Allowances: teaching teens how to manage their money

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by Robin Dance

Married over half her life to her college sweetheart, Robin's guilty pleasure is Reddi Wip from the can. Mom to three, she's as Southern as sugar-shocked tea. Follow her on Twitter. Her beautiful new blog robindance.me is a must-see.

My husband is an excellent financial manager.  This has proven important in our marriage since I’m partial to words, not math or anything remotely associated with budgets.  Charlie’s excellent Warm and Fuzzy Budgeting post was preachin’ to his choir.

As is often the case in marriage, the way we were raised informs the way we parent. For instance, I received a weekly allowance as a child but my husband didn’t.  It’s understandable, then, that when we had children of our own I was in favor of an allowance and Tad wasn’t.  After considering the pros and cons, we decided it wasn’t in keeping with our general parenting philosophy (perhaps another topic for another time), so we didn’t implement an allowance.

Last year, when our children were 12, 15 and 17, we had a change of heart.

With the goal of them learning how to handle money, we began paying them a bi-weekly allowance.

Our intent was not to compensate them for chores or link payment to behavior.   I’m excited to share how we arrived at the amount and the surprising results of instituting an allowance.

Finding the “right” amount

Every family and each child is different, so this is not “one size fits all.”  For an allowance to be an effective tool in learning how to manage money, take time to come up with a realistic amount.  Take into consideration your child’s age, maturity level, and activities when determining the amount.

1.  Decide expenses you’ll continue to fund.

From the outset, we made it clear what expenses we’d continue to cover to avoid future confusion or frustration. Included in our list for Parent’s Responsibility:

• clothes and shoes
• school field trips
• summer camp
• sports uniforms and equipment
• haircuts
• basic car-related expenses

2.  Identify recurring, on-going expenses.

What are the regular daily or weekly costs you’re currently funding?  For us, school lunch money was at the top of the list.

3.  Determine expected, upcoming expenses.

With pulled out a calendar out and wrote down everything we could think of that typically happens over the course of a year:

• Youth group outings
• Birthday parties
• Fast food and snacks
• Entertainment (movies, music, video games)

4.  A little extra for unexpected, miscellaneous expenses.

While we continue to pay for clothes they need, they’ll have to cough up the bucks for that Fun Run t-shirt; while we cover school field trips, souvenirs are up to them.

5.  Make provisions for giving.

While we didn’t require them to tithe to our church, we encouraged them to support organizations or causes they deemed worthy and in need.  Their choices range from organizations with global impact such as Compassion International, to their friends raising support for mission trips.

6.  Plan for saving.

We chose to do this “on paper.”  We created a spreadsheet where they could account for their spending by category.  Once we determined their bi-weekly rate, we set aside 10 percent for big ticket items.  Though those dollars never literally changed hands, they could see this amount grow every two weeks.


Photo from shutterstock

The remarkable results

I’m not sure what my husband and I thought would happen as a result of instituting an allowance for our children, but we’ve been pleasantly surprised.

1.  Altered spending habits

Because it was now their dollars to spend, they were more careful about their choices.  Before allowance, my youngest would easily spend our money for a weekly lunch card ($20).  When it was his money to spend, he elected to take his lunch most days, reserving school lunch for only his favorite meals.  It was also amusing–and very telling–to see their choices for friends’ birthdays.  For those closest to them, they were willing to spend more than I had previously!

2.  Collaboration

If there was something another sibling might enjoy, they pooled their money to make a purchase.  Also, if one ran out, they’ve loaned money to each other until the next payday.  They keep each other honest and honor paybacks.

3.  Weighing the real cost

They’re thinking more carefully about their spending choices; now that the onus is on them. They are thinking beyond “today.”  Their restraint has been a paycheck back to us!

4.  Personalities confirmed

One of our children is a natural saver and will do without; another is a natural spender and will jump on any bandwagon.  Implementing an allowance spotlighted these tendencies.  While they’re still under our roof and direction, we help them find a middle ground that will serve both better when they’re living in the real world.

