With the holidays coming up, you and/or your spouse may eventually grow sick of buying presents for yourself and pretending they’re from your kids. That’s what allowances are for — the chance for your kids to buy their own gifts for you!
A kid’s allowance is likely to be their first exposure to the world of money. Conventional wisdom says kids under five have no chance of understanding your speeches or PowerPoint presentations on the subject, so be mindful of that age-based learning curve. As for the amount, conventional wisdom again has some guidance for us, with the child’s age being seen as the best dollar amount for allowances. But where can your kid put that money?
Venmo has been cultivating good word of mouth since the debut of Venmo Teen. It’s totally free. I’ve written before about money apps that are intended for teens. Some of them had really difficult-to-understand fee schemes, while others did that thing of saying they were free when they weren’t free.
Venmo is different. It all began when PayPal (Venmo’s parent company) started offering cash cards. Powered by the person’s PayPal balance, the accounts have routing and account numbers for direct deposit. There is no overdraft, so you don’t have to ask to turn that off. It’s just a low-maintenance debit card.
Naturally, Venmo evolved its own teen debit card with many of the same features, including the free use of MoneyPass ATMs (found at 7-Eleven stores).
But what about kids younger than 13?
- Cash actually might be more educational for younger kids because it forces them to see how much they are spending.
- Teach your kids the value of a dollar. I was so delighted a few years ago when I put a couple of dollars in some Valentine’s cards to my grandkids and the little one said, “This is my first money!”
- Pre-teens can grow their critical-thinking acumen by helping you to choose a charity to contribute to. They can do anything from research on CharityNavigator.org to curating news articles on the topic.
In our book, Mastering Your Financial Lifecycles, Chapter Three is devoted to the teenage years, with an action checklist included. Another option for instilling good money habits in kids is to hook them up with a money mentor. Research has shown kids are more likely to retain information when it comes from an outside source — contact us to learn about our money mentoring program.