My daughters had no choice but to grow up with my allowance strategy that became the basis of my book. Now as a grandmother I enjoy watching my grandkids learning about money the same way. 

Here are some comments from parents and kids about their no-cash allowance experience. Starting with my daughters, I asked why they adapted the same strategy with their kids. “Because that’s what we knew growing up.”

As a result money doesn’t stress me out. Would I like to have more? Sure. Wouldn’t anyone? But I pay the bills when they arrive and bank online like a pro. As a kid, I wouldn’t believed that my parents knew what they were talking about. I feel lucky that my mom and dad helped me develop this intangible, unconscious skill that prevented a lifetime of anxiety about finances and as it turns out, has saved me a log of money. Abby, started at age three

After graduating from college, I found adjusting to financial adulthood was as rough on me as it is on many people. Even with the best of planning, life happens, and in one year I had credit card debt that more than three times my monthly salary. Because of the no-cash allowance I had the skills and awareness to manage my spending and reduce Amy debt. I set up a budget, disciplines myself to make regular payments and paid off the entire amount in just under a year and half. Sarah, started at age 5

I wish I would have had this book in my mid-20s when the first two were born; I never thought that I would need to teach them to be financially responsible – boy, was I wrong. Kathy, mother of four who started a no-cash allowance for her youngest child

This book is a MUST read for every parent who is asking the question: do I give my kid an allowance or not? when do I start – what age is old enough? (and it’s sooner than you think) Lynne shares her proven process to teach children about money, responsibility, consequences and how to succeed – with a few lessons learned from being allowed to make a few mistakes, tough decisions, etc… on their own. The process allows children to “test drive” their money skills as the grow up. GREAT CONCEPT and it’s showing results in my household! LOVE IT!!! Amazon review

The greatest gifts you can give your children are the roots of responsibility and the wings of independence. best-selling author of the audio series, The Psychology of Winning ~ Dennis Waitley

Both my children are learning about money in a totally new way and are putting Lynne’s concepts into practice, preparing themselves to teach their children how to manage finances in a no-cash society. I urge you to read this book and get a new perspective on managing money. Amazon review 

From the author 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 any 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.

When your kids track all their money as a number, they become better money managers.

Read more:  What this mom discovered about allowances

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Check back next week for another blog about kids and money

Kids believe what they see. For most kids their earliest experience with money is putting cash in their piggy bank. They know if they put money in, there is money to take out.

If they see a lot of cash in their piggy bank they think they have money. Yet, they don’t know how much money they have unless they physically count it.

Most ATM deposits are cashless

Do your kids see you put money in your bank? Most deposits are invisible to your kids. Electronic and automated deposits are money that can’t be seen or touched. This virtual money shows up as a number in your account.

Do your kids see you go the bank and actually count the money in your account? No, because you rely on online information and your records to know your balance.

Do your kids know that the number on the receipt is the balance in your account? Probably not. They see the machine spit out cash, but may not know that a number represents the balance.

ATM is a counting machine

The difference between an ATM and a piggy bank is accountability. The bank dispensing your cash keeps up-to-date records of your balance. With a piggy bank there is no easy way to keep track without counting and recording the balance.

Create an ATM experience at home

Parents can help their kids learn how keep track of money as a number like you do. The No-Cash Allowance is designed to do just that using an allowance 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. This is similar to an ATM system.

Kids keep track of their allowance in a written log by recording each transaction. They see the numbers get bigger when they add money to their account. Then when they spend they see the number get smaller. Through repetition your child learns that money is a number that either grows and shrinks with each money transaction. No allowance apps needed.

No-Cash Allowance in action

• Kids write weekly allowance in account and update balances. 
• Parent takes the kids shopping and pays for their purchases using parent’s credit or debit card. 
• At home the kids subtract their expenses and update account balances–debit card in action.

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.

Part of the learning experience for your kids is keeping track of their money. Seeing the balance go up and down is a great introduction to cash flow.

If kids believe what they see shouldn’t they start seeing that their money is simply a number? You don’t need a magical piggy bank to teach kids money is a number. A no-cash allowance can.

