Imagine my surprise when I picked up my daily newspaper a few weeks ago and read that the traditional cash allowance is dead, a victim of the electronic age. Seems that with kids spending so much on digital entertainment -- music downloads, online video games, eBay auctions and just general stuff -- cash handouts are "pointless."
Like, whoa. I'd suggest that far from being pointless, teaching children to manage actual cash is more important than ever.
Electronic payments may be great for banks, online retailers and sometimes even parents. But kids are still kids, who don't really grasp the idea of money unless they can see it and feel it. If you spend it with the click of a mouse, it isn't quite real (as even many adults can attest).
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Nor, for that matter, is plastic. Kids don't necessarily draw a distinction between prepaid cards, debit cards, credit cards -- whatever the card, it's still just an easy way to spend money.
Even in this electronic age, you want to teach your kids certain financial values. They need to know, for example, that Mom and Dad aren't endless sources of money in any form.
That means they need to learn how to make spending decisions with their own money. Kids will spend unlimited amounts as long as the money is yours. When their funds are on the line, it's a whole new ballgame. And the best way for them to appreciate what it means to spend money is to see the big empty in their piggybank or to feel it in their wallet.
So how do you reconcile that with the new reality of kids spending money online? Not (as several parents in the newspaper story said they did) by giving your kids carte blanche to use your credit card to make online purchases. One mother complained about trying to sort out her 14-year-old son's various credit-card charges -- especially when he and a friend started downloading songs at 99 cents apiece. "It's killing me," she said.
There's an easy solution, Mom: Take away the credit card. In the "old days" of a cash allowance, parents weren't obligated to pay for everything their kids wanted, and they're not obligated now.
In fact, most of the old allowance rules still work, and others can be adapted to Allowance 2.0. That's certainly preferable to parents throwing up their hands and giving up on spending limits altogether.
Next week: Rules for Allowance 2.0 in the electronic age.
-
What Is a Qualified Charitable Distribution (QCD)?Tax Breaks A QCD can lower your tax bill while meeting your charitable giving goals in retirement. Here’s how.
-
Embracing Generative AI for Financial SuccessGenerative AI has the potential to reshape how we approach learning about and managing our personal finances.
-
How to Motivate Kids to Savepersonal finance It's not easy teaching your child to save. Here are some ways readers have incentivized their kids to keep track of their finances.
-
Lessons for Kids From the Crisissavings One of the greatest opportunities presented by the pandemic is to give children an appreciation for the workings of the economy.
-
Why Financial Education Workscollege Money skills learned young will pay off in the long run.
-
The Tooth Fairy Is Leaving Less Under Pillows These Dayssavings The average amount that the Tooth Fairy gives kids is down 10% from last year.
-
The Value Test: 300 Colleges That Pass
College Rankings All the schools on our list, from 1 to 300, are best values.
-
6 Ways to Get Your Kids to Do Chores Without Paying Themspending Kids shouldn't be paid for doing routine tasks, but for doing extra jobs that parents define as above and beyond.
-
Save $1 for College, Cut $2 in Debt
college Paying for college doesn't mean you have to take out thousands in student loans.
-
Back-to-School Money Tips for College Students
college Kiplinger's summer 2015 interns offer advice on managing your finances as a student.
