Tracking the finances of one kid was hard enough, but as the years passed and Frank and Pam Whitlock added another kid, then another and another, what seemed difficult at first became almost impossible.
Not only were they keeping up with the allowances of four kids, they were trying to stay on top of IOUs as well.
“It was very unorganized and wasn’t modeling for them how to keep up with your money,” Pam Whitlock said. “It was crazy.”
Crazy was making notes to herself on a calendar, forgetting or simply not having enough money to make the payroll.
About the time the couple’s youngest son went off to kindergarten in 2009, Frank Whitlock announced he could probably come up with a computer program that would do the work for them.
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And he did. The program worked so well that the Johns Creek couple decided they could go a step further and create a company.
Frank Whitlock, a computer software developer, built a website and recruited a group of friends and family members to try it out.
In June 2010, the Whitlocks officially launched MoneyTrail.net, a free online allowance and money management system for kids, teens and their parents.
Since then, nearly 2,000 people have opened accounts with the service. But money management is only a small part of the problem. When to start doling out allowances and how much can weigh just as heavily.
Neale S. Godfrey, author and founder of the Children’s Financial Network, a company dedicated to educating children worldwide about finances, recommends parents start as soon as kids begin connecting money as a medium of exchange — around age 3 or 4.
And the amount, she said, should depend first on what you can afford and then on their ages.
“What I recommend is parents pay kids their age per week,” said Godfrey, author of “Money Doesn’t Grow on Trees” (Fireside, $14.99). “A 3-year-old would get $3 and a 10-year-old $10.”
Godfrey said she also recommends parents set up a four jar system in which kids budget the money they earn. The first jar is for charity, or 10 percent off the top. The remaining three jars are for quick cash, as in instant gratification; medium-term savings that hopefully will encourage them to push off instant gratification and save for something larger like an iPad; and long-term savings for college or a car.
“What we want to do is model behavior we want them to have throughout their lives,” she said.
Although some argue children shouldn’t be given an allowance, Godfrey said they absolutely should because an allowance not only teaches kids money management, but also shows the child the relationship between work and money. But they should earn it because that’s the way it works in real life.
“If they don’t do chores, they don’t get paid,” she said. “There’s no entitlement.”
Parents, however, should distinguish between being a member of the household and not getting paid for taking care of their personal space and working for pay.
That system seems to work for the Whitlocks, who said that allowances became a topic of conversation when their children started school.
“What we have morphed into over the years is in the elementary years, we give $2 a week, older kids get $5 a week,” Pam Whitlock said. “It’s a very small amount, but we have a list of jobs that they can choose to do around the house that they can get paid for and others that they must do.”
For instance, she said, when the oldest child, Brittany, wanted to go to Disney with the high school chorus, she did baby sitting and car washing to shore up her savings.
“Some parents do more. Some do less,” said Whitlock, a former pre-school and first-grade teacher. “Some do it based on age. I say talk to your kids and be consistent.”
Whether a parent gives an allowance or not, MoneyTrail can help.
“We are a virtual family bank, which means that we do not handle real money or connect with any online banks or credit cards,” Pam Whitlock said. “We just help families keep track of transactions between parents and children.”
Anyone can log onto the site and create an account. Users older than 13 can add an email address to get weekly updates of current balances. Users also have access to their accounts via a mobile site, m.moneytrail.net.
While the Whitlocks aren’t willing to divulge how much, they say the site does generate revenue.
By clicking on the market tab on the site, kids create a wish list from Amazon.com. When a parent or grandparent makes a purchase from the site, Whitlock said, MoneyTrail gets a commission.
The couple is concentrating on building its user base and, perhaps, putting ads on the site.
“We really would like to keep it a free service because I think it’s a good thing for families,” she said.
“By always knowing how much money they have, kids are able to make smart saving and spending choices. Parents save time by eliminating the hunt for the calendar or sticky note to determine when allowance was last paid or how much money is owed.”
Other helpful websites
● www.bmo.com /smartstepsforparents
● www.orangekids.com teaches basic financial skills through a video game-like cartoon
● www.childrensfinancial network.com
Tips to teach kids about money
● Do not make money the big secret in the house.
● Make your world your classroom. Explain what you’re doing so kids won’t think a credit card is a magic piece of plastic.
● Take your kids into a bank and open an account by the time they are age 5 so it becomes routine.
● Do things in reality before you do things virtually (online) or they won’t understand that it’s real.
● Make sure the kids bring their quick cash to the store. Don’t let them start borrowing money from you.
Source: Neale Godfrey, author of “Money Doesn’t Grow on Trees”