Kids believe what they see. Let them see that money is a number starting now.

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Buy The No-Cash Allowance on Amazon, Kindle or from this website.

Lynne Finch helps parents teach their kids about money from their first allowance 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. 

When creating your allowance system, consider how it translates to life after age 18. Think of ways to make the your kids allowances relate in some way to what happens in adulthood.

Pay kids allowances regularly without fail

Treat allowances as a base income that is never withheld as a punishment. As adults, most employees receive regular paychecks, usually through online deposits to their accounts. Employers don’t withhold pay at whim.

Use a written account that kids can see their allowance as a number on pay day. By direct-depositing allowances parents need not have cash and kids can record their own income regularly.

Give kids complete control

Allow kids to control how their money is spent. Just as no one tells an adult how to spend every penny, kids will learn from their experience making their own decisions. Any mistakes will be educational and can’t hurt them financially.

In effect, you are giving your kids control over part of the family budget, similar to a business providing funds to department heads. In your family each child runs a department with specific needs and interests.

Use fines and fees

Adults experience financial consequences for the actions, good and bad. Use your kids allowance system to install a fine and fee process to control behavior. Kids will learn there are financial consequences of actions, e.g. late fees and fines.

In our home I created Helping Hands, a posted list of services I would do for the child and then charge them a small fee subtracted from their account. For example, if they did not hang up their jackets or pick up their toys, I would charge them a fee instead of nagging. Helping Hands is explained in my book and was very effective and short-lived because my kids didn’t like seeing their balance get smaller.

Provide incentives and bonuses

We offered special work opportunities when one of the kids wanted to earn extra money. They regularly got bonuses for good grades. Sometimes there were individual incentives to break a bad habit or improve behavior. These were all in addition to their regular weekly guaranteed allowance.

Transition to reality

A system like The No-Cash Allowance gives your child real control of real money, including cashless spending. Your child tracks and controls the money in an account in your home–similar to a checking account. It is possible that much of the money may never exist in the form of cash. The child receives larger amounts of money and more spending responsibilities over the years. 

Parents are the best teachers to help prepare their kids to manage their money as adult by doing the following:

• Provide money
• Provide opportunity for practice and repetition
• Encourage and praise
• Commiserate over mistakes
• Trust their kids to make good decisions
• Provide years of practice before adulthood
• Start the conversation money

As a parent you use money you would spend on your kids anyway to provide a financial education in your home to give them real control of real money now. No allowance apps required.

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Buy The No-Cash Allowance on Amazon, Kindle and through this website.

Lynne Finch helps parents teach their kids about money from their first allowance 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.

Today’s youngest generation may never write a paper check. Consequently, understanding how your kids think about money is important as you provide financial experience in your home. 

Money attitudes and habits change over time

A generation is a group of people growing up in similar historical, social and economic times who share common experiences. Generally 15–20 years. 

Greatest Generation 1901-1924: Thrifty, careful with finances, balanced checkbooks. Saved as much as they could. Fixed before buying new.

Silent Generation 1925-1945: Discipline, self-sacrifice, and caution. Defined by conformity and general prosperity. Savers, financially prudent.

Baby Boomers: 1946-1964:  Goal-centric, independent, and resourceful. They value hard work, individualism, optimism, family, and consumerism.

Generation X: 1965-1979: Entrepreneurial and individualistic growing up in two-income households. Want what they want and want it now. Struggling to buy, and most are deeply in credit card debt. 

Millennials 1980-1994: Eager to spend, to retire early having saved their money. They schedule everything. Invited as children to play a lead role in family’s purchasing and travel decisions.

Gen Z 1995-2012:  Began using cell phones and digital technology very young, leaving traditional toys behind. Known for making socially conscious purchases, thriftiness, and being highly informed.

Generation Alpha came to life in 2010, the year of the first iPad by Apple. They are growing up in a digital environment that will affect them socially and economically; they live through screens.

