One of the most popular social welfare policies in Sweden is the child allowance (barnbidrag). This policy gives a good sense of how a universal welfare state works. The Swedish government makes a monthly payment of 1,050 SEK (160 USD) to the designated guardian of each child in the system. This payment is made regardless of family income. The payments are also slightly augmented for each additional child (you can see that in the table on the page I link to above). Compare this with the US system in which there is a child tax credit of up to 1000 USD annually but it phases out at higher incomes. Even if you do get the credit, it’s mixed in there with all your other taxes and tax credits and you only see the windfall (if there is one) that one time a year.
Barnbidrag seems a much better system. I absolutely love seeing that 2,250 SEK barnbidrag show up in my account each month. I can use it as I see fit, but I consider it designated money for child expenses. It is more than enough to pay for any school expenses, extracurriculars (in Sweden, anyway, don’t get me started on the cost of extracurriculars in the US), and the kids basics. Since we all get basically the same amount but we all pay a percentage (about 34% for me) of our income to taxes, this is still a redistributive program (those without the expense of kids are putting in but not getting and those with kids and higher incomes are putting in more than than those with lower incomes).
On this trip to Sweden I’ve learned of another great use of the barnbidrag. I have 2 sets of friends with children in their early teenage years (13). Instead of designating a weekly allowance, when their children turned 13 both of these families turned some or all of the monthly barnbidrag over to the kids. In one case they give the kid the entire thing with the stipulation that they must save at least 200 SEK a month and in the other they give half and keep half in savings and to contribute to larger family-related expenses. In both cases the barnbidrag isn’t just “funny money” for the kids to blow on snacks and comic books. Instead, the kids are expected to cover their own expenses – clothes, haircuts, personal care products, food when not at home, trips, costs associated with their hobbies, etc. The child who receives her entire barnbidrag also pays her own cellphone bill, etc.
How does this work? The child has a bank account. The money goes in. They use their bank card to make payments and access cash. They are expected to budget their money responsibly.
Both of my friends talk about gaining control of your barnbidrag as an important and relatively safe step in learning how to manage money. I agree!