learn how to make better decisions to avoid making large money mistakes as adults. back to top |