The commonality in all generations

In my research about generations I did find one common reality. Money always exists as a number. That number may be in a checkbook, bank account, or other online balance. In many transactions today money never exists as cash. Regardless of how we spend money, money can always be tracked as a number.

Today’s kids think about money differently

With the ways we use money in today’s digital world, it more important than ever that our youngest generations learn to manage money as a number. Learn more in my book for teaching kids this essential life skill. Money and Responsibility Define This Allowance System for Kids.

My generational timeline

Parents started a family during WWII without a checkbook. I’m a Baby Boomer and got my first checkbook when I went to college to track my student loans. My kids are Gen X and  got their first checkbooks when they were in junior high school. My grandkids may never write a paper check.

When kids were in college we learned how to transfer money from our bank account to theirs, and eventually to their college financial accounts.

My husband and I are primarily credit card users who pay the full balance every month. We enjoy the convenience of paying only one bill and enjoy the rewards. 

My college daughter taught me how to use an ATM in the 1990s. We have debit cards but don’t use them because debit cards don’t provide the same security as credit cards do.

My oldest grandchildren are Gen Z. When I give my Gen Alpha grandson some cash, he turns it over to his mother to deposit in his No-Cash Allowance account. Tells me it’s much easier to manage as a number.

I’m a bit of an old dog when it comes to some of the newer cashless spending methods. Will need to chat with my grown kids about how to use Apple Pay and ask my grandkids to show me how to use payment transfer methods like Venmo. 

What are the generational money attitudes in your family? 

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Buy The No-Cash Allowance on Amazon, Kindle or from this website

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. 

Kids can manage money before they know how to read. Even though providing allowances for your kids may not seem an essential part of parenting, it is.

When parents provide their kids with money to manage using allowances, they create one of the most educational in-home experiences to prepare their kids for being responsible with their money as adults. Parents are, in effect, transferring control to their kids to manage money they would spend on them anyway.

Today’s kids are receiving anywhere from $800 to nearly $2,000 dollars a year or more while living at home. But are they really learning how to manage that money? Expecting schools to teach money management, or relying on allowances apps ignores the real power parents have in providing a hands-on money management experience for their kids.

Learning about money starts in the home and parents don’t need to be financial experts. In reality, only parents can teach their kids the skills, behaviors and system to prepare them to be adults.

Parents! If you don’t teach personal finance lessons to your kids, they likely will never receive any financial education. It’s your responsibility to ensure they are ready to leave your home with the skills, behaviors and system that will help them be self-sufficient members of society and avoid the pain associated with money struggles.
Vince Shorb, CEO, National Financial Education Council

Start allowances for your kids early

Parents know their kids habits and attitudes, especially when it comes to spending and savings. Read: Spender and saver kids blog

Moms, especially, are often more proactive when it comes to teaching kids about money. As a mom, I thought it was my responsibility and created The No-Cash Allowance to teach my kids how to manage money, later writing my book to help other parents.

Parents also know that kids understand what money does when they are very young.

Researchers at the University of Wisconsin-Madison report that by the age of 3 most kids are able to understand the basic concepts of value and exchange that are central to economics

Parents have the advantage of starting early. A three-year-old with an allowance account will have 15 years of hands-on experience managing their own money before graduation.

The value of money specifically is not something that’s taught in schools, which means that ultimately, it’s up to parents to teach their children how to use and manage it best. This is just one of many important values we as parents want to instill.  Mark Cuban

Make allowance a learning experience

By following some consistent practices over the years you can help your kids develop habits and behaviors that they can take with them when they leave home. You do this by giving your kids money with control and responsibility to manage by themselves.

• Establish a consistent process 
• Provide reliable transfers of money to kids control
• Require kids to keep track of money as a number
• Use The No-Cash Allowance as a guide

The 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. The child withdraws, transfers, and deposits funds while keeping a running balance. Kids get hands-on experiences using their own money to develop essential life skills such as:

• Money math
• Planning
• Decision making
• Record keeping
• Financial language
• Virtual money concepts

The book focuses on teaching kids to manage money as a number in an account with chapters on the following:

• Looking at money attitudes in general
• Understanding the differences between child and adult money
• Teaching kids the decimal cash system 
• Explanation of the no-cash allowance system
• Instructions on how to set up for your family 
• How to influence behavior

The chapters on how to use the system with different age groups helps parents tailor allowances for their family.