Confessions

This is the part I’d rather not tell you.  But I’m willing to share our reality check in hopes you’ll be encouraged and realize perfection isn’t the goal — the goal is to help your children learn how to manage money.

We’re not doing so well with the accountability part.  Great in theory — tracking expenses on a spreadsheet is a marvelous tool for visualizing where money is going.  But after the first few months, we were no longer diligent to make sure the kids kept up with it (they aren’t).

The bottom line is certain, however.  They are learning how to manage their money!

Their spending has become more thoughtful and intentioned, and although allowance was never tied to household chores, they seem to do those more willingly now (or maybe that’s just my imagination).

I had worried we waited too late to begin an allowance, but the timing–and their response–indicates it’s never too late.!

An important note: In my opinion, allowances stop when our teens find outside employment.

I know there are helps out there for teaching younger children (Larry Burkett’s My Giving Bank or this piggy bank from Money Savvy Generation) about money — but what has worked in your home for tweens and teens?  Are you a proponent of allowances? Why or why not?

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Comments

  1. Nice tips!

    My children are very young, so I have no experience providing allowance to teens. I can say, however, what my goal is, and it is lifted directly from the experiences of one of my college friends. I knew a girl whose parents had done such an incredible job teaching her about money management that when she went off to college as a freshman, they deposited a huge chunk of money in her account at the beginning of the year (to cover tuition, books, rent, groceries, etc.) It was the full amount they had budgeted for all her expenses, and it was her responsibility to manage that money over the entire year. And if she ran out…oh well. They weren’t providing any more.

    And she did well. Very well. She ended up with extra left at the end of the year. It is my suspicion that the vast majority of college freshmen would not do nearly that well! So my goal, when I have teens, is that they should be as adept at managing their money as my friend was when she left for college.

    • I meant to add, too, that the amount wasn’t over the top, and it wasn’t padded in any way. It was what was needed for her basic monthly budget, times 10. No more, no less.

      • Color me impressed! This did NOT happen by accident and it is a lofty, admirable goal.

        To me, accountability is one of the most difficult things, especially if you’re not number minded. BUT, kids in general (in middle America) act like they think money grows on trees and it’s a disservice not to help them prepare for beyond home.

        As I say that, I know it’s much easier said than done!

  2. avatar
    Lynn Crapo says:

    Great post! I agree. Allowances were never a part of our household. Our children found their own part time jobs even before they hit the teens. So by the time they were teens their money managing skills were already in place and good habits set in motion. It’s always a good thing to start a habit the earlier the better. It’s been a smooth transition as each child left home to live on their own. Including paying for post secondary schooling on their own , while living on their own.

    • Bravo, Lynn.

      We’ve always maintained the posture household chores were a part of everyone’s role within our family, so those things weren’t compensated. Over and above major work projects have been, but not the daily things expected of all.

      My daughter is the only one who has worked enough to count; of course, now she has outside employment but prior to that, she baby sat a fair amount, and OMW–people paid her WELL!

      My oldest son has done a thing here or there, but never w/consistency.

      Again, our goal was simple: provide them the money we were ALREADY covering–necessities for a student–and let them learn to manage it.

      For you to have helped them establish habits before they left home is to be lauded. A lot of kids leave the nest very unprepared (I’m lookin’ in the mirror :).)

  3. I’m not at the teen stage yet but eagerly looking to learn from those already there. Reading Two Chicks & A Hen’s comment made me remember that when i went to college, my parents gave me the money for the first four months. I distinctly remember the lesson when I realized that I should have budgeted for the vacation period and Christmas presents as the next amount was not coming through until January 1! I had simply worked out how many weeks of school I had and budgeted accordingly. Sadly, even then, I didn’t save any of it – that was a lesson for much later.

    I love that Robin’s kids were still happy to give to charity. I think the secret to making this work was that everyone knew upfront what the allowance was going to cover.

    • Suzanne,

      Thanks for sharing your experience; there’s definitely a lesson to be learned (and if readers listen, they can learn from YOU, not the hard way!). I had written more about giving money away, but this post is so long already I edited that part out (it’s a post of its own!).

