Allowance Is A Broken System - Here's Why
Do you give your kids an allowance? If so, it might be time to reconsider.
Allowances and trendy allowance apps often don’t work as intended, and can actually teach your kids and teens poor financial habits.
Today we’ll explore why allowance is a broken system, how allowance apps can actually reinforce bad habits, and how GravyStack provides a solution to these problems.
So, What exactly is an allowance?
This might seem like a silly question.
Surely, everyone knows what an allowance is, but it’s an important question to consider.
Generally, an allowance is a fixed amount of money given to a child and often (66% of the time to be exact) it is not necessarily dependent on them completing chores or tasks.
More times than we can count, we hear stories of parents giving their kids money out of guilt.
How many times has your child asked you for a few extra bucks so that they can buy the newest skins on Fortnite or asked, “Can you just take it out of my allowance for next week?”
We’ll be the first to admit that we have been tempted to give in to this more than once.
In fact 37% of parents who give an allowance, let their kids borrow against it! This is training them to use borrowing and debt as a means to fulfill impulsive purchases.
As parents we want our kids to be happy and enjoy childhood, but when we positively reinforce behaviors like this we could be trading today's life lesson for tomorrow's happiness.
I know… Seems a bit harsh, huh?
In the next section we will explore why this is the case when relying on the allowance system and allowance apps.
Why giving a child an allowance is not always a good idea
When we zoom in and examine what the allowance system actually is, we see that it’s fundamentally a power-struggle based relationship rooted in entitlement.
When you give your child an allowance, you’re sending the message that they deserve money for just existing.
(Oh wouldn’t that be nice…)
This system nurtures entitlement where kids expect money from their parents in exchange for nothing or very little in return. With the gaining popularity of allowance apps it has never been easier to send the wrong message to your kids about how money works and disregard the real-world value of money.
Kids and teens can get the idea that money is an unlimited resource that’s easy to come by, and these habits can affect your child's relationship with money deep into adulthood.
When a child is not taught how to budget, manage, and make smart financial decisions with their money, they often find themselves in serious debt when they become older.
As parents, it’s good to remind ourselves that our kids are constantly learning about the world around them through every day activity, not just from school. They take in new information and concepts that immediately begin shape their worldview and adult habits.
If we keep this idea in the forefront of our minds when allowing our child to interact with money, all the sudden giving a child an allowance doesn't seem like the best option.
The Truth About Allowance
Studies have found that giving kids and teens an allowance does not necessarily lead to better decision-making when it comes to personal finance.
According to Michael Eisenberg of the American Institute of CPAs, kids on average have an allowance of $30 a week. That's enough to save over $1,500 in a year!
The not-so-surprising fact is only 3% of people said that their kid put a majority aside for savings.
The whole idea of an allowance is supposed to be teaching kids good financial habits, right? So why does the data tell a different story?
It’s because an allowance is too free-flowing. It’s not tied to a specific action, causing kids to have a difficult time understanding the value behind the money.
This is even more true when using popular allowance apps for kids. Sending an allowance on a regular basis though an app makes money seem even more free-flowing and further reduces the amount of value tied to that money.
If kids and teens are given a large amount of money with no real accountability or monitoring, it’s easy to spend it impulsively on things they don’t need.
Alternative To The Allowance System
You are probably asking, “How do I teach my kids about money without an allowance?”
This is where GravyStack comes in.
GravyStack is the game that makes learning about money fun and relevant for kids and teens.
Your kids will never ask for money again, instead they will offer to earn it with “Gigs”. At GravyStack we make sure to tie every dollar earned to a specific valuable action your child has completed.
By doing this we shift the entitlement rooted, power-struggle relationship to a family agreement that outlines what your child is responsible for and what they get in return.
We take the burden of enforcement away from parents and create an environment where parents can guide their kids to healthy financial practices.
How “Gigs” Work
Gigs are much different from the allowance system because each task is tailored for your child's age level and it teaches kids about earning money instead of receiving money.
Gigs enable your kids and teens to not only understand the value of money, but also build habits that will help them create a meaningful and fulfilled life.
Gigs are jobs parents offer to kids. Once offered, kids can either accept or reject them. This is important because it gives your child a choice and the freedom to make money at their own pace! They can even request their own Gigs for parents to approve or edit! How’s that for instilling initiative?
Why Use GravyStack?
GravyStack goes beyond simple allowance apps and offers an entire roadmap for financial wellness.
With GravyStack your kids get to step into and explore the magical World of Windfall, a place where your child is the hero of their financial destiny.
They get to play through fun and challenging levels while teaming up with an exciting cast of characters such as Rainbow Unicorn. This magical character teaches your child about the pitfalls of borrowing money, what loans and credit are, and how dangerous these systems can be if used incorrectly.
Kids learn better by doing, but they won't DO IT unless it's fun.
GravyStack is an all-in-one financial app that puts the power of play first to break down barriers of learning.
With GravyStack, kids get to earn money through gigs and watch money flow through their Money Machine™ into their Save, Spend, and Share Jars.
Seeing the flow of money from beginning to end is what helps kids understand and manage money with confidence.
GravyStack is the best way to give your kids and teens the power to become financially independent. By embracing the fun-first approach, you'll be sure that your kids will love learning about money and gaining financial literacy.
Start your kids on their journey of financial freedom today!
Sign up today and let GravyStack be your guide for empowering your kids with the knowledge, tools, and habits they need for a lifetime of financial success!