• Ages 3-5: Children know what money does before they know what it is. Activities introduce money basics.
• Ages 6-12: School activities and an expanding social life offer new opportunities for money management.
• Teenagers: The teen years are the financial dress rehearsal before adult. Help your teen start managing money in an almost-adult fashion. 

Parents, including financial professionals, say they didn’t realize that their kids were so capable until they started using The No-Cash Allowance. One mother told me how amazed she was at how capable her children are with non-monetary things like growing responsibility and making decisions.

Watch on YouTube

Buy the book on Amazon or Kindle (or from this website)

Lynne Finch helps parents teach their kids about money from their first allowance 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.

Recent research shows the role that emotions play in spending behaviors. Surprisingly, even kids reliably report their emotional responses when given a choice to spend or save.

A University of Michigan study found that children as young as five already had distinct emotional reactions to spending and saving money, and that these translated into actual, real-life spending behaviors. The findings also suggest that these emotional reactions and spending behaviors weren’t modeled after their parents.

Behavior of spender or saver kids

The spenders (aka spendthrifts) are those kids who can’t wait to spend no matter what, buying something just because. They don’t experience emotional pain, tend to over spend, and may carry more debt as adults.

The savers (aka tightwads) feel emotional pain when spending, may not want to spend their money, and may have less debt as an adult.

All saving is not the same

Saving is simply the act of not spending one’s money. Yet when kids hear family talk about saving they may be confused because how and why adults save is different than a kid’s experience.

As my husband tells me when I show him how much I saved while shopping, “You have to spend money to save money.”

When looking at long-term saving, not spending now helps build a fund for a down payment or retirement, This is a deliberate act of not spending now in order to have money to spend in the future.

Kids don’t earn a living, don’t have to pay living expenses, and have considerable freedom spending their money. As a result, they don’t face the pressures of real-life events when deciding whether to spend or save. For them life is good as they are learning to manage their money in childhood.

Requiring kids to save

Providing allowances to kids then requiring them to save a portion leaves them out of the decision loop and takes control of their money out of their hands. Consequently, spenders may end up deciding the money wasn’t theirs anyway, while savers will be quite okay saving as instructed because of their reluctance to spend.

Influence spender or saver kids’ behavior

Recognizing the role of emotions about money for spender and saver kids is important for parents to influence their kids behavior before they become adults. Talking with the spenders and savers about their money decisions can create constructive money talks in families and help kids gain confidence in their choices.

In the end, we aim to manage money wisely to make our lives comfortable and fulfilling. Yet, we all know people who spend on fun and can’t figure out how to support themselves. We also know others who spend too much in one area, for example, spending excessively on gifts for others at the expense of their own needs. Creating the balance between spending and saving is one of life’s many challenges.

The use of money is all the advantage there is in having it.
~ Benjamin Franklin

In creating a hands-on financial education for your kids in your home or homeschool you can set some guidelines that will influence their behavior. By creating kid-size real-life situations you can help them balance those spending and saving habits.

Require kids to track all their money as a number in an account they are responsible for maintaining. Make them see their money as numbers.

Give them age-appropriate expenses with responsibility and control. This makes spenders and savers use their funds to satisfy their financial obligations, creating a sense of responsibility. Buy school supplies

As kids see their account balances rise and fall because of their decisions and responsibilities, they will be getting a child-size experience of the adult world of money. Parents tell me how amazed they are at how capable their children are when it comes to managing money and making decisions. Start now to prepare your kids for their adult financial future.

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Buy now: The No-Cash Allowance book on Amazon and Kindle

Lynne Finch helps parents teach their kids about money from their first allowance 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.

When your child walks through the Kindergarten door, no one tells them they just got hired for their best first job: a 12-year gig that will change their life. Yet, the job description is simple: be the best student you can be. 

