Quiz: When it comes to kids’ allowances, do you:
A. Wait ’til the kids remind you it’s time and then pay up
B. Give your kids money as needed, but not on a set schedule
C. Pay for chores as they are accomplished
D. Regularly pay an allowance on a set schedule
If you answered A, B, or C, are you frustrated or annoyed over allowances? I find it a real pain to have to dig up cash when my kid reminds me or pay for each little chore that is finished.
Maybe you’d like to try budgeting for allowances.
It’s so easy to do! This is how we do it.
How we budget for allowances using YNAB
Each month, I budget the total monthly allowance dollars into our budgeting software, You Need a Budget (YNAB). On the first Friday of the month, I pay the kids (either in cash or as a transfer into their individual Capital One 360 savings accounts). Usually they choose the transfer option so they don’t have extra cash to keep.
I love using Capital One for the kids’ accounts. Their handy mobile deposit app allows me to deposit any checks they get without a trip to the bank. I can instantly transfer allowances from my savings account directly into theirs.
How I track loans to my kids
Along with budgeting for allowances, I keep track of any loans I’ve made to the kids in YNAB. My kids have inherited my love of shopping online and so I often will place orders for them. I enter my purchases into my YNAB app and categorize them as loans the kids need to pay back.
When I’m reconciling my accounts, if I haven’t asked the kids to pay me back yet, I notice the balance in the “Loans to Kids” category. In fact, that balance tells me that someone owes me money right now!
Using YNAB for these 2 categories is a perfect fit because:
1. I don’t forget to budget for the allowances.
We don’t spend a ton of money on allowances, but I like to have it accounted for at the beginning of the month.
2. I’m already using YNAB.
I’m in YNAB for all our other money matters so it’s simple to record these transactions.
3. It’s giving my kids a head start with budgeting.
They see me entering their purchases and they know how important budgeting is to me. This is a great start to smart money management for them.
The budgeting is paying off!
My kids have saved a ton and their bank accounts are growing. Just last week the two older boys bought refurbished iPod 5 Touch models off of Amazon. My 7 year old bought his big brother’s old iPod. Now they all have their own personal iPods (secured by my trusty internet security system – did you get your copy yet?)
Would you like a YNAB discount?
If you plan to purchase a copy of YNAB, don’t forget to come back here and use this link for a coupon worth $6 off the price.
You might also like to see how we track our spending in YNAB. This little habit makes it super easy to keep our budget up to date.
How do you manage your kids’ allowances?
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