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Allowance 2.0 – My Thoughts
By JLP | January 8, 2007
The Wall Street Journal had an interesting article this past weekend titled Allowance 2.0, which is about the allowance in the cashless world. In the world of iTunes, Rune Scape, and Club Penguin, with their dowload fees and monthly fees, it is difficult for parents to keep track of who is spending what.
I found this part of the article quite annoying:
Barbara Howe is frequently flummoxed by her cellphone and credit-card bills. In a recent month, she found the following charges racked up by her 14-year-old son Lucas:
$2.99 … MLB Baseball
$4.99 … ESPN BottomLine
$7.99 … Tetris
$0.25 … eBay bid alert
$3.98 … Guy Stuff bikini girl wallpaper
$32.67 … iTunes downloadsOne persistent financial drain: when Lucas’s neighborhood friend comes over and the two start downloading songs at 99 cents apiece. “It’s killing me,” Ms. Howe says.
Here’s a an idea: Tell Lucas he is NOT ALLOWED TO CHARGE ANYTHING! I don’t get it! Who’s the parent and who’s the child?
We are still on a cash basis with our boys (they are 11 and 10). If they want to buy something online, I buy it and they pay me cash for it. If they don’t have the money, they don’t get it. Granted, they don’t have iPods and I won’t allow them to signup for Rune Scape and Club Penguin (I know, I’m mean). I know things probably won’t stay this way forever. Eventually, I’ll probably allow them to get some sort of debit card as long as there is no way for them to charge too much and have to pay overlimit fees.
Anyway, I thought it was an interesting article even though I don’t agree with Barbara’s method of dealing with her son.
Topics: Budgeting, Kids and Money | 11 Comments »
January 8th, 2007 at 12:49 pm
Sounds like nonsense to me, it is important to keep your kids on the right track, if this woman has children at that age and has not instilled some value of money, who knows where they may end up.
young
January 8th, 2007 at 1:43 pm
It is not true there is no way to pay overlimit fees on a debit card as stated above. Many banks will allow you to overdraft your checking account on a debit card then charge you $29 per transaction plus $9 per day that you are overdrafted.
January 8th, 2007 at 2:01 pm
in some cases, not saying here specifically, you have those parents who are being schooled on technology by their children and in neither side may be fully aware of the fees for service.
January 8th, 2007 at 2:14 pm
Who gives their kids that age an allowance by using electronic services linked to a credit card or parent account and then let the child control what is purchased? How could you be shocked to find out that your 8 or 10 year old has no sense of the value of money and just spends money online without thinking about it?
If you insist on giving your children items that require purchasing additional items online the solution is quite simple. You go online with them and do the purchasing so you are in control of what is actually spent. Heaven forbid a parent should be involved in a child’s life at that age.
Either way it comes down to the parent paying attention to what their child is doing and regulating it. More importantly they should be teaching them the value of money and how to spend and save appropriately.
The “spend money now and pay mom or dad back later” method is EXACTLY how people get in credit card debt. If these kids are buying things now and paying their parents back later at ages 8 through 12 this will certainly carry over into adulthood where the consequences are much more severe.
January 8th, 2007 at 5:14 pm
Rune Space and Club Penguin? Yikes. Never heard of ‘em. Just shows the entire alien world I’ll need to learn if/when I have kids!
January 8th, 2007 at 6:36 pm
FYI you need to fix your “Rune Scape” link. Its actually going to http://rundscape.com/ which in turn goes to searchportal.information.com which is caught by my copy of SpySweeper as being a site affiliated with spyware.
January 8th, 2007 at 6:40 pm
Tom,
Thanks for the catch. I fixed the link.
January 8th, 2007 at 8:35 pm
Wow, that’s crazy! How does a 14 year get access to a parent’s credit card?
When my daughter wants to download music, she uses her own cash to buy iTunes gift cards in $15 increments from CVS. Otherwise, it’s a no go.
However, I’ve had similar problems with the cell phone (text msging and ringtones). She’s allowed to do both, but within limits. Last month exceeded my limits, so right now, the phone is completely off limits until she learns to respect the rules. If/when I decide to give it back to her, if she does it again, I’ll have all text msgs and ringtone downloads blocked.
January 8th, 2007 at 9:57 pm
I had the same reaction as JLP when I read the article…I could not believe that these kids were charging all those expenses! My 9 year old is on the cash basis. But he does play runescape and club penguin…You can play these games online with a FREE account! But he has hit me up a few times to let him spend some money to buy some “extras” like his friends but I cut him off completely “You can play for Free but you are NOT buying anything!”
WSJ had an article a month or two ago on the company who runs runescape. I showed him to my 9 year old and ever since then he wants to be a game developer when he grows up…Oh Lord what have I done!
January 8th, 2007 at 10:32 pm
With a toddler, it looks like I have a lot to look forward to.
March 9th, 2007 at 11:57 pm
Allowances are great IF you use them to teach your kids about money so by the time they are 18 and on their own they are prepared to handle money propery and successfully!
I strongly recommend “Allowance Magic” which is offered in the right hand side of this blog under recources or for purchase on The Money Camp website.
It is a wonderful book that teaches parents how to funnel money through the children. The Money Camp encourages adults of children who attend The Money Camp (yes- even those who can’t make it to a local program in their community) can use this book along with their downloadable Money Camp at Home version. (They were happy someone else wrote an allowance book for them) so they could continue to focus on having Money Camp’s for kids all over the world by the year 2010.
http://www.themoneycamp.com/?a_aid=1f3b745a