While school and real jobs aren’t quite the same, encouraging kids to treat it as a job helps them develop skills to succeed in the workplace. School is not a sideline activity while they wait to get hired for a part-time job that takes away valuable time away from getting the most from their school years. 

Of course, academics rank first. Knowing the three Rs is essential, but the opportunity for sports, music, art, drama provide experiences kids may not have access, time, or money to do as working adults. School offers a great opportunity to sample many new activities and develop new interests.

As in my blog about providing financial exe How to help your kids develop money skills to last a life time allowances parents become facilitators and the kids are the owners of their money. With K-12 education, parents have a similar role supporting their kids in their first job.

Parents of students are responsible for providing for their students 

• A place to study at home
• A supportive study environment 
• Encouragement in developing time management skills 
• Funds for kids to buy school supplies.  Read the blog
• Funds for older kids to pay school and activity fees
• Personal involvement in school conferences and meetings
• Communication with teachers, now made easier through online methods

With this focus on education, instead of asking kids  “How was school today?” parents might ask:

• How was your job today?
• What problems did you solve?
• Is there something you want to work on more?
• Do you have a plan for how to improve?

This may lead to interesting family conversations when your child asks you, “How was your job today?” 

Why is school your kids best first job

• Students have assignments to complete
• There is a schedule for getting the work done
• Testing helps kids know how their doing
• Schools may offer incentives and rewards for behavior
• Students get education regular progress review
• Students learn to work with others in group settings

Parent-student relationship

• Parents can provide rewards for good grades or improved grades, similar to businesses offering bonuses
• Rewards can be monetary or other type of reward/recognition
• Kids can explain to parents what they are learning while parents don’t have to be experts
• Parents can encourage, celebrate, reward, be interested while the family parents and kids may even learn something together and create a shared interest.

What about part-time jobs and summer

In our family, we did not want our kids working during the school year, except for some typical kid jobs like babysitting, simple jobs for family and friends. We believed that our kids benefited more from concentrating on academics and participating in extra-curricular activities. They would have a life time of work awaiting them after their education was done. 

Also, with their busy schedules our kids didn’t have time to work and manage school. We encouraged them to get good grades and be involved in other activities to give them a better resume when they graduated.

However, in the summer part-time jobs are a great experience if available. If not, an alternative is for parents to “hire” their kids during the summer. We paid our kids to mow the lawn, along with many other jobs kids can do. Washing sheets and towels, doing super cleaning jobs, cleaning bathrooms and other family areas. 

Hire your kids

Parents can present these as real jobs with instructions, appropriate supplies, training and equipment along with scheduling and pay rates. One year we hired our kids to paint our old two-story garage and offered a bonus if they got it done on a deadline. We showed them how to paint, clean brushes, and move the ladders. After a job well done they got the bonus!

In fact, we hired our kids for many jobs and setting reasonable rates. Then one day they came to use and requested a labor negotiations. We were surprised and listened to their case. They proceeded to explain, “This one takes a lot of time and these don’t need much.” We asked them to suggest new rates and accepted their reasonable changes the spot. 

Parents and their kids jobs have similar requirements for success.

• Do the work
• Complete assignments on time
• Be evaluated
• Work toward awards and recognitions
• Pay attention and follow directions
• Be a team player

Encourage your kids to excel at your kids best first job as a student. Provide a financial education at home. Your kids will leave home ready to be self-sustainable adults with the skills, system and experience to succeed. That’s a winning combination.

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Lynne Finch helps parents teach their kids about money from their first allowance 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.

Buy the book

Parents, you can raise money smart kids by doing this one thing now. Stop controlling your kids’ money. If kids don’t have the ability to make their own  decisions and learn from them, kids will not be prepared to manage money successfully as adults.

Parents, with good intentions, control allowances to protect their kids from money mistakes that plague many adults. But kids are not adults and can’t make the kind of mistakes that harm their financial future.

Life’s challenge for kids is managing money

No matter how much advice parents give kids about money, no matter how often they look over their kids’ shoulders, nothing but experience and mistakes can prepare kids to transform from a child to an adult overnight at age 18. Start early to raise money smart kids in your home. No allowance apps needed.