      And agreed–when expectations are laid out up front, there are fewer surprises. Of course there’s a learning curve, but it’s relatively short.

  4. I love this plan, and want to implement something closer to it for my kids. I currently provide a flat allowance for my teen that is intended to cover his lunch, and if he spends it for that, he has nothing left. This has encouraged him to sometimes take leftovers/make sandwiches, and (often!) mooch off his friends who buy big lunches and don’t finish them! :P

    That said, he also pays for his cell phone from this money, which is getting to be a tight squeeze now that he has a girlfriend and ALSO wants to spend money on/with her. He wanted to get a “smartphone” and we were only willing to pay for a phone that let him call us to let us know where he is, when to pick him up, etc. so that was his choice. But he is really tight for money now that he’s using his “lunch money” to cover all of these things.

    I would love to hear more about what different families actually choose, to cover all of these various categories in their kids’ allowances – e.g. birthday gifts, going out with friends, entertainment (HUGE for my younger boys! Who also get an allowance but it’s tiny compared to their older brother’s), etc. I think I need to boost allowances for all my kids but don’t want it to just feel like mountains of free money pouring in, and also want to only provide for the appropriate level of responsibility by the age of the child (e.g. I’m not going to give thte 6YO enough money to cover bday gifts for his friends!)

    Thanks for a great post!

    • Stacia,

      Some great points here; the amount we provided for our kids was age appropriate for their expenses, each one received a different amount. What surprised me most in our case was the restraint of our kids–they spent much less when it was “THEIR” money to spend!

      I’m sure there’s a wide range of what families cover; we still foot the cell phone bill but only provide basic service (they actually had to buy their phones and pay for the first year, but that’s another story, lol); even though all three are eligible for a data plan (not smart phones), we don’t allow it; they can send/receive texts but NO PICTURES or videos (can take ‘em, can’t send ‘em). Again, our logic behind that is another post so I’ll hush for now. Hopefully some others will chime in with expenses their allowances cover.

  5. One way to teach children on how to save money is by simply giving them something that the will spend on it like a cellphone plan.

  6. Wow, this is thought-provoking. I have a 4 year old who I have just started thinking about about giving an allowance to–related to helping out around the house. You’ve added much for me to think about (and I would love a post about your parenting philosophies!). You have made some great points–I especially love letting them give to the charities they choose rather than requiring giving to your church. I think it would have encouraged me to be more excited about giving than I was with my own allowance.
    Thanks!

    • Hi Candace,

      Ha–sometimes I think I should be writing to parents of younger children to help them think through choices they’re making for when their kids are teens (not just to parents of teens). NOT that I have all the answers, but I DO have three kids and they’ve turned out decently (so far) and maybe there are shreds of wisdom in the choices we’ve made (to God be the glory on THAT!!!).

      Anyways, in short, the reason we didn’t provide allowance when they were younger was due in part to our thinking that certain chores were “required” as part of membership in our family; my husband worked outside the home to provide food, shelter, clothing, etc., and I mostly worked at home to manage what went on under our roof. To teach our kids responsibility and cultivate their independence, they had certain daily duties–making their beds when they got up, keeping rooms clean (gets harder with age!), setting table, unloading dishwasher, etc. Responsibilities increased with age.

      Does it make sense that our logic was to provide an allowance to help teach them to manage money (not pay them for what they should be doing anyway)? It was a shift of who pays for things basically–straight from me or their dad or with them making those decisions.

      Thanks for your kind words and sharing your thoughts~

  7. Great tips – especially for teens. Young children have simpler financial concerns. Once they can discern between what they need and want, they can learn to save, give and spend more wisely.

    We have experimented giving our teen a smaller allowance and us, as parents, providing all the “needs” vs. giving our teen a large allowance and teaching her how to budget for all her own needs. It is harder for her to do the latter. And yet, I think this budgeting, saving and prioritizing is a difficult, but vital skill!

    There are too many young adults still clueless about how to manage their personal finances and I hope my children will not be at such a disadvantage!

