It was a cold, clear December night in Los Angeles. My family and I decided to head down to the local Canyon Bistro and play some cards. About halfway through our meal, a man with the longest dreadlocks I’ve ever seen walked in holding an acoustic guitar and an amp and set up to cover some 70s folk songs. The music was acoustic and very relaxing. As we were getting ready to leave, my 11-year-old said “Dad, can I put some money in his tip jar?” I said, “Sure” and got four $1 bills out of my wallet, giving two to each son. As my son was about to leave the table, he said “Take it out of my iAllowance.”
Introducing the iAllowance
Since my sons were about four, I’ve given them allowance each week equal to their age in years. For example, at age 10 they got $10/week. And from day one, they had to split it into three jars, one for saving, one for giving and one for spending. They got incredibly high interest on the saving and giving balances—as much as 100% per month in the early days. I quickly figured out that I’d be bankrupt in the blink of an eye if I didn’t taper the interest as their balances grew, so now they only get about 1% per month. This system has worked well in many respects. It encouraged saving, provided an ample reserve for spontaneous or planned generosity, and let them know how much is available to spend while walking through a toy store (as opposed to the incessant “Dad, can I?” refrain that all parents are used to).
However, I’ve been anything but consistent in my payment of the allowance. A couple of months ago, we realized it had been four months since my last “weekly” payment. (Financial planning Dad fail!) An Abacus colleague told me about iAllowance around that time—an app you can easily download onto an iPhone, iPad and Android. Once set up, it automatically pays weekly allowance and splits it into whatever buckets I want, adds in interest and keeps a running balance. My boys have it on their phones and can check (but not change) their balances. We were recently in a sporting goods store and my eldest wanted to buy some equipment for street hockey. He didn’t have his wallet, so we looked in iAllowance and saw he had enough in his spending jar, and I bought the goods and immediately deducted it from him. Then, at paint-balling on Veteran’s Day, he wanted to buy a VIP pass to get discounts year-round, so I deducted that, too. The same thing has worked with giving. Our rule with savings is that they can’t use it for anything impulsive—they need to be proactively saving towards something.
Start Building Good Habits When Kids Are Young
So few of us received disciplined and balanced money training while growing up. Even if you don’t have kids, you may want to download iAllowance and “fund” it with a finite amount per week in a category where you tend to overspend. Then when you’re out and about and feeling tempted, it only takes a couple of seconds to look and see if you’ve still got money left. If you do have kids, grandkids, or other young family or friends, now is the time to begin using iAllowance with them. It’s amazing how little time it can take to form positive life-long habits with money, especially if you start young.
