Virtual Allowance: How to Encourage Healthy Habits

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September 10, 2020

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This is great info, thanks for giving me some ideas on how to start a dialogue with my teen!


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Table of Contents

Virtual Allowance: How to Encourage Healthy Habits. An expert guest blog

By creating a system to earn a virtual allowance for kids, parents can help their children develop healthy behaviors while also teaching them financial responsibility. Parents can use virtual allowances to turn screen time into something productive that can help the whole family.

The Team asked 10 experts to share their best advice on setting up a virtual allowance for kids.

1. Gamify the process

Lynell Ross headshot
Lynell Ross

Lynell Ross, Founder and Managing Editor, Zivadream

Keep your virtual allowance simple, and present it as a game. Create a chore chart to help your kids understand how to take responsibility for their own health and contribute to the family by brushing their teeth, picking up dirty clothes, emptying the dishwasher, or feeding the dog or other tasks that are important to your family. Older teens can help prepare meals or help with babysitting. Charts help keep things organized so you don't have to remind them of what to do.

Be realistic with payments, so they can learn the value of a dollar.

Help them spend their earnings. When it comes time to spend their allowance, make time to sit with them and teach them how to navigate shopping, compare prices, and look for the best quality. This time together is a great teaching moment.

2. Balance is everything

Josh Ochs headshot
Josh Ochs

Josh Ochs, Founder,

Just like with anything in life, balance is the key to using screen time in a healthy way. Set your kids up with a virtual allowance for time spent on screens. Include them in the conversation about what that looks like - the number of hours per week, per day, and how they plan to use them.

Scheduling and being flexible in using their virtual allowance is okay as long as homework, chores, and other tasks get completed as well. What can your kids do to earn more screen time?

Is it an outdoor home improvement task?

Reading a paper book?

Building something with their hands?

Teaching your kids to value offline activities can happen without them even realizing it.

3. Create a visual like a whiteboard so kids can see how much money they have left

Jennifer Walden, Director of Operations, Wikilawn

Our children are both still young, so we can't just let them use our credit card. We authorize purchases and give them a weekly allowance to spend on virtual things. I know some parents scoff at this because there's no value in virtual things, but how much value is there in a child spending their allowance on a physical toy?

I'd argue it's the same amount. Both encourage play and creativity. Roblox is especially great for this, and parents need to be more engaged with what their kids are doing in apps like this to see the amazing things that come from it.

That said, it's very easy for kids to not understand the value of money, especially when they're not physically seeing it leave the account. We have a whiteboard in our girls' room with a visual representation of how much they have to spend. It's just a circle we color in at the beginning of each week, and gradually erase as they use their allowance. But it gives them a clear way to visualize how much they have left so they can spend appropriately.

4. Teach them young and set a budget

Andrew Roderick headshot
Andrew Roderick

Andrew Roderick, CEO, Credit Repair Companies

Parents should provide their children with a virtual allowance because it will help them learn the value of money and it will help them to learn how to budget. The earlier you start to speak about money with your children, the better.

If they learn from an early age how important it is and what its true worth is, the better they will handle and spend money in the future. Start with some research, get to know what the cost of certain items is. This way you know what budget to set. 

You don't want to give them too much, to begin with, because this will help encourage them to purchase things they love, not just what they see. Also, agree on certain safe sites to use when shopping and encourage them to save anything that they didn't spend for a bigger purchase in the future. Also, praise them when they have spent wisely to encourage good spending habits.

5. Teach them how to spot scams and avoid being a victim

Carla Diaz headshoty
Carla Diaz

Carla Diaz Cofounder, Broadband Search

The world is already so prominently based online, it should be part of our every-day lives. Giving your children a virtual allowance will help them learn about online buying behaviors and can teach them self-control. It’s easy to buy products online, almost too easy.

Just a few clicks here and there and your product is on its way. By giving your children a virtual allowance, just like a normal allowance, you can teach them to save for something they really want rather than just buying anything as soon as they get money. 

In addition to providing them with this allowance, you can teach them about online safety. Sit with them when they’re looking to purchase something online and guide them where you can. Show them how to spot scams and how to be cautious in an online space.

Just as easily as you can buy something online, you can fall victim to scams, and teaching your children how to be safe is a very important part of their online spending behavior.

6. Teach them the value of money

Adma Korbl headshot
Adam Korbl

Adam Korbl, CEO & Founder, iFax

It can be hard for children to understand the value of money. I think that kids should be allowed a virtual allowance, but should be taught about it first. They should also be taught how to spend it, too. 

Sit with them for the first few weeks. A lot of games and online stores try to force you to buy something and, if unaccompanied, the child might buy something they only kind of like but all of their allowance is gone.

By telling them what different things their money can buy or even giving them a real-world equivalent could help teach them the value of money.