  8. Robin, I know you purposely refrained from revealing the allowance amounts, but I am curious, if you’re willing to share! We adopted our sons when they were 8 and 10, and they had never had experience with money before that. (If we had little kids, we would have started much earlier.) We started allowances, the amount being their grade at the time. (Some people use the kids’ ages – holy cow, we’d go broke!) Turns out, this was probably a little too much, too, esp. since we didn’t implement hard and fast rules about saving/giving/spending etc. We removed the 15 year old’s allowance last summer, when he was supposed to get a job. (He didn’t.) The 13 y.o. lost his allowance when I lost my job in July. (The “trickle down” effect.) I’d like to try implementing it again b/c I can’t stand paying for those daggone school lunches!!
    One thing we do pay for is the older one’s cell phone. Basic service – no smartphone, internet, or picture messaging – but it means we can take it for infractions. (It’s his most important currency.) Tougher to take it from him if he pays for it.
    Our younger son spent all of his money on any and all junk every time we went out. (Hard to watch!) But, I will tell you, that even he recognizes that lesson now. He babysits and shovels snow, and saves EVERYTHING, but is generous when giving, buying gifts, etc.

    • Karen,

      We’ve adjusted their allowances many times over the past year, based on circumstance–in the summer, they don’t have school-related expenses and when we began their allowances, I had a job (now I’m back to freelance work and the pay is not always predictable or consistent). So yes, it’s gone done for them, but they understand the circumstances and it’s not an arguable issue.

      A point made previously in this email thread is laying out expectation; discussing those things that are covered by them/us. We literally wrote everything down we could think of, discussed it with our kids and asked for their feedback. Though I don’t recall specifics of those conversations, they felt like our choices were reasonable and made sense.

      Email me at pensieve.me@gmail.com and we’ll talk further details :).

  9. avatar
    SlickMom says:

    Great article! It spoke to my heart as neither my husband nor I are very good and implementing long-term plans, thought our hearts long to do something out the allowance issue! We gave our children allowances when they were young, separating their money into 3 parts, giving first (to Jesus – shoe box ministry savings), bank savings, and then pocket money. This dwindled before they hit the teen years and now that they are 14 and 15, we would like to start again. Thanks so much for the encouragement – just what we needed to get started again. We were blessed knowing that we are not the only ones who struggle with these types of things!

    • SlickMom,

      Thanks for your encouragement and transparency. You’ve provided a great model of not giving up! What works in one season of life doesn’t necessarily work down the road.

      And I totally agree–it’s helpful to know you aren’t “the only one.” :)

  10. Our children are elementary school aged (one tween) and I am an allowance advocate. Everyone in our home gets a small allowance, mom & dad included. It’s not tied to chores, though we all contribute to our home. They can earn extra money for going above and beyond (vacuuming the car for example).

    Giving them a little bit of money each week enables us to teach them how to manage money. There is saving, giving and like you said the natural spenders and savers become apparent. When we see these characteristics we can help guide and teach how to balance the two.

    • This is what I’m doing with my 4 1/2 year old, actually. I also decided not to have allowance tied to chores. It’s just a little bit of money for them to use to learn about finances (and math, and sharing, and priorities, and so on). And chores are something you do simply because you’re part of the household.

      Of course since she is my eldest, I can’t say anything about how this worked out in the long run! I guess I’ll see in 14 years when she heads off to college :).

    • Renee,

      Perfect–you’ve put your children in a position to l e a r n how to manage money; your intention is commendable!

  11. My oldest daughter is five and learning about money. I have been debating about an allowance, but am not sure if it is too early. Thank you for all of the good information.

    • Mary,

      I wonder how different it would have been for us had we begun an allowance when my kids were that age. The thing is, I’m SURE we wouldn’t have approached it from the standpoint of teaching them how to handle money then; so I’m kinda glad for us, we waited. BUT…you have benefit of extensive thought and conversation, so maybe you could shape/teach better??

  12. It has been my intention to have the kids keep track of their money on paper to SEE how it works. I think visual is very important for the children to really get it. I already know I have one who is a “saver” and one who is a “spender. I also know how important it is to teach lessons at a young age, kids do not wake up as adults on their 18th birthday and know how to do everything an adult is suppose to do. As parents, we know it is years in the making. I remember growing up that my parents offered no information in the way of money management. Vague statements such as “save your money” for when you need it, unfortunately, does not teach children enough. They need to do and see.

