When Enrico Dixon worked as a retail store manager, he often saw families with children come into his store. These outings typically set the stage for a financial battle between parent and child.
What's a parent to do when their child throws a tantrum in the middle of the store?
"If you take a child to the store, they're going to want something," said Dixon, founder of Chicago-based Cobra Back software company. "I would always see the children asking parents, 'Can I have this?'"
Watching these scenes led Dixon to create an online program, "Responsible Allowance," which encourages children to learn money management skills.
"If they understand how money is earned, they wouldn't ask for money so often," he said. "There has to be some sort of balance between earning and spending."
As the economy continues to struggle, Dixon hopes to help parents create financially savvy children who will be prepared to succeed financially. He states that software programs will bring allowances into the 21st century, and make saving and earning money more fun for today's computer-savvy children.
After logging into the program, children are greeted with a page that lists their current allowance and savings, along with any goals they are saving for.
Children can also earn money through additional chores, good grades and "bonuses," or lose funds through fines. Goals are tracked using colorful, interactive bar charts.
"There are a lot of features," said Dixon, noting families may not need to use every feature. For example, some parents may not want to reward their children for good grades, and can ignore that feature of the program.
Responsible Allowance also allows parents to move beyond money and award children a points-based allowance. Some families may not have the money to give children an allowance, but a point-based system still allows children to understand the value of earning rewards, he adds.
Perhaps your child wants to have a sleepover or eat out at a favorite restaurant. Instead of taking the child out to eat, ask him or her to earn the privilege by completing chores or earning good grades.
They won't be earning the money to pay for the trip, but even young children can understand that 10 points might earn them a sleepover, and that saving points can lead to larger rewards.
"It's very important that children learn how to manage money and their time at an earlier age," even if there is no actual money involved, he said.
Dixon believes Responsible Allowance's goal-tracking feature is the most useful part of the program. It allows children and parents to set savings goals such as buying a new toy, and to allot a percentage of their allowance to each goal.
When a parent "pays" their weekly allowance, the correct amount is set aside for each goal. Children can also choose to send more dollars or points toward their goal at any time.
"Accomplishing a goal is very gratifying," said Dixon. "Once a child has achieved a goal, it shows them that they can do something on their own. It motivates them to get things done as the bar charts their progress."
He encourages parents to set both large and small goals. Smaller goals can be achieved more quickly, but larger goals are more satisfying to reach.
Dixon noted that the Responsible Allowance program will work for some families, but not all parents are ready to commit to allowance software. It can be time-consuming to log onto a Web site to pay an allowance instead of handing your child a $5 bill.
"If the parent is not consistent with the program, it's no longer fun for the child," he added. "If they're not getting paid, then there's really no point."
He remains convinced that for some families, tracking a child's allowance online will be a major step toward instilling financial responsibility in today's high-tech world.
"There will always be people who go by a chart on the refrigerator, and that's fine. But I love technology. You can do almost anything with it. I'm a firm believer that technology goes a long way."
Responsible Allowance is available online at www.cobraback.com/responsibleallowance.htm .