Kids can track allowance in a check register

Tracking allowance
Kids track allowance and spending in this checkbook register

Looked at your transaction register (AKA check register) lately? They come complete with a lengthly list of codes for a variety of cashless transactions: DC, ATM, AD, AP, BP, and T. Hmm, can parents use this concept to teach their kids about money management?

Track allowance and spending

Maybe this is the time to start paying your kids their allowance as a number instead of cash. Maybe this is the time to give hands-on experience tracking their money transactions as a number, just like you do.

Obviously, kids wouldn’t use all these types of transactions. However, with a kid-friendly code system your kids can track all the ways they spend and receive money in their allowance account.

DC      Debit Card

ATM   Teller Withdrawal

AD      Automatic Deposit

AP      Automatic Payment

BP      Online Bill Pay

T        Online or Phone Transfer

Kids quickly get the idea that you can buy stuff without using cash. They simply swipe a piece of plastic that looks like a credit card. Works like magic!

To get your kids in the habit of recording their transactions, pay their allowance as a number written in an account. You become the banker and your kid is the account owner.

Then hand them a pencil and an allowance log to record their transactions. Require them to record every transaction in writing. Start with these basic codes.

AD    Allowance deposit

Parent:  Today is Saturday, time to record your allowance.

Child gets allowance log and writes in the weekly amount and adds to the previous balance. Notice how the kid has to use some addition skills here to get the new balance.

Child: Wow! Now I have enough money to go to the movie.

ATM   Teller withdrawal

Child: Can I withdraw ten dollars. I need cash for the book fair.

Parent digs in purse or pocket and hands over the cash.

Parent: Here it is .

Notice the the kids is seeing that the money is coming from a real person, not a machine. And, more importantly the kid has to subtract the amount from the balance. It’s not free money after all.

DC   The no-cash allowance version of debit card spending where parent pays while shopping.

Child: I have enough money in my account to buy this today.

Parent and child roll into the check out line.

Parent: Okay. I’ll pay for it with my stuff. When we get home you write the number from the receipt in your account to get your new balance.

There is one more code on these allowance logs that you can gradually work into your system. This is the AP (Automatic Payment) code. This code introduces your kids to the idea of paying bills that are regularly subtracted from their account, whether they like it or not.

Suppose your child pays a share of the cell phone bill. Have your child treat this as a recurring subtraction on the due date. As a parent you review the account occasionally to see that these payments were recorded.

Parent: I see you remember to subtract your cell phone bill yesterday. Good work.

Download allowance logs here.

Basic Account  This is for younger kids with larger spaces for writing.

Checkbook Account Older kids can use this version that looks more like a bank’s transaction register.

Spreadsheet Account Kids can use a computer to track their allowance, but need to print it out regularly for parents to review.

While this writing of numbers may seem trivial to you, this hands-on activity is very significant to a child. Every time your child subtracts an expense and sees the number get smaller he is learning that every money choice has a consequence. Likewise, everytime he gets to add money through a deposit he sees his balance increase.

Already we are seeing a generation of young adults who do not keep any type of transaction log. No record-keeping at all! They log in to their online account and wiggle their thumbs to see how much money is left.

That’s the grown-up version of dumping out a piggy bank with that one nagging problem. Those automatic withdrawals or a check that clears could very well sneak in overnight and create an overdraft tomorrow.

If you want your kids understand how money travels in today’s digital world, start now by requiring them to record every transaction in writing. Knowing how to manage the numbers on paper will give kids hands-on experience now before they become adults.

Lynne Finch helps parents teach their kids about money from piggy banks to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children that money is a number with kids as young as pre-school and continuing through high school. 











Teen Spending Habits Create Unrealistic Approach to Adult Life

Teens live in the best of all worlds moneywise. Teen spending habits show that they spend a lot of money and have few responsibilities or obligations for their spending habits.

What do teens buy?

The Piper Jaffray  25th semi-annual project “Taking Stock With Teens”  begins with an overview of teen spending by category.

teen spending

Because teens they don’t have regular bills, debt, loans, insurance payments, and mortgages, they can walk into the mall with a carefree attitude about spending. But is this a good way for them to prepare for adulthood, just around the corner? What is this teaching them about money management?

What do teens expect to earn as adults?

Not only are teens able to spend without much responsibility they also have an out-of-this world expectation of their earning as adults.

According to a 2007 Schwab Survey teenage boys expect to make an average of $174,000 annually, while girls expect to earn $114,000.

The reality is that in 2014 the median household income was $53,482 and per capita 12-month income was $28,555.

Why are teens so unrealistic about money?

In today’s society kids start receiving money at an early age and are usually able to spend it any way they want. As they grow they have more money but little responsibility for their expenses.

Over the years kids develop these free-spending habits that will be difficult to break. The most critical years are those last few years before becoming a legal adult—the teen years.

One of your responsibilities as a parent is to guide your kids through a transition to the adult world of money. You can do this by creating a semi-independent stage where your children assume responsibility for more of their own day-to-day expenses, such as school, transportation, and education.

You can do this through using the strategy explained in The No-Cash Allowance. What you will be doing is transferring money that you would be spending on your teen to your teen to manage. This includes keeping track in their accounts and paying for the expenses on time.

Using this approach your teen could be managing funds in high school for most of their day-to-day spending on clothing, entertainment, education, extra-curricular activities, and phone expenses.

Even though you may be providing most or all of the funding the key is to transfer responsibility to your teen to manage the money certain personal expenses. In creating such a real-world money situation, The No-Cash Allowance provides a consistent process that teens can use to learn how to manage money for real-life expenses.

Lynne Finch helps parents teach their kids about money from piggy banks to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of The No-Cash Allowance. Follow Lynne’s common sense approach for teaching children that money is a number with kids as young as pre-school and continuing through high school.