Pocket money goes digital as Aussie parents start transferring money to kids’ bank cards

The days of piggy banks and $5 notes for pocket money may be on the way out but a growing number of WA parents are going digital to teach financial literacy, with bank cards for children as young as five increasingly popular.

Pocket money apps and child debit cards linked to parental accounts are booming at a time when cash is harder to find and parents are more time-poor than ever.

At the same time Australian parents are paying their kids an average of $25 a week in pocket money, about half of which is via online payments.

Popular apps, such as Spriggy and Kit, allow parents to link their bank accounts to a child’s debit card and to monitor or block spending.

For parents it is about finding a way to teach their children the value of a dollar without having to scrounge up the cash to dispense pocket money.

For the banks behind some of these apps — Commonwealth Bank owns Kit but the product is not issued by them and NAB is an investor in Spriggy — there is a good reason to cater to kids who may grow up to be loyal customers.

Critics say some of the pocket money apps may have less functionality and higher fees than a traditional debit card and do not always pay interest in savings accounts.

Kit managing director Yish Koh said the app, which has about 12,000 users aged 5 to 14, was about digitising the experience that past generations had grown up with.

“In the past kids would learn by going to the canteen with cash, going down the road to buy some milk but those opportunities just don’t exist anymore,” she said.

Kit works by giving kids a Visa debit card, onto which parents can transfer money.

The app includes “gamified” financial literacy lessons and can “nudge” kids to encourage them to set and meet savings goals, while parents can block their child from spending money on something they don’t approve.

We will check in once a month to see how much she has earned and discuss how much should be transferred to her spending account.

Rival Spriggy works in a similar way, with a Visa card linked to a parental account. Payments can be tied to chores.

Debit cards for tweens, such as Westpac’s offering for kids eight and up, are another option.

Westpac’s app includes a chores feature that ties household jobs to pocket money payments.

Westpac research shows three in four Australian parents give their kids pocket money and nearly half — 49 per cent — do so via digital payment.

That research found that children aged eight to 17 receive an average of $25 a week, nearly three times what parents said they received as kids.

Griffith University lecturer and behavioural change marketing expert Robyn McCormack said pocket money was a great way to have conversations about money and build financial literacy.

She said debit cards for children and pocket money apps were one way to do it, especially for parents who might otherwise put it in the “too hard” basket because going to the ATM to withdraw cash was just one more job to do.

But she said parents had to opt for a plan that worked for them.

“If the design of the system isn’t simple, if it’s too hard to keep track of them it’s not going to be used and you won’t get the consistency that they need to learn from it,” she said.

“That can be the problem with some of these digital systems.”

Perth parents Nicola and Steve first bought a Spriggy card for their daughter Frankie, 9 as a way for her to have access to money sent by family living overseas but started using it to pay her pocket money.

“We discuss how much of the money she will put in her savings account and how much goes to Spriggy for spending and then, of course, she loves to go shopping with her own ‘credit card’,” Nicola said.

“We have recently set up Spriggy jobs as a way for Frankie to earn pocket money. All pocket money is set up to go to her savings account. We will check in once a month to see how much she has earned and discuss how much should be transferred to her spending account.”

However, Nicola advised parents to “read the small print”.

“I spent a little too long investigating a $60 Spriggy transaction that came out of my account to eventually realise that it’s an annual subscription fee,” she said.

Frankie said she had started walking the dog and helping to make dinner to earn pocket money. She was a fan of having her own bank card.

“It’s easier to carry than lots of notes and coins,” she said.