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Frequently Asked Questions

General
For Students
For Parents
Technical Support
DOES ALLOWANCETREE INVOLVE REAL MONEY?

AllowanceTree represents the real money that parents give their children. The system automatically tracks monthly deposits, and allows children to use and manage their money online. Parents do not deposit real funds online, but they are responsible for holding their children's money so it is available when their children want to use it.

AllowanceTree is the online accounting system for their real money. If the system is used only to represent virtual money, effective learning and financial experience will not be achieved.

While children can spend their money online (all purchases require parental approval), the AllowanceTree modules strongly encourage them to save, invest, and avoid debt — the essential skills for wise financial management.

When they want to withdraw real money, they can use the "Cash-Out" feature online. Their parent is notified and can then give them the cash from their stored allowance money, and it is automatically deducted from their Cash Balance.

When they make a purchase at the Allowance Store, the purchase request is sent to their parent, who must first approve the purchase, and then complete the payment.
WHERE DOES THE MONEY RESIDE?

As the parent, you decide how and where to store your children's money. The AllowanceTree system represents your children's real money, but you do not actually deposit their money online. You control your children's physical money offline, while they retain the illusion of financial autonomy online.

We strongly recommend that parents set aside the money they are giving their children on AlowanceTree. A separate Paypal or Bank account account can be used, or even cash. This money can then be used to pay for their AllowanceTree purchases that you approve.

If your children's money is not set aside, and they decide to buy something expensive that they have been saving towards, parents might be hard-pressed to make the payment. If this is the reason for declining a purchase request, the trust and the system is undermined, like a run on a bank that doesn't have enough funds to pay back client deposits.
DO ALLOWANCETREE SAVINGS ACCOUNTS EARN INTEREST?


Yes, if the "Parent Bank" chooses to switch interest ON, since they are the ones who pay it. In Settings, parents can switch interest on or off for each of their children's accounts, as well as choose what their monthly interest rate should be. AllowanceTree cannot pay interest because we are not a bank.

HOW DOES GRADES INVESTING WORK?


The AllowanceTree Grades Stock Market is designed to teach children about the stock market in a simple and practical way, while also encouraging them to invest in their education at school and improve their grades.

SETTING IT UP:
In their profile Settings, parents enter their children's classes from school, as well as what their current grades are in those classes (as a percent). The share price for each class is the same as their current grade, ex: 75% in Algebra means Algebra shares cost 75 cents each.

Children can buy or sell as many shares as they want whenever they want. When they buy shares, the money is deducted from their Cash Balance. When they sell shares, the proceeds are paid back into their Cash Balance.


EXAMPLE: 
My Biology grade is 78%. Shares cost 78 cents each. 
I buy 10 shares which costs me $7.80. Then my grade goes up from 78% to 86%. This makes the share price go up to 86 cents each. My 10 shares are now worth $8.60. If I sell them now, I make a profit of 80 cents.
HOW OFTEN ARE GRADES UPDATED?

As often as parents choose to update them. The more often the better, because that gives the share prices movement and simulates an active stock market. Weekly is recommended if possible.

For Chores, parents can update them as often as they like. The chore grade is finalized at the end of the month.
HOW DO LOANS WORK?

The purpose of Loans is to teach your children to understand and avoid debt.

Children can apply for a cash loan from their parents. They do so by applying for a specific loan amount, and also listing how much they will pay back each month and what interest rate they want to be charged. Parents receive this application and can approve or decline it, or they can change the numbers and send back a counter-offer.

When approved, the money is immediately credited to the child's cash balance and can be used by them.

The minimum monthly payment is automatically deducted from the child's cash balance on the 1st of each month. These payments, as well as the interest paid on these loans, is meant to simulate credit card purchases and payments.

Each child has a credit rating based on how much debt they have, compared to their allowance income, and how well they are managing it. Parents should consider their child's credit rating when considering a loan.
WHAT IS DIVERSITY?

Diversity means not keeping all of your money in the same place or in the same investment. Money should be spread around in different investments so that if something happens to one investment and the money is lost, you still have other money and other investments so you don't lose everything. Many people keep some money in cash so it can be used immediately, some in savings for when you need some unexpectedly, some in the stock market, which if invested wisely, in good companies, might go up in value, and some in precious metals, which tend to do well when stocks don't, so you cover yourself in case one does badly. Different people will advise you in different ways about how much should be put into each type of investment, based on their wisdom and your situation. Educate yourself and get good advice.
CAN I REALLY ORDER REAL SILVER AND GOLD THAT GETS DELIVERED TO MY HOME?

Yes. The experience, educationally, is worth its weight in gold, so to speak. Owning physical silver and gold is not only exciting, but they are tangible assets that can also be used as actual currency if needed.

We encourage diversifying investments, as do almost all financial advisors, and owning precious metals is one of the most fundamental ways to do this.

Our prices, plus shipping and handling, are extremely competitive, and you are invited to compare. Make sure to store your precious metals with your other family valuables.
HOW DOES THE CHORES SECTION WORK?

Chores are considered your child's "job," and the amount you decide to pay them for doing chores should be included as part of the monthly allowance you give them. Then, based on how well they do their chores, you can either pay them a bonus, or deduct part of their "salary" if they do a poor job.

In the parents' chores settings, they can choose how much is added to or lost from their child's allowance based on how well the chores are performed. Children can also petition to get a better grade by submitting a report.

Chore grades are finalized at the end of the month, and the following month's allowance income is adjusted accordingly.
DOES ALL THE MONEY DONATED TO A CHARITY GO TO THAT CHARITY?

