Here's how much the typical kid gets in allowance each year

  • "Parents are finding it harder to have conversations about money because they don't have cash around," said William Carmichael, CEO of RoosterMoney, an allowance tracking app.
  • It is still important, of course, that children learn how to spend and save.
  • People form many of their financial habits by seven years old, a 2013 University of Cambridge study discovered.
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Piggy banks might be on the endangered species list, yet your kids still need to learn about money. They're handling a lot of it.

Kids ages 4 to 14 received an average $454 in allowance over the course of 2017, in addition to cash gifts for birthdays and holidays, according to a forthcoming survey from allowance tracker RoosterMoney. The average kid takes home around $8.74 a week.

The app polled 10,000 of its users.

Offering an allowance is an opportunity to teach children how to spend and save. People form many of their financial habits by seven years old, a 2013 University of Cambridge study found.

But the way these payments are doled out and stored is changing. Apps like RoosterMoney, FamZoo and Threejars offer ways to digitize the allowance and induct children into the economy, which itself is becoming increasingly virtual.

"Parents are finding it harder to have conversations about money because they don't have cash around," said William Carmichael, CEO of RoosterMoney.

Parents are actually doing a disservice to their children by teaching them about finances solely via cash, Carmichael said.

"That's not the world their kids will live in," he said.

Here are some tips to teach your kids about money in the age of screens.

1) Make digital currency feel real 

It can be hard for a 5- or 6-year-old to understand what is happening when their parents swipe their credit cards at the grocery store. Parents should explain the process.

"Parents are the number one influence on how kids will spend their money," said Paul Golden, a spokesman for the National Endowment for Financial Education. "You want to teach your kids when you go to the ATM, you're keeping the receipt, and how it comes off the bottom line."

Piggy bank apps can also reinforce the consequences of spending. The FamZoo app, for example, sends a reminder text message to the child when they've purchased something. Parents can also require their child to gain permission from them before they buy something.

"That's putting the pain back into spending," said Bill Dwight, founder of FamZoo.

2) Reward saving

Many of these online piggy banks allow parents to set an interest rate. The RoosterMoney app, for example, has a default rate of 9 percent. (In its user survey, they found that the average kid saves 43 percent of his allowance.)

"We might not be getting those rates with banks," Carmichael said, "but when you're six or seven [years old], you need to make it exciting."

The FamZoo app will notify children of their returns (paid, of course, by parents).

"We're trying to teach kids basic principles like compound interest," Dwight said.

Golden said that parents need to "understand their kid's financial personality," as well: One of his kids is a spender while the other is a saver. Recognizing a child's tendencies can help a parent realize what lessons they will need to reinforce.

3) Teach them "the pain" of debt

Children will learn to spend their money better if allowances are given out on a set schedule, Golden said. Many of the allowance apps allow parents to establish recurring disbursements.

"If they're only getting an allowance when they've done something good, that's not how the world works," he said. "We want to teach them how to make ends meet."

The FamZoo app even allows children to receive loans from their parents, with a real-world cost.

"We model all the things adults see in the world with our child products," Dwight said.

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