Does your child get an allowance? There’s an app for that
Even as parents struggle to control the amount of time their children spend in front of a screen, some are turning to apps to monitor and distribute their children’s allowance.
SALT LAKE CITY — The average American child gets an allowance of about $9 a week from their parents, adding up to nearly $500 a year, according to a survey released earlier this year.
But instead of paying up in cash, some parents are opting to use apps to distribute and monitor allowances, and to keep track of chores linked to the money.
Julie Jargon, family and tech columnist for The Wall Street Journal, interviewed parents who said apps such as GoHenry and Greenlight help to teach their children how to responsibly use a debit card while keeping it under the parent's control. Their children are also more willing to do chores when they're connected to an app, rather than posted on the refrigerator.
"The kids have their phones with them all the time, and they can check the app and mark off their chores on their own. I know even before I get home whether a chore has been done," Bonnie Koon, a mother of three in Crawfordville, Florida, told Jargon.
Koon uses an app called Greenlight, which offers debit cards for children that are linked to a parent's bank account. Unlike a debit card issued by a bank, money credited to a Greenlight account can be divided into parent-approved categories, such as spending, giving or saving, CEO Tim Sheehan said on CNBC. Parents can also designate where children spend their money.
“It’s quite convenient to go tap-tap, and they have 20 dollars to spend at Chick-fil-A or wherever they might be,” Sheehan said.
Parents can keep up with their children's spending with real-time alerts, the website for GoHenry says.
The trend is part of a wider movement to do away with cash, which some economists believe will happen during the lifetime of millennials.
Only about one-third of transactions in the U.S. are in cash, and the percentage drops to 21 percent among people in their 20s and 30s. In 2017, the number of debit-card transactions surpassed cash for the first time for expenses between $10 and $25.
Some people worry, however, that a change to a cashless society will hurt the poor, who are less likely to have bank accounts, and research has shown that people behave differently when they use cash instead of credit or debit cards.
The parents that Jargon interviewed said the apps helped their children to be more responsible with money. Still, some parents may hesitate to give their children yet another reason to check their phone, given the latest research about how screens are affecting children’s brains.
It's not quite like the universal basic income that some U.S. cities are trying, but for children, it's the next best thing: money provided by their parents, sometimes with strings or linked to chores, or sometimes just a handout so they can have some spending money before they're old enough to get a summer job.
According to the 2019 Allowance Report by RoosterMoney, another app for children and parents, nearly 70 percent of American parents provided their children an allowance last year. The average amount by age ranged from nearly $4 a week at age 4 to $13.34 at age 14.
That was up nearly 4 percent from the previous year, causing MarketWatch to note that children's allowances are growing faster than American workers' salaries, which grew by 3 percent, not counting for inflation.
Forty-five percent of children receive their allowance on Saturday, making that the day most American children are likely to be flush. Eighty-eight percent receive their allowance on Friday, Saturday or Sunday.
The RoosterMoney survey, which examined money received by children ages 4 to 14, also revealed children's most common chores (the top 3: tidying the bedroom, laundry and looking after pets), and the amount of money given for chores (washing the car came in at $4.60, compared to cleaning the bathroom, which paid just $1.82).
In the United States, the practice of giving children an allowance started about a century ago, according to historian Steven Mintz at the University of Texas at Austin, who was quoted in The Atlantic.
In the article by Joe Pinsker, Mintz explained that the allowance served two purposes: It helped children contribute to the growing economy, and it helped them learn to manage money. Over time, however, Americans parents have also come to use an allowance to encourage their children to do household chores, a practice that sociologists Pinsker interviewed disparaged.
Heather Beth Johnson, a sociologist at Lehigh University, told Pinsker that children who are paid for chores get a sense that they're entitled to compensation for everything they do, rather than doing jobs because they're important to the family and everyone in the home should contribute.
Moreover, in other cultures, children are happy when they're old enough to contribute to the household in a meaningful way, David Lancy, a former professor of anthropology at Utah State University, said in The Atlantic's report. And children expect neither money nor praise.
"Praise is rare, as the principal reward is to be welcomed and included in the flow of family activity," Lancy said.
Johnson, the Lehigh sociologist, is among the 30 percent of American parents who doesn't give her children an allowance, but she does give them spending money as needed, she said. Nor does she need to give an allowance to get her children to do chores.
“Maybe my kids are just really strange, but I really don’t have to say it more than once," she told Pinsker. "I say, ‘Empty the trash,’ and they do it.”
For parents who believe their children benefit from some incentive, available apps include Homey, a "chore management app for the entire family," and Current, an online banking service with a special focus on teens. BusyKid lets children make charitable donations, save and invest in the stock market with their allowance money. The website ScaryMommy says BusyKid "will have your kids begging to do chores."
When it comes to age, Greenlight says a child of any age can get a MasterCard-branded debit card; money in every category is completely controlled by parents, and a charge will be declined if a child tries to use the card somewhere other than an approved store.
GoHenry is only for children between the ages of 6 and 18; as an added perk for children, the card they receive is stamped with their name. (For example, if your child's name is Olivia, the card they receive will say GoOlivia on it.)
RoosterMoney is geared to younger children and accepts children as young as 4 for its "digital tracker which lets your children keep track of their money, save towards goals and earn rewards while you oversee what money goes in and out of their account."
"You remain the Bank of Mom and Dad," the RoosterMoney website promises.
Of course, some parents believe they can be the Bank of Mom and Dad without all the bells and whistles of apps. John and Sarah Smith of Herriman, Utah, featured in the Deseret News earlier this year, post their children's jobs on the refrigerator and pay their children an allowance in cash because they believe using cash helps people to make better financial decisions.
"If I've got a hundred-dollar bill in my wallet, and that’s the only bill I have, and I’m deciding if I’m going to buy a $1.50 soda, more often than not, I will say I don’t want to break a hundred-dollar bill to buy a $1.50 soda. Is it a need or want?" John Smith said.
And Kari Paul, writing in MarketWatch, noted that analogue parents can teach children sound financial principles by playing the board game "Monopoly" together, or investing in Dave Ramsey's "Financial Peace for Kids." The old staple, the piggy bank, is also still around, although some have been updated with a new name, "Porkfolio."
For adults who would appreciate an allowance of their own, your best chance right now is to move to Stockton, California, a city that once filed bankruptcy but is now testing a universal basic income.
For 18 months, 130 adults will receive a $500 debit card each month to use on anything they want, with no chores required. The results will be studied to see if a basic income — essentially, an allowance — can help raise low-income adults out of poverty.