Yes. 100% of it.
WHAT IF I DON'T GIVE MY KIDS AN ALLOWANCE? CAN I STILL USE ALLOWANCETREE TO TEACH THEM GOOD MONEY MANAGEMENT?

YES.

Whatever your parenting style, AllowanceTree can accommodate you.

There are some parents who don't give their children allowances. They can still use the system by setting the monthly allowances to $0, and then using the "Cash-In" feature to add an amount of money to their children's accounts. Their children can then use this money within the system and learn many (though not all) of the money management lessons the site is designed to ingrain.
CAN I WITHDRAW REAL CASH FROM MY ALLOWANCETREE ACCOUNT?

Yes. Use the "Cash Out" button on your portfolio page to request the amount you want in physical cash. Your parents will be notified, and your cash balance will be adjusted. You can then go to your parents and they will give you the cash.
CAN I ADD PHYSICAL CASH I HAVE TO MY ALLOWANCETREE CASH BALANCE?

Yes. Hand your parents your cash and they can add it to your Cash Balance using the "Cash-In" option.
HOW DO I GROW MY MONEY?

You can grow your money in three ways:
- Earn interest on the money you put into Savings (if your parents turn interest on).
- Earn profit by buying shares in your grades and selling them when your grades go up.
- Earn bonus income for performing your chores well.
HOW MUCH ALLOWANCE SHOULD I GIVE MY CHILDREN?

People have different opinions on this question. Some give a dollar per year of age per week, some more, others less. Be guided by your budget, your family values, and by the number of things you expect your children to buy with their allowance.
WHAT AGES OF CHILDREN WILL BENEFIT FROM ALLOWANCETREE?

While the site is designed for middle- and high school-aged children, it can be effective for pre-teens as well, especially those who show interest in real-world or financial issues.
WHAT IS THE COST OF USING ALLOWANCETREE?

AllowanceTree is free to use.

Our core functionality is available to all at no cost.
We charge a small Premium subscription fee of $2.99/month per family to engage the full range of features we offer, such as our unique Grades Stock Market and Chore Salary Center.
HOW MUCH DOES IT COST ME WHEN MY CHILD MAKES INVESTMENT PROFIT?

When your children earn profit on their grades investments, or bonuses for doing their chores well, or interest on their savings, the proceeds are added to the value of their portfolio.

As the Parent Bank, you pay these small extra sums to your children as an incentive for your children to do well at school, do their chores well, and manage their money well. In your profile you can view the amount of money your children have in the system, that is, how much money you should be holding for them. Make sure you are setting aside the correct amount of money to cover your children's online accounts.

So, HOW MUCH will it cost you if they manage their money well? You get to decide this in your Account Settings when you enter their interest rates and chore bonuses and penalties.

EXAMPLES and COSTS:

SAVINGS INTEREST: If your child earns 5% monthly interest on their Savings Balance, it costs you 5¢ for every dollar in their balance, or $1 for every $20 in their balance each month.

Think about how much your child might save each month, and how much you want to pay them as an incentive to save. 1% interest equals 1¢ for each dollar.

GRADES STOCK MARKET: The amount your children can earn by investing in their grades depends on how much they invest and how much their grades improve.

As an example, if your child is getting 78% in Biology, the shares cost 78 cents each. If they buy 10 shares, they pay $7.80 for the shares (to you). It gets deducted from their Cash Balance. If their grade goes up to 86%, shares are now 86 cents each. If they sell them, they earn $8.60, which means they make a profit of 80 cents. That's about 10% profit on their investment. Most parents would be willing to pay 80 cents (for every 10 shares) for a grade to go up by that much.

CHORES: You set the specific dollar amount that your children will either lose or add to their allowance income for next month, based on how well they perform the chores you assign to them. You can set these amounts in your Account Settings.
WHO WILL MY CHILDREN INTERACT WITH ON ALLOWANCETREE?

Only you, their parents. The site is a closed family system, not a social networking site.
IS THE SITE SECURE & PRIVATE?

Yes. Your passwords are encrypted. Even our employees cannot see them. Your payments are made through Paypal, which means we do not store your payment information, for your added security. We respect your privacy and will never share your personal account information.
WHAT IS THE VAULT?

The Vault is the Parent Bank account balance. It lets parents know the total amount of money, belonging to their children, that is in the system. This is the amount the "Bank" is responsible to "have in its Vault" — it is the amount they should have set aside for their children, to be available when needed. You are free to hold their money in the manner you prefer: in a bank account, paypal account, cash in a safe at home, etc. However, if you do not have this money set aside, you may not have it available when your children try to make a purchase.
HOW SECURE IS MY SUBSCRIPTION PAYMENT?

If you become a Premium Member, your payment is transacted through Paypal, one of the most internationally respected and secure internet payment processor.

Paypal enables you to pay either with your paypal account or with a credit card. Paypal accounts are free to set up, and we highly recommend signing up for one if you don't already have one.
CAN I SUSPEND OR CANCEL ONE OF MY CHILDREN'S ACCOUNTS?

Yes. Visit your Settings menu and click on the Accounts tab.

You can suspend or reactivate any of your children's accounts, or resend an activation email if one of your children did not yet activate their account.
I CANNOT LOG IN TO MY ACCOUNT.

Not a problem! Click "Forgot Password" under the login bar at the top right of the page. If the problem persists, click "feedback" on the right and send us a message. We will resolve the problem for you as quickly as possible.


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