Meet the Travis Family: Toby, Jen and their daughters, Kate and Meg. Sunday has always been allowance day at the Travis house. Their allowance money is to be divided between three buckets: save, share and spend. It’s a philosophy Toby and Jen were introduced to through BECU—and it’s a value they want to continue reinforcing with their daughters through allowance.
Great idea, except for one thing
Toby and Jen felt good about their allowance plan, but it wasn't long before they ran into a logistical challenge. “When Sunday would roll around, we wouldn't always have the right amount of cash on hand to put into each of the girls' spend, save and share banks,” explained Toby. “With two girls, that's six banks in total we needed to fund each week. And the amounts were so specific. For Kate, take her age – 13 – and divide it by 3. That's $4.33 that should be going into each of her banks each week. For Meg, who's 11, we needed to put $3.66 into each of her banks. We thought doing the whole thing online might make it a little easier.”
Save, share, spend – online
Welcome to the world of digital allowance. Life got much simpler when Toby and Jen took the girls' allowance online. They set up three BECU accounts for each girl: two savings accounts— including an Early Saver account - plus a checking account. Each account is named “save” “share” and “spend” with the girl's name attached. (For example: Kate/save, Kate/share, Kate/spend. Ditto for Meg.)
“BECU makes it so easy,” said Toby. “The great thing is that it doesn't cost any extra to have the six accounts. Plus we can name the accounts anything we want. At a bank, we couldn't do this because we'd pay $8-$10 in fees for each account every month. That would totally wipe out the allowance we're giving them.”
Toby and Jen use BECU's Online Banking to make automatic transfers into the girls' allowance each weekend. They also sit down with Kate and Meg to review their allowance accounts online. And, the girls each have a debit card connected to their “spend” account.
“They've grown up in a cashless society, so we knew they understood the concept of money. Having a debit card – seeing an account online – it all makes sense to them. They don't need to hold a dollar bill in their hands to understand it's in an account for them,” says Toby. As an extra bonus, now that Kate is 13, she's old enough to use Mobile Banking. “Meg has a couple years to go yet. She's a little jealous of her sister,” Toby explains.
Real world lessons
While some parents connect allowance to chores, Jen and Toby see allowance as a teaching tool and a way to hopefully help the girls develop some money management skills.
Having their own “spend” accounts gives Kate and Meg a chance to make some purchasing decisions on their own. Toby and Jen are fairly confident of their choices. “But we took some precautions,” said Toby.“ For example, there's no overdraft protection on their spend accounts, so if they use their debit card at the mall but there's not enough money in the account to cover the purchase, they'll be declined. That's real life. And we see they're learning how to make sure that kind of thing doesn't happen.”
Another big aha for Kate and Meg is the discovery of compound interest on their savings. Especially with the Early Saver accounts which earn a premium interest rate on the first $500 in deposits. “It just keeps growing without them doing anything. They get it – and I think it motivates them to save even more.”
And what are the girls saving for? For Kate, it might be for a trip to the mall with friends or vacation souvenirs. Meg is more of a long-term saver, Toby explains. “She'll keep saving and saving until one day she'll just decide to go and buy something fun.”
As for their “share” accounts, Jen and Toby talk with the girls about using that money for the benefit of others. The Travises have several organizations they support as a family, including Friends of the Children and HopeLink. Jen says, “It goes straight from their “share” accounts to the organization. We can see how proud it makes the girls to help people in need. And we love how easy BECU makes it to reinforce a value that's so fundamental to our family.” Money in their share account can also be used for family gifts and school or community charity projects.
How to pay your kids' allowance online
Interested in going digital with allowance? BECU makes it easy – and free.
- If you haven't already done so, open an Early Savers' Account in your child's name. Call it “save.”
- Open a second savings account in your child's name. Call it “share.”
- Open a checking account in your child's name. Call it “spend.”
- Connect your checking account to your child's save, share and spend accounts. You can also set up recurring automatic deposits into the accounts, so you'll have one (make that: three) fewer things to think about each week.
For more information about teaching your children about money, check out these resources:
This is for informational purposes only and is not intended to provide legal or tax advice regarding your situation. For legal or tax advice, please consult your attorney and/or accountant. Investments are not federally insured, not subject to credit union or affiliate guarantee, and may lose value.