Allowances are a great way to teach kids about personal finance. (Unless you believe Lewis Mandell, a professor of finance at the University of Washington, who looked at more than 50 years’ of research into the effectiveness of allowances and concluded that that they can backfire. Especially if you dole them out unconditionally, in which case, you are on track for raising future “slackers.”) But as many parents can testify, they are Yet Another Thing To Remember in your week and often a pain to manage.
Enter the updated iAllowance, an app for iPhone and iPad. Released in December 2010 and currently on sale at 50% off, the app is designed to help busy parents stay on top of allowances.
Without having used the app, I’m relying on how it’s described, but here are some of the pros and cons for me:
- Sad to say, but it’s all too easy to forget to hand out the allowance each week, particularly when you have younger children. We made Sunday night our allowance time, but even with a regular slot, we’ll sometimes find ourselves on a Monday or Tuesday suddenly realizing that we’ve forgotten it again. With iAllowance, you can set it up so the payments are made automatically.
- No more scrambling to find real money and coins each week to hand over to their little hands. Even better, the app automatically divides up the allowance into different “banks.” So, you wouldn’t have to find the $1.00 for charity and the $2.50 for spending and the $1.25 for saving, etc.
- You can get a summary of the amounts received and the amounts spent by email, much like a bank statement.
- Visually, it’s quite an appealing app, especially for elementary school children.
- Parental controls and Dropbox back up of data offer great peace of mind, especially as our boys are so tech savvy when it comes to our iPhones. (“Look, Mommy, I’ve just discovered how to zoom in with your iPhone camera!”)
- While it saves parents the hassle of finding real money, it also robs younger children of the experience of dealing with real money. Given the use of debit cards, credit cards and now the ability to pay with smart phones, maybe this is a dying art, but, for now, it’s still an important one. They need to learn what the coins look like and how to make sure you don’t mix up a $5 bill with a $1 bill. Their math skills also benefit from understanding that four quarters go into a dollar. We also teach them to always count the money and double check that a mistake has not been made.
- I wonder what happens when the child suddenly asks for the $50 that is “saved” on iAllowance? Does the parent simply pay for the item with their own credit card and then deduct it from iAllowance? With a traditional allowance, at least we know the money has really been handed over to our boys.
- The biggest negative for me is that the opportunity to earn interest from savings – and therefore learn that wonderful miracle of compounding – does not seem to be part of iAllowance. You could probably set it up so that you pay a separate amount each month that you call interest, but that’s coming from the Bank of Mom and Dad rather than from an actual bank.
At the moment, our allowance system works for us, so we don’t need this. I can see how it could be attractive for other parents, though, particularly those who are focused on tracking allowance payments and what their children spend.