    The one thing I struggle with is tying the allowance to chores. I absolutely agree that the children are members of the household and everyone has a responsibility to contribute to age appropriate tasks. It’s particularly a struggle at the moment with my pre-teen who thinks it’s the parents job to take care of the house. :-) I recall reading something that recommended tying the allowance to chores, as truly, that is how our world works. You do you job, you get paid. You don’t do your job, you don’t get paid. So…that’s where I’m stuck.

    • Dawn,

      Like you, I had no instruction as a kid. Thing is, neither did my husband and he’s as whiz-bang as it comes with budgeting and money management! First born syndrome? Need to control? Naturally a planner? Probably all those things.

      RE: your second paragraph, there are definitely two schools of thought; I understand your perspective, but because of how our parenting philosophy evolved from early things we read, experienced, parent courses, etc., we never considered tying an allowance to routine chores. EXTRA, “big” work around the house, yes, but not the type things expected of all of us (making beds, they clean their own bathroom, laundry help, kitchen, etc.). WE don’t get paid for taking care of our home, it’s necessary to our family’s smooth function.

      I understand the other perspective, just not inclined to agree :).

  13. Yes, we do give an allowance and I have had some great systems for teaching money management. However, lately it’s turned more into me throwing a few bills at them as we’re on our way out :)

    I will say, though, that any time my kids wanted to make a “big” purchase, something that is a large portion of their allowance (it’s relative) then I had them think about it for a day or so. Now, my youngest is 7 and she is already very careful and thinks long and hard about what she wants to spend her couple bucks on.

    Another thing is that 90% of the time, they spend their money on something for someone else. I do love that :)

    I need to get back on track with the good stuff, thanks for sharing!

    • Angela,

      Sounds like your babies are starting VERY young; I know it’s a source of mama-pride for them to be thinking of others at such an early age. Also, that you require them to have a waiting period before making large purchases is a great move; hopefully it will carry with them throughout their lives.

  14. I would like to say that it is especially important for parents to teach their kids spend money in the right way. For some people it can be the art, but teens have to definitely master this art. So, once your children will become adult, they will have their own families and will have to manage their family budget by themselves. So, it is very important for kids to obtain this skill.

  15. Our teens are older and unfortunately have both lost their jobs. They both attend local community college and live at home. We are trying to put pressure to continue the job search or get creative, so we give limited funds that basically pays for their gas to and from school (which is climbing everyday!) Oldest one will pick back up some great seasonal work in a couple of weeks, and younger is starting a photography biz doing toddlers pics and senior pics to help bring in some funds. They are having to learn how to mkae their gas money stretch through the week and it affects their decisions about where to drive and where not to.
    Unfortunately, we did all this a little too late. We are not great with money, and we have not taught them wonderfully either. Ugh.
    Bernice

    • Bernice,

      Sometimes necessity dictates choices; sounds like your kids are learning hard lessons as they go along. I’m a firm believer in it’s never too late :).

      Also, I realize I’m VERY fortunate to be married to someone who’s my opposite in this regard; he’s the reason we’re so intentional when it comes to budgeting.

      I wish you well!

  16. avatar
    Meredith says:

    Thanks for the great article. You have given me a lot to think about. My kids are 5 and 3 and we’re already thinking of the best way to teach them money lessons. They see us use cash and do our budget. We haven’t yet figured out the whole allowance vs. earning money issue. I never liked the idea of giving kids money without them earning it, yet I didn’t want to pay them for things they should be doing anyway. I liked your idea of teaching them to manage their money by covering items you won’t pay for. I wonder how we can adapt this to our younger kids. I’d love some suggestions!

