Good morning! Might I just say that you are all looking ravishingly pretty today? Have you lost weight? You look marvelous.
Thanks to everyone who took the time to chime in on this post to let me know what you’re hoping to see here in the future. I love getting your feedback and I promise that I’m going to be addressing many of your requests/concerns in the coming weeks. One of the topics I saw come up several times, though, was one that I was planning to work on this month, anyway, so say hello to a new category here at Want Not: Mindful Money. There’s a lot of stuff that will go in here, over time, but I thought with a new year and all—and with so many of us being parents—I’d kick things off with a review of one of my favorite money topics: Giving kids allowance.
Many of you asked how to help kids realize the value of money and/or escape from the “gimmes.” And I’ve noticed that a lot of people feel that allowance is “free money” for kids and yet another way to spoil them. To my mind, allowance is all about teaching kids to recognize the value of a dollar and to start practicing good spending habits. Done correctly, giving your kids allowance can become an invaluable tool in shaping their relationship with money.
So here’s what I believe about allowance:
Any child old enough to count is old enough to receive allowance. Starting allowance early makes it a way of life. I’m not suggesting you shower your preschooler with money, but a quarter a week for a 4-year-old—while not an amount that’s going to make him wealthy—is great “practice” for when he’s actually old enough to want to start spending on things.
Allowance is not payment for chores, although I do believe in deducting from weekly allowance for transgressions (per a clear and predetermined penalty system). Your child is not your slave, and no one gets paid to be a part of your family. I think it’s important for kids to do chores, but I think it’s equally important for them to understand that that’s simply part of being in the family. You don’t get paid for doing the laundry, so why should they be paid to clean the bathroom? Chores are a part of family life. Allowance is something different. On the other hand, have a clear discussion about what infractions will cause them to lose part of their allowance. Allowance is a privilege, in my house, contingent on ability to abide by house rules. My kids know that if I need to correct them three times in a row for a behavioral issue, they’re going to end up owing me a quarter.
Any allowance plan—regardless of the amount of money—should include mandated portions of money set aside for charity and for savings. When I first started doing allowance with my kids, they each received $1.75 each week. Of that, $.25 went to charity and $.50 went into their savings accounts. (There’s nothing magical about those numbers; in terms of helping them understand it seemed to work well—one quarter to charity, two quarters to savings, and four quarters to do with as they pleased.) Each child has a three-compartment container to keep money in. Periodically I have them give me the money in the savings compartment and I deposit it to their savings accounts. They’re pretty good about remembering the charity money, themselves, and either putting it in the plate at church or dropping it in the Salvation Army bucket or whatever. Any time they lose money to an infraction, it comes out of their discretionary fund—the savings and charity money must remain static.
Be clear about what allowance should be used for. I buy my children everything they need. They will never have to use their allowance for necessary clothes or food. (The exception being that perhaps when they’re teenagers I will give them a separate clothing allowance to manage themselves.) So there’s nothing they will have to buy for themselves. But if my daughter wants fancy hair pretties or my son wants his very own pack of gum, they are welcome to dip into their allowance for those items. I have also started having them buy each other holiday and birthday gifts with their own money and have been pleasantly astounded at how generous they are with each other. This tells me that I am doing something right.
Be clear about what allowance is not. Right now, I still get some say on how my children choose to spend. I think that probably once they’re in high school I will zip my lips and allow them to spend on anything and make their own mistakes, but right now they’re still learning and I still get to participate. So when my son wanted to blow all of his money on silly putty so that he could make an imprint of the entire comics section of the paper? That was a Mama Veto. Likewise, my daughter is not allowed to purchase anything made by Bratz or other
skanky inappropriate items.
Part of giving allowance is modeling good habits and talking to kids about spending. If you’re just forking over some money every week and mismanaging your own money, or if you give them money and expect them to use it well but refuse to talk to them about your own habits, you’re missing the point. I’m not saying that Junior should be privy to all of your bills and your checkbook, but I am saying that you need to practice what you preach. Don’t tell kids to save some and donate some unless you’re doing the same. And talk to them about how you do it. My daughter once asked me why people give money at church every week but I only do it once a month; that was a great opportunity to explain to her that I find it easier to keep track if I only write one check a month, but I am figuring my donations based on both my income and what period of time I consider. We then talked about how not giving every week means having more money to give later, and the pros and cons of saving up a bit before making a donation.
Pay attention and praise accordingly. When your child makes good financial decisions, praise her! Maybe she decides to bank more than the mandated amount. Maybe she deliberates over an item at the store and decides she really doesn’t need it. Kids want and need your approval, and staying active in the process—not considering it over after you’ve handed them the cash—is all part of teaching them.
It doesn’t matter how much money you give in allowance. It matters how you handle it and what you’re teaching along with it. And I guarantee you that a child who is mindfully receiving and managing an allowance will experience a sharp decrease in the “gimmes” as he learns the value of money.