7. Use banks apps to teach the value of money, budgeting, and setting goals

Lisa Arlington headshot
Lisa Arlington

Lisa Arlington, Founder, Giftsnerd

There is nothing bad about giving a virtual allowance to your kids. To make my kids learn how to keep money safe for the future I took the help of Bankaroo. Bankaroo is an amazing app with a polished user interface and plenty of features. Parents and kids can see the video tutorials to get the most out of the app.

Bankaroo is one of the best virtual banks for kids where they can learn the value of money while knowing how to do the budgeting, save up for goals, and spend responsibly. 

For me, it is a useful way to keep track of my kid's pocket money and their spendings. The app is available for free on every device or you can log-in to Bankaroo from your web browsers. The app can be installed on iOS, Android, Kindle phones, or tablets. It can be used when offline with faster image uploads and notifications.

With the Bankaroo Plus account, I can manage separate accounts for checking, saving, charity, and can also make my kids transfer the funds between family members.

8. Use a virtual allowance for kids to show them the benefits of having responsibilities and getting work done

Dary Merckens headshot
Dary Merckens

Dary Merckens, Gunner Technology

Parents should 100% be giving their kids a virtual allowance and the best method for doing so is to integrate that virtual allowance with their favorite gaming device.

Allowances are incredibly important for young children. Learning the principles of money and responsibility has a lifetime of benefits. And as financial literacy continues to wane, these lessons become even more paramount. Kids need to learn that diligence and hard work produces value, money can run out, and sometimes you have to save (especially for big purchases).

Consider giving your children a set of chores or other responsibilities that they have to accomplish on a daily and weekly basis. At the end of each week, on Sunday night, based on what they got done, your children would be rewarded for their performance. The reward would be in the form of points or virtual currency that they could spend through their favorite gaming system.

Some ideas of responsibilities that can earn your children gaming points:

  • Being in bed by 9 at night is worth 100 Nintendo points
  • Every time they take the trash out is worth 200 Nintendo points
  • Mowing the lawn is worth 500 Nintendo points
  • Getting an A in a class is worth 2,000 Nintendo points (Some parents are against rewarding kids for academic performance, but some literature says that rewarding kids for grades both make them work harder and perform better)

This way, your kids earn points towards something they love, while also learning about the benefits of having responsibilities and getting their work done. Additionally, you can try to encourage your children to buy games that you could play together. So, instead of just giving them money to spend on anything, you're actively encouraging the purchase of something that the whole family can enjoy together.

9. A virtual allowance can be a great strategy for motivating your children

Carrie Krawiec headshot
Carrie Krawiec

Carrie Krawiec, Birmingham Maple Clinic

Earning a virtual allowance can be a great strategy for motivating your children. Parents can exchange points on a behavior chart for iTunes or other downloads.

Consider what behaviors can earn rewards. Break routine behaviors into 5 steps and create a chart. You may have small daily rewards, like points or tickets, and then larger weekly or monthly rewards, like iTunes downloads, games, or other larger prizes.

For example, if you are working on improving homework instead of offering your child a prize for getting straight A's, offer small daily rewards for the small steps it takes to improve grades.

For example:

1) bringing work home

2) getting the necessary supplies

3) focusing at their desk for 30 minutes

4) giving you or another parent their homework to review, and

5) putting it in a bag or folder to take to school. You’ll want to give your kid praise for completing their tasks and calculate their daily points to earn rewards.

Check-in with your children daily and be consistent. Make sure the reward is something not already given freely to your child so as to set up a reinforcement system rather than the threat of punishment.

Consider setting up rules about when you will check for completion, who will administer the reward, what the expectations are for online behavior, and how non-compliance will result in consequences.

Avoid bribing or giving your child the reward before the task is earned. If you find your child is not succeeding with this strategy then revise the plan. Likewise, if they are earning too much too easily then consider adding a more challenging objective.

10. Help your children set up budgets and savings accounts

Dustyn Ferguson, Dime Will Tell

As we move further away from cash, a virtual allowance is becoming more of the norm - and that comes at a cost: a further disconnection of what money is all about. Kids are no longer seeing dollar bills come and go, they're just seeing digits on a screen, and this can disconnect kids from the true value of money, how to earn (and deserve it), and plan financially for the future. It's easier than ever to buy impulsively online, so it's important to have a money talk with kids to ensure they get what it is all about.

Besides just talking about money, it can be useful to help kids set up budgets and savings accounts. Helping your children navigate their mistakes is a step in the right direction when it comes to teaching kids about finance in a digital world. Financial mistakes are more crucial than ever for children to make but they will hold those lessons for life which can help set them up for financial success later in life.


While screen time can have a negative impact on your child’s life, setting up a strategy for earning a virtual allowance can help parents turn screen time into something positive. When parents use a virtual allowance to show their children the benefits of having responsibilities and getting work done, they motivate their children to be productive.

Parents can still give their children physical money, but as society moves further away from cash, it’s important for them to learn the value of money both online and off. Parents can follow the advice above to help their children learn financial responsibility in a positive way.

Have your own advice on setting up a virtual allowance for kids? Let us know in the comments below!

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