Parents! If you don’t teach personal finance lessons to your kids, they likely will never receive any financial education. It’s your responsibility to ensure they are ready to leave your home with the skills, behaviors and system that will help them be self-sufficient members of society and avoid the pain associated with money struggles. Vince Shorb, CEO, National Financial Education Council

Parents’ challenge is giving up control 

Remember the day when you let go of the bicycle giving your kid complete control? You knew bumps and bruises would follow. But you also knew that your child would develop skill and become a better cyclist.

Fast forward to the day when you hand over the keys to your licensed teenager, who can now operate a motorized vehicle without you. In doing so, you are trusting your teen to make good decisions.

The same is true for developing the skill of managing money. If kids don’t have control they won’t develop the skill of making decisions that lead to good financial results.

Raise money smart kids

From my successful experience teaching my kids to manage money I wrote a book to help other parents raise money smart kids. It all started in the 1970s when I gave my Gen X daughters their first allowances before they started school. 

At that time the prevailing way to give kids money was to fork over cash. But my biggest problem was that this mom was a check and credit card spender who failed miserably having the correct amounts on allowance pay day. 

Note: This was before ATMs so to get cash I drove to a bank, walked inside, wrote a check and stood in line at a teller station with two bouncy preschoolers in tow.

Direct deposit of paychecks came on the financial scene during that time eliminating payroll checks and depositing a number directly into a bank account. No checks, no cash. Just numbers. 

I was inspired to title my book The No-Cash Allowance because when I started written accounts for my kids using direct-deposit plan set up my kids to control their money. My grandkids are Gen Z and Gen Alpha and are learning to be money smart kids using the same system as their moms.

No-cash system prepares kids for adulthood

When all money is treated as a number kids use simple addition and subtraction to know how much money they control. Kids like to be in control and control of money is a big thing. 

My kids always knew to the penny how much was in their bottom line. My oldest daughter said she loved adding and subtracting money in her account and thought that every kid did it.

This system provides consistency over the years while kids develop record keeping skills, learn about cash flow, plan for the future, and review past decisions. The allowance logs also make great reading and provide opportunities for money talks.

Kids grow with the system as they manage more money and responsibility. Your kids can have many years of using a consistent system that shapes their attitudes about keeping track of the money.  My youngest daughter had 15 years of hands-on money experience before graduating from high school. 

No-cash allowance system in action

One daughter opens her account book (or computer spreadsheet), adds her weekly allowance and records the new balance. She announces that she can buy a new sweater. Her sister updates her account and asks if we could stop at the shoe store. I take the girls shopping and pay for their purchases using my credit card. They subtract their expenses and update the balances in their accounts.

No cash exchanged hands yet everyone knows exactly what happened. Deposits were made, account balances got bigger, purchases were made and account balances got smaller. Also, much to this mom’s delight, neither child asked me for more money or for me to buy something for them. They took responsibility for their spending decisions and the resulting change in their account balance.

Benefits for kids

• Money Kids want to have money like adults do. “This is my money.”
• Responsibility “I have to pay my phone bill and my school activity fees are due next week.”
• Control “If I don’t buy that today I will have enough next week to buy that jacket I want.”

Benefits for parents

• No more begging for money Your child always knows how much money they have and when deposits will be made.
• No misunderstanding  The account tells all like a financial diary.
• Money is a neutral topic When your child owns their money it’s easier to talk about it.
• Expenses become real Something as simple as buying school supplies takes on real meaning  when the money comes out of your child’s account.

Kids learn from consistent system

The No-Cash Allowance is a guide for parents to raise money smart kids using a system that lets a child control day-to-day money activities gaining hands-on experience using cash and cashless transactions including debit card, ATMs, electronic transfers and credit spending. Book overview

Parents and financial professionals who use The No-Cash Allowance system tell me they are amazed at how capable their children are when it comes to managing money and making decisions when they let them be in control.