  17. avatar
    Meredith says:

    Thank you for a great article! My husband and I are starting to think about this now. Our kids are ages 5 and 3 and I’ve always been in the mind set that I didn’t want them to be handed money without working for it, yet I didn’t want to pay them for things they should be doing anyway. You’ve given me something to think about in terms of just giving them the money to help teach them how to manage it. We’re already modeling by using cash and they see us working together on our budget, but I’m wondering if anyone has ideas about adapting the money management skills for kids this young. What kinds of things can they pay for? Thanks!

    • Meredith,

      You’re welcome!! Good for you to have already begun thinking about this for your littles. Have you checked into Larry Burkett’s Crown Financial, Focus on the Family and/or Dave Ramsey’s advice? Some of their thoughts will contradict mine but maybe they’ll have suggestions that suit your family.

      As far as your last question, I think they’re on the young side for making purchasing decisions :). But, maybe concentrate on saving, giving some away, and instead of you buying them a treat at the grocery store, allow them to but it themselves. (I’m also curious to see if others chimed in later!!)

    • Meredith,

      You’re welcome! So glad you’re already thinking about these things. You might want to check out Larry Burkett’s Crown Financial, Focus on the Family and/or Dave Ramsey’s thoughts. I’m sure we have differences of opinion on some things but they’ll give you VERY qualified food for thought.

  18. Love this, Robin! I love how you intentionally thought through what you would pay for and WHY. It’s funny . . . my husband and I do the same–we give our teenagers an allowance–but we make our kids pay for almost everything, including (and especially!) their clothes. Sure, I will help with big-ticket items like shoes and coats, but for the most part they are on their own. It frees me up from having to make the decision about how much to pay for stuff and how to be fair about it (one daughter would buy designer everything and the next is happy to go to Target). Our kids also pay for a portion of their cell phone bill every month, so they will have the responsibility of anticipating and paying for a bill. But here’s where we’re REALLY mean . . . we make our kids pay for half of their summer camp bill, and believe me, it’s a LOT of money. But it gives them a good savings goal and a real sense of accomplishment when they’ve saved it. And, yes, tithing is an expectation at our house too.

    But here’s what I found so interesting . . . even though we (you and I) pay for things differently and have different expectations about allowances, the results are the same. Each child has learned to weigh whether the item is important enough to spend their money on. They have had to think through each purchase. They have worked together on some things (like buying their dad a special pair of shoes for Christmas!). And each of their personalities has really come through because of this process. I can’t recommend it enough.

    • Thanks for pointing out that it’s not so much the DETAILS that matter, but rather the intention in setting up an allowance. Sounds like both you and Robin have the same intention – learning budgeting and wise spending habits. By making expectations clear, the systems are working for everyone. As a parent of two littles, this is really encouraging to me!

      We’ll find a system that works for our family.

      • Ditto your point about the key thing being an intentional system that matches your family situation/values. Of course, there’s no shortage of experts to espouse the “one true” system. If you’re looking for ideas on different approaches/systems, we’ve got over a 1000 articles (and growing) cataloged here: http://www.delicious.com/famzoo (You can click on the “allowance” tag in the right hand sidebar to see just allowance articles).

    • Shelly,

      I think if you lived in town we’d be fast friends. That makes me smile! :)

  19. Robin,

    Loved the honest, personal, and concrete account of your family’s allowance experiences. I particularly like how you’ve taken an explicit budget-based approach to the amount with clear expectations rather than just picking a number out of a hat.

    You’re results mirror exactly what we’ve seen with our five kids (now ages 9 through 20). I completely agree that it’s never too late to start (but by all means start early if you can).

    There are more and more online solutions out there to deal with your “confessions” section, simplify the general setup/tracking, and give everyone in the family access – interested folks can google around a bit.

    We’ve also had really good learning experiences with giving the teens a separate annual clothing budget and allowance.

    Lastly, we didn’t go “cold turkey” on allowances when our teens got summer jobs, but we did modify the budgets accordingly.

    That said folks should tailor their system to their family values/situation – the key thing is to HAVE an explicit system. Loved hearing about yours in detail.

    Regards,
    Bill

    • Bill!!!

