~ so your kids grow up financially savvy.
- Ever get sick and tired of kids begging for one more thing?
- Ever feel taken for granted because your kids don’t appreciate all you do and buy for them?
- Ever wish your teenager was more responsible with money?
- Ever wish your children had a little more patience and stop expecting things RIGHT NOW?
If you answered yes to any of these questions, my advice to you is give them an allowance. It’s as important as teaching them to swim.
Having an allowance will teach your children how to manage, use, save, spend, and value money. And, maybe most importantly, they will learn delayed gratification—a lost skill in this age of instant everything.
Growing up with an allowance means your children have a much better chance of managing their future finances responsibly. When children have their own money to spend, they soon learn the value of what they spend it on. A tempting toy that breaks the first day becomes a lesson in quality. Spending the wad on candy means there is nothing left for anything else.
You will no longer spend time and energy arguing over what you will and won’t give them money for. When you hear, “But Mom, everyone else has one,” you can say, “Great. How long do you think it will take to save up for it? Let’s figure it out.” When they beg for more money, you can say, “You’ll have it with your next allowance. I know it’s hard to wait.”
Giving children an allowance sends a message of trust in your child’s capability. They feel empowered when they oversee their own money. Most important, a child who is raised responsibly with an allowance does not blow it financially the first time they have their own money. It’s a win/win all around.
When do I start an allowance?
This depends on your child. We started giving our son a quarter a week when he was five or six. He had no idea what it was for and never remembered it. We stopped and started again when he was eight. Our daughter was piling pennies as a toddler, so we started hers at five. By the time she was seven, she bought herself an American Girl Doll. When she was thirteen, she paid for a $1700 violin.
How much do I give?
This is completely personal and depends on what you expect your child to pay for. When my children were little, allowance was for toys and treats. In middle school they chose whether to get a hot lunch at school or to take the money and make their own lunch. I always bought their clothes but when they were older, they could add their own money to the amount I agreed to spend to get the more expensive shoes, for instance. When they went out with friends, allowance covered movies and snacks.
Some parents give allowance in two or three segments: 1) spending money, 2) savings account, and 3) charitable giving.
If it is to cover treats and toys, allow your child to blow it all and then acknowledge his disappointment and anger when he begs for more money. You can say next time he can save to get what he wants. Disappointment and frustration may be huge, but battles do not need to be fought.
Spending money is just that. They must be allowed to spend it on whatever they want to learn its value. When the amount is decided on, be very clear what it is to be used for so battles can be avoided.
Savings is basically your call. Give the amount you would like put aside each week in a bank account. Be clear about rules, i.e. it’s not to be touched before college, it can be used for big purchases.
Charity gives your children the experience of helping others. Together, talk about and research what your child would like to support—animals, children in need, etc. Decide together how much to set aside each week and put it in a jar. When a certain amount is reached, write a check to the charity, making sure your child is in charge of snail-mailing it.
What if they want more?
When they complain they’ll never have enough money to buy x, y, or z, it may be time for a raise or you can suggest extra jobs like raking leaves, shoveling snow, cleaning the garage, having a lemonade stand. My daughter loved a job she had piling bricks for a penny a brick. As they get older, they might rake leaves for the neighbors or sell some of their old toys at a yard sale. Extra money given for birthdays or holidays always adds an encouraging boost.
What if they never save any money?
Acknowledge how hard it is when you don’t have the money for something you want, share a story of your own, and ask your child if she would like your help to save a little bit of her allowance each week.
When she is begging for a big item, help her figure out how much she could realistically save each week and then how long it will take to have enough. Mark it on the calendar. Extra jobs can speed the process but in today’s world delayed gratification is a most important lesson. The pride experienced when your child finally has the money and makes the purchase herself is worth every ounce of patience.
Do I withhold it when they don’t do their chores?
No. Allowance should never be tied to chores. When allowance becomes a reward for chores, it loses its teaching value. If it is a reward, it is also a punishment when the chore is not done. This is territory for feuds and resistance.
Regular jobs are expected because the child is an important, needed member of the family team and are not to be paid for. Allowance should be given regularly each week or month regardless of the child’s performance or behavior for its true lessons to sink in.
But why should I just hand over money to my child for nothing?
Giving your child an allowance is as important as giving your child swimming lessons. Learning to swim means he can be safe in the water. Growing up with an allowance means he learns to be safe with money.