Buy the book to get all the information you need to adapt The No-Cash Allowance for your family.

Watch on YouTube

Lynne Finch helps parents teach their kids about money from their first allowance to online banking. “It’s time to teach the kids how to manage money they can’t see or touch,” says the author of award winning book, 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. 

This strategy is based on the system I used to teach my daughters to manage money starting more than four decades ago when they were pre-schoolers. Now as mothers they are teaching the same concepts to my four grandchildren without using allowance apps.

With more kids growing up spending money they can neither see nor touch, parents are the best teachers to start teaching the life skill of money management. A few rules and consistency will give kids the hands-on experience they can take with them when they leave home. 

1. Transfer control of money as a number to the child to manage using money you would spend on them anyway.
2. Require kids to keep track of all money in and out of their account as a number, on paper or in a spreadsheet. Track money as a number.
3. Increase age-appropriate funding and expenses starting at age three and continuing through high school.

Here’s what motivated me to create my no-cash allowance system. After getting married, I was shocked to see that there was no money left for fun! When it was allowance time I wanted my kids to learn about real life money management. Teaching my kids to manage money was my responsibility because I:.

• Did not want to manage their money
• Wanted them to be independent and own their money
• Did not want them asking for money
• Wanted them to know how much money they had
• Did not want them to be unaware of their spending over time
• Wanted them to track money as money represented by numbers

This mom became a facilitator, dispensing cash when needed, although my kids requested cash less often than I expected. That may have been because I was also their debit card when shopping, paying with one transaction. At home they would add up their purchases and subtract from their account, long before debit cards were available.

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. This was also possible because I was not controlling their money so they could learn from their experiences. I don’t think an allowance app could have been as successful.

While my kids didn’t have online tools, my grandkids do. My oldest grandkid is now managing his money through a credit union after using the account system in my book. His mother wanted a real-world experience for her teen that didn’t require her to be hands-on. Another teen grandkid set up her own spreadsheet to use until she’s ready for an account in a financial institution. Again, her mother wanted to be hands-off.

While researching the variety of allowance apps available for parents, I learned the following:

Allowance apps emphasize parent control

Parent control predominates allowing them online access to their kids accounts and activity, while being able to block certain transactions. In contrast, my kids were completely in charge of keeping good records. As family banker I reviewed for accuracy after the fact.

Non-monetary tracking methods

Some methods of tracking do not use real money tracking systems. Instead some apps use non-monetary using points or stars.  By using a substitute for money kids are not learning how to track real money. 

Require subscription

Paying a third-party to help parents keep track of their kids money keeps control in the hands of parents instead of giving kids their own hands-on experience managing their money, In using The No-Cash Allowance parents transfer a small part of the family budget to the kids to manage. This is money parents would spend on them anyway, so there is no extra cost for parents.

Free apps available

Some free allowance apps lack some of the functionality of paid apps. Read more about allowance apps here

Chore apps

Apps for tracking chores may be included or parents can use a stand alone app.  Because my kids started allowances in the pre-computer age I made 3×5 job cards complete with instructions for each chore. Today I would gladly use a computer app.

Kids not in control

In general, I find that allowance apps put parents in control to the extent that kids may need pre-approval to use their money. While we had some family guidelines on spending money, my kids could make their own decisions without consulting me. I was preparing them to be adults where they would not need permission to spend their own money. 

Where are the numbers?

Kids need to see the numbers, especially now that physical cash is invisible in most transactions. When approached by a developer to adapt my system as an app, I asked about printing  a log similar to a checkbook account or statement. I was told that printing wasn’t an option. Another developer told me that no one was interested in printed stuff anyway.

But when I asked my daughters who are using The No-Cash Allowance written account system, they both told me that printed accounts were an essential part of the learning experience. Having a history of their money choices gives kids the opportunity to see how their money management changes over time. Seeing the numbers also provides great material for family money discussions.

Transitioning to financial accounts

Some allowance apps provide a debit card connected an institution in their system. This may not be available at a local brick and mortar institution for the parents. When my oldest grandkid was ready for transitioning his account, his parents found a local credit union where he could apply in person.. This experience taught him how to provide legal identification and talk with a financial person about setting up his account.

