Allowances. How much money should you give your kid per week? At what age should you begin giving? And should you tie receipt of an allowance to the doing of chores?
The answers to these questions* have bedeviled parents for generations. (See below for the asterisk). Now, with the advent of the millennial generation -- and before we even got firm answers to the last batch of questions -- we've been presented with a couple entirely new questions: Should you give your kid an "e-allowance"? Should you encourage your kids to shop online?
Unsurprisingly, Amazon.com (NASDAQ:AMZN) answers these questions with an unqualified "yes."
Introducing Amazon Allowance
With little fanfare, Internet e-tailer Amazon.com started up a new project earlier this year, dubbed "Amazon Allowance." As the name implies, it's a way to pay your kid's allowance on Amazon. Here's how it works:
- Amazon Allowance is essentially a virtual Amazon Gift Card, onto which you can add funds once, once per day, once per week, once per month, or bi-weekly, at the parent's discretion.
- Parents can gift an Amazon Allowance to any child age 13 and up, so long as that child has an Amazon.com account (for which the child must possess an email address).
- Parents fund the Amazon Allowance through an online form, and it works much like buying a gift card on Amazon. Which is to say, you're billed on your specified "delivery date" for the Allowance, after which Amazon holds onto the cash until your kid spends it.
Spends it where? On Amazon.com, of course...
Ay, there's the rub
And this brings us to the downside of Amazon Allowance. There are upsides to the idea, of course. Amazon offers harried parents a set-it-and-forget-it way of paying our allowance on a regular schedule, with no subsequent arguments about whether someone "forgot to pay allowance last week." It's an automated process, and kids can check their balances on Amazon Allowance anytime they like, see when they were paid, and how much money is left in their accounts.
Also, because Amazon permits (some) sharing of Amazon Prime benefits within a household, children of a parent who is subscribed to Amazon Prime should be able to spend their Allowance money to buy things on Amazon, and have them shipped to home for free.
But the big downside to the idea (albeit to Amazon, it's an upside) is that these goods must be bought on Amazon. That means no shopping for better bargains on Overstock or Rakuten, for example. It also prevents allowance money being spent on candy at the local drugstore (albeit to parents, that may be an upside) -- or books at the neighborhood bookstore either, for that matter. It also greatly limits the opportunities for parents to teach their kids good comparison shopping techniques on trips to the store (comparing prices of different brands for example, or learning how two half-gallons of milk on sale for $1 apiece are a better bargain than one gallon sold for $2.50 at regular price).
Basically, a parent putting a kid's allowance on Amazon is outsourcing one valuable aspect of parenting -- and giving Amazon.com a captive market of kids.
The upshot: For Amazon.com, Amazon Allowance sounds like a great way to get 'em while they're young and train kids to think of Amazon as the place to shop -- forever.
According to financial website Mint.com, the standard answers to the questions we began with go like this:
The average child's allowance in America is approximately $0.50 per week, per year of age -- although some parents pay more.
Families commonly begin paying allowance around age 6 or 7 -- so approximately first grade.
And finally, 89% of parents believe children should have to do at least some chores to "earn" their allowance.
Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. You can find him on Motley Fool CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 305 out of more than 75,000 rated members.
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