Megan Hogg's four children receive all their pocket money online and spend it with prepaid debit cards. Hogg did away with her previous system – a combination of jars, coins and spreadsheets – in the summer holidays over a year ago.
"It was quite painstaking and sometimes if I lost track they'd have two weeks due," Hogg says.
Now, she uses Spriggy, an app providing a digital alternative to pocket money. She transfers pocket money into the children's prepaid Visa PayWave debit cards, which they can manage through the app. It's been a time saver for Hogg, who works part-time as a nurse and spends much of her time outside work taking her children – Emily, 15, Harrison, 14, Nicola, 13, and Danika, 11 – to extracurricular activities such as drama, dance, netball, baseball and youth group.
Pocket money has always raised questions for parents, from how much children should receive to whether it should be contingent on chores. Parents are divided, yet a 2016 survey by the Teachers Mutual Bank found nearly nine out of 10 respondents thought children should be paid some form of allowance.
Digital pocket money is still a radical idea. Pocket money has retained its strong association with physical notes and coins more than most things in our increasingly cashless society. More than three out of four parents give pocket money in the form of cash, according to a PureProfile survey of 1000 parents of children aged eight to 17, commissioned by Spriggy.
Kids see us with our cards and think that it's just an endless supply of money, and I think giving them a card will join the dots.Megan Hogg
Dianne Charman, founder of the Jade Kids Foundation and Money Savvy Kids, which both aim to teach children better financial literacy, thinks digital pocket money apps could be a useful tool for parents to help their children learn about how to use money, but that parents shouldn't allow the app to replace lessons with their kids. "I think Spriggy by itself is pretty groovy, but Spriggy with a conversation about what's happening is financial magic."
She also believes parents should teach their children about cash, such as by allowing them to deposit cash into a bank account and watch as parents withdraw money from an ATM. She also suggests that when a child reaches their savings goal, parents should withdraw the money for the goal in cash and let the child buy the item with that. "Let them count the money out," she says, "and then you can show them the convenience of doing it with a card, but first show them what's actually happening."
An educational tool
Beyond the tradition of the piggybank, many parents baulk at the idea of giving their children a tap-and-go card. There's plenty of research suggesting it's easier to spend more money when using a payment card than cash – and that's for adults who can understand the concept. Surely that wouldn't work for children, who have less understanding of the value of money to begin with?
Not so, according to Spriggy's founders.
"Most things that kids want and need to learn to resist are purchases online," says Spriggy co-founder Mario Hasanakos, referring to online shopping and in-app purchases. Hasanakos and co-founder Alexander Badran believe first-hand experience is essential to teach children about digital currency. And with three out of five parents surveyed by the Commonwealth Bank in 2017 believing their kids had a more limited understanding of money than they had at the same age, partly because of digital money, there seems to be demand for such an educational tool.
The PureProfile survey also found nearly two out of five parents surveyed are "worried" about their children's understanding of digital money.
Spriggy works by transferring money from the parent's digital wallet – which can be attached to a debit card or bank account and managed on their app – into the children's. Parents can set up automatic payments at regular intervals or make these payments manually when needed. The kids are given a prepaid Visa card and have their own version of the app, which they can use to see their card balance and transaction history, and allocate pocket money into spending or savings goals.
When asked whether giving children as young as eight a PayWave card is responsible, Hasanakos refers to the app's safety features. Parents can lock the card, add money remotely in an emergency, and view purchases in real time, allowing them to follow up with a conversation. "I wouldn't dare offer what we offer [the card] if we didn't offer it with the app," Hasanakos says. The cards are also prepaid and parents have the option to turn off contactless payments.
Apps with prepaid debit cards for kids have also cropped up in Britain, such as Osper, goHenry and nimbl.
"I think it's just a really great, safe and efficient way to begin teaching children about the value of money," Hogg says. "In the digital age, kids see us with our cards and think that it's just an endless supply of money, and I think giving them a card will join the dots."
Spriggy is not the only option for parents wanting to teach children about digital currency, and other apps that use virtual money may provide an additional level of comfort to parents. PiggyBot, PennyOwl Allowance, and RoosterMoney Allowance Tracker all track virtual pocket money payments, with PiggyBot allowing parents to decide how much is allocated to saving, spending, and giving to charity. KidsBank provides virtual banking, while ChorePal and BusyKid are focused on rewarding chores. ChorePal rewards chores with virtual points or money, while BusyKid allows parents to deposit real money into a holdings account that kids can use to purchase giftcards or even fractional shares of real stock with their parents' permission.
In primary schools, many classroom teachers are using Banqer, which simulates a classroom economy, with virtual money earned for completing tasks or "employment" in the classroom, virtual interest at a rate set by the teacher, virtual bank accounts managed by the students and real things to spend it on, including essentials such as renting your desk and optional extras such as being allowed to rent a bean bag to sit on or the sandwich maker to make a toastie.
What should parents be doing?
More than a year after launching, Spriggy has about 80,000 members – parents and their children – and they see a huge variety in how families use the app. On average, parents give around $1 per year of age per week in pocket money – for example, $10 per week for a 10-year-old. However, some families only give money as needed and other families will put all purchases for their children – including things they pay for outside of pocket money such as sports fees – through the Spriggy card so their children understand how much money is spent on them.
Nearly two out of three parents believe pocket money should be earned as a reward for completing chores around the home, the PureProfile survey suggests. In other families it's an expectation that children will help around the house without being paid.
Many children from all backgrounds are given money for birthdays and Christmas, even from a very young age. That's especially so this weekend for families with Asian heritage celebrating Lunar New Year and following the tradition of handing out red envelopes filled with cash.
What do parenting experts say?
Dr Fiona Martin at Sydney Child Psychology Centre says you can start teaching children about money as soon as they can recognise it and understand its function.
"From a young age children are learning that you need to get money out of a wallet, or you might use a phone now, to pay for things at the shop," Martin says. "That's a daily living skill that children learn and you can get them involved early on – encourage them to count change and encourage social skills to find how much something is, hand them the right money, count the change, ask for the item. It's good for promoting confidence and the independence function of money and also social skills."
Martin says it's a matter of personal and cultural preference whether to give children money or tie it chores, and whether to make it physical or digital, and there's no right or wrong. It's important that kids help around the house and acquire those life skills, and some families might find they need money as a motivator while other children naturally want to be involved.
Martin says children also learn through observation and everyday interactions and she makes sure to include her kids – not her newborn but the three older ones aged 11, 8 and 6 – in her decision making.
"A lot of it is conversations, talking about the purpose of what you're doing ... for example, telling them that you're buying the big packet because it's better value," Martin says.
"I recently moved house and ... there was furniture we no longer required, so some items I've given to family and other items we've sold on apps like Gumtree and eBay and my kids have been involved in the whole process. We've talked about someone else using it and having a purpose for it, and us earning some money from it."
Hogg's children each use the Spriggy app differently. Eleven-year-old Danika saved up $30 for a Kris Kringle gift. Now, she's saving up money to spend during a family trip to Queensland, while 14-year-old Harrison uses his goals to save up for outings with friends. He's set a goal of $50 for bowling and laser skirmish these holidays.
However, both Harrison and Danika believe they spend more than they used to on small items, such as slushies or packets of chips on the way home from school, because it's easier to carry around the card than cash. Their money is also more accessible now than it used to be because their parents aren't around to discourage such purchases.
"If anything, it's given them more ability to get things that maybe they previously didn't, whereas previously we were more of a stop-gap," Hogg says. "But I think that's a growth and an understanding in itself."
Harrison agrees: "It teaches you self-discipline," he says.
Additional reporting by Caitlin Fitzsimmons