      I knew there were several remarks by you from the emails I’ve been receiving for this post but until now I haven’t taken time to READ everything. Thank you for your encouragement and positive feedback; thanks, too, for providing additional suggestions about how to tackle teaching kids financial responsibility. Sounds like YOU could’ve written this post!! :D

      • Robin,

        That’s very nice of you to say. I generally stick to my knitting of writing software instead of posts! (But I do post articles periodically on the FamZoo blog).

        Your post and this ensuing discussion in the comments is one of the better ones out there (I pretty much read’em all), so kudos to you and the readers!

        I know parents really appreciate the practical, honest advice/discussion and the info definitely helps us at FamZoo build a more thoughtful, flexible solution.

        Best,
        Bill

  20. This is a great article. Years ago I read this article which illustrates the same ideas.

    Our children are still too small (3 and 1) to really understand money, but we enjoy teaching them what we can now, and I look forward to the day when they will take a little more responsibility for their own finances. We also are planning on fostering teens soon, so it will be neat to teach them how to manage their money. Hopefully we can make some lasting impacts on them, financially as well as emotionally.

    We also plan on matching savings with our children for college and missions.

    Thanks for the article! You can never read too much about parenting teens!

    • Becca,

      Oooooo–I like your idea and incentive of matching college and missions! That puts long-term goals out there for them to support/fund! (Thanks, too, for your kind words!!)

  21. Great ideas! I’ve had trouble staying consistent with allowance for my kids. And I’ve wavered between just handing them money and having them earn it. I love the idea of establishing from the beginning who pays for what…such an easy way to avoid misunderstandings, or discussions about it in the middle of a store.

    • Rebecca,

      I’d say consistency is one of the most difficult things about parenting, period! IF you can approach that, your kids will benefit (and so will YOU). MUCH easier said than done, it is a worthy goal.

  22. THANK YOU! My husband and I are just now learning to handle finances in a better way and we said to each other just last night,”How are we going to teach this to our kids?” Thanks for your ideas and honesty!

  23. I know a family with 5 still pretty young children who get a small regular allowance. They have a family “bank” (computer spreadsheet) and each week they sit down with dad and make a “deposit” into their “account”. They are required to set aside a minimum amount for giving and saving and the rest they can spend as they please. When they want to buy something I’ve often seen the parents question their children: how worth-while is it really? and weren’t you saving up to buy such-and-such? The kids make their own spending decisions but their parents point out the pros and cons of how they’re spending. I’ve always though it was a great way to teach money management. I love the advice in this post, too!

    • Heather, Your comment highlights what I like about the “Family Bank” model (whether tracked on paper, spreadsheet, or online) where the kids come to the parents (“The Bank”) for the funds: it keeps the parents involved in the spending decisions and provides ample opportunities for teachable moments (before the purchase). That ongoing dialog is really key.

    • Heather,

      BRAVO to those parents! It’s HARD to maintain that kind of commitment, but I do see great value in it. Something EVERYONE can take away from that (whether or not they choose to do it the same way) is the parents intentioned conversation AND teaching their children to THINK about the consequences of their decisions! Love that.

  24. I took a parenting class that suggested that kids get money when they are old enough not to eat it. The suggestion there was $1/year of age. So I should be giving my 4 YO, $4/week to buy….stuff (?) with. Actually I don’t mean to make fun – your post is a good reminder to actually DO it. I think I worry about the loss of control that comes with giving my kids their own money (what if they use it all to buy candy and then they eat it and vomit all the time!!!) instead of looking at what a great learning opportunity this really is :)

    • Alexis,

      Hmmm, I’m not sure I agree with that parenting class suggestion, but I guess that’s why there’s chocolate, strawberry and vanilla :). And your concern about your children making poor choices and having to suffer consequences? I’m pretty sure if you let them bear those consequences once or twice…they’ll learn to be smarter about their choices! ;) :)

  25. Robin,
    We also decided not to give our children allowance, but help them in their endeavors to earn money by providing opportunities to do so at home.

    We don’t give our kids (11, 14) an allowance. But we pay them for helping around the farm – when the harvest is over, they get a big chunk of money for helping out. We allow them to sell vegetables and strawberries we grow and we often compensate them for doing outstanding work