How We use YNAB to Manage Allowances

How We use YNAB (You Need a Budget) to Manage Allowances

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.

How we use YNAB to manage allowances
I purchased an iPod for my son. This is the entry into the free YNAB iPad app. I categorize this purchase as a “loan to kids”. Later I can collect the money back from my son.

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 to manage allowances
This is the YNAB budgeting screen. I have a category for “Kids Allowances” right above “Loans to Kids”.

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?)

Max with his new iPod
My son with his new iPod, purchased with his own money.

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?

P.S. If you liked this post, would you take a second and share it on Facebook? Thanks so much!

Click here to start saving with Capital One 360

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33 thoughts on “How We use YNAB to Manage Allowances”

  1. I love YNAB and also use it to budget for allowances. I do love the way you work the loans in YNAB though…that is genius. I put sticky notes all over my computer and I am here to tell you that this is not the world’s greatest system. Thanks!

  2. It’s hard to track allowances. For us, we use MS Excel to note all the expenditures and savings. The YNAB software looks cool and helpful as well.

  3. I did not know about the Capital One product. I was thinking of opening a Serve account for my “allowance” and one for Mr. Mashed Up.., I’ll have to compare it to this one now 🙂

  4. I have never heard of YNAB but I think it’s a great way to get older kids ahead on learning money responsibility, especially when they start reaching those teens years and start thinking that everyone owes them money (us adults have all been there!). It seems like such a great learning tool!

  5. What a wonderful app. Although my daughter is only two I’m constantly thinking of how I’m going to teach her life’s important lessons, budgeting being at the top of the list. When the time comes I’ll definitely check this app out. Thanks for the info!

  6. I think it’s important to have kids appreciate budgeting early and start learning on prioritizing expenses. It would also help if they get perks for chores as this would make them responsible.

  7. Since I only have a toddler, budgeting his allowance is this in my hands. I still control everything, he doesn’t know the value of money. This will be very helpful for kids who already ask for money to buy chocolates and other less important things. Thanks for sharing

  8. We’re trying to teach the kids that they get paid when their chores are done WITHOUT us having to remind them, check up on them, etc. We’ll randomly give them chore money for extra chores like working in the yard but for their regular chores, they need to be consistent and get them done or sorry Charlie. No cash.

    We don’t use a budgeting program like this but I think it’s a great idea.

    • It’s much nicer for everyone if you don’t have to nag, isn’t it? We use a checklist and it is much easier to say “did you do your morning list?” than to go through the list of chores. Still working on getting them to independently start the list, but it’s a process.

      Thanks for your comment!

  9. My children usually help around when I ask them too. Although if it’s something specially I do give them some money. I do give it right away.

      • I agree with a lot of your points here. It’s unrtaounfte that many parents consider finances a taboo subject even around their own children. I have a very young daughter, and plan to have her be a part of her finances when she is old enough to understand. I think letting a child earn money through allowance, and saving to buy some of their own toys is a great lesson to start. The world would be a better place is both parents, AND schools did a better job teaching kids about money.Great article. Keep them coming!

  10. I have never heard of this before and I think I am going to have to check it out. I am looking for a job and with Christmas and all coming I want to make sure I am prepared! Thank you so much for this share!!!


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Welcome. I’m Sarah!


I’m the creator of Decluttering School (formerly known as Early Bird Mom), lover of organized spaces, encourager to women and mom to four boys. Click here to read more!

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