Using allowances apps creates an alternate reality for kids about managing money that doesn’t translate to adulthood. Parents have to let go of the bicycle so kids can develop that skill. With money parents need to be hands-off during those precious growing up years when they can only learn from their mistakes.r

When your 18-year-old is suddenly an adult there will be no guardrails about how they use their money. Your young adult child might face a challenging time adjusting to the real world of personal money management. Who will be in control then?

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Lynne Finch helps parents teach their kids about money from their first allowance 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.

Buy your copy of The No-Cash Allowance now.

When we give children money without responsibility we allow them to develop these free-spending habits. These habits become ingrained as a child gets older. The most critical years are those last few years before becoming a legal adult—the teen years.

Becoming legal adults financially

Teens, in our society, have the best of both worlds by having a considerable amount of spending money with few recurring debts. We know that most of a teen’s money is spent on entertainment (movies, music, games), clothing and snack food. We also know that moar teens are not spending money on housing, groceries, insurance, or loans. This all changes when them become working adults.

According to a recent BLS survey, the largest expenditures for working adults were housing and transportation, which comprised 26 percent and 13 percent of people’s take-home pay, respectively. Another big spending category was food, to which 10 percent was devoted. U.S. Bureau of Labor Statistics (BLS).

Compare that with teen spending.

American teenagers spend around $2,250 a year on average, mostly on food, clothing, and entertainment. Taking Stock with Teens – Fall 2021

Do our young adults feel prepared?

53% Despite taking a financial literacy course, I don’t feel prepared for the financial responsibility that comes with adulthood. T. Rowe Price 

One of your jobs as a parent is to help your teen make the transition to the adult world of money. You do this by creating a semi-independent stage where your teen can learn how to use money tools safely.

Money to transfer to their control could include: school, gifts and donations, room, entertainment, activities and hobbies, communication, clothing, personal care, and transportation. Over the years we added more money and responsibility for our daughters. By the time they were in high school our daughters were managing 100s of dollars each semester on their day-to-day spending.

When we transferred multiple spending plan amounts to our daughter’s account she looked at the large number and said, “You mean I have to manage all of that?” She had to learn a money management skill that many young adults struggle with.

64% of teens look to their parents or guardians for financial advice. (Source: Junior Achievement)

Your teen still depends on you for most or all of the funding, but will be making money decisions in a realistic context. In creating this real-world money situation, the no-cash allowance provides a consistent process that teens can use to learn money management before becoming legal adults financially.

An excellent credit rating is one of the most valuable assets any adult can have. This book is a great primer for parents who want to instill responsible money management habits in their children.  And, those habits will help ensure “credit-worthiness” in  adulthood. –  Patricia, retired bank executive

Allowance anecdotes

We need a raise  Our allowances were age-based with raises on birthdays. Then one day, our daughters sat us down for a meeting. “We need a raise,” they said and proceeded to lay out several reasons for their request in a most professional presentation. We listened while being so impressed that we were receptive to their demands. After negotiations the new allowance rates went into effect.  

One teen’s experience  A friend started the no-cash allowance with her teenage daughter. The teen figured out how much she spent in different categories and used her debit card for purchases. Mom and daughter reviewed the statement and found a big surprise. Her budget for “coffee with friends” was blow away by the amount she actually spent. However, because this was an important social activity for her, she adjusted her other spending. It’s all about seeing the numbers. 

Labor negotiations: We did a weekly drawing for job cards, some with pay and some not. They had to complete all the jobs before adding their earnings to their accounts. Then one day, they approached us demanding labor negotiations. “You’re paying us too much for these jobs and not enough for these,” they said. We asked how they would adjust the rates. They pointed out specific jobs that didn’t take much time or effort and others that required more. After they suggested new rates, we agreed on the spot. My goal was for them to do the work, but listening to them showed they valued time and effort to each job.

When your kids track all their money as a number, they become better money managers.

Read more: Teaching your kids about credit cards

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