Boomers, remember when you were a child and began receiving a weekly allowance? I don’t know about you, but my poor pals and I felt rich on allowance day when our parents dropped a few shiny coins — or, in my case, a thin dime — in the palm of our hand. I’m not mad about the ten cents, because for a child growing up in those Father Knows Best days a dime went a long way. I could buy 20 two-for-a-penny cookies (Oatmeal, thank you.) or an equal amount of Jawbreakers and Squirrel Nuts, or a Three Musketeers bar.
Allowances have increased. Today’s youngsters expect nothing less than a Jackson. My unofficial survey, taken among friends and relatives, reveals that the average amount of weekly allowance Boomer grandchildren receive from their parents is $20. Hooooooly Andrew Jackson!!! Talk about inflation.
That eye-opening revelation validates my personal definition of allowance day as: payday for unemployed youngsters; sometimes supplemented by cash received for doing chores or getting good grades in school.
Much has changed since the children of Boomers have grown up. Many of our offspring not only have more disposable income than some of us had at their age, they have an entirely different way of providing allowances to their children. Fewer of today’s youngsters receive cash accompanied with the suggestion to save it for a rainy day in a piggy bank, a water jug or inside a small box in their bureau drawer. Today’s teens get plastic — with or without the advice.
Thanks to some banks and financial services like PayPal, teens 13 and older can receive their allowance on a debit card, which they can use to make online or instore purchases and withdrawals from ATM machines.
For the uninformed, PayPal is an online payment service that allows users to disburse or receive payments by linking their bank account or credit card to a PayPal account. Since it was founded in 1998 — and acquired by eBay in 2002 — PayPal has received numerous awards and is recognized as one of the best online financial services.
Parents using PayPal can open a PayPal Student Account for their teenagers. The teen’s account becomes a subaccount of the parents’ account allowing the parents to transfer money to the teen. Teens, however, cannot transfer money from their parents’ account.
Some parents believe that, like hard cash, the debit card teaches teens the concept of budgeting and saving money. But more importantly, when allowance day rolls around it not only eliminates the currency exchange, it prevents the “Oops, I don’t have any cash on me,” excuse from busy or forgetful parents.
PayPal notifies parents via their mobile device or email to help them monitor their teen’s account for a low balance, high spending or other activity. Unlike some banks that charge a fee for teens’ debit cards, PayPal has no monthly cost for the account and no hidden fees. A tutorial video on the PayPal website provides instructions for parents interested in the PayPal Student Account.
Not everyone favors giving debit cards to kids. Janet Bodnar, Editor of Kiplinger’s Personal Finance, a nationally recognized expert in the field of children’s and family finances and mother of three says “If you want to teach your kids about managing money, stick with cash.”
Whether parents prefer to give their teens cash or a debit card is a personal decision, but Boomer Alert: unlike some of us, when today’s teens hear “paper or plastic” they may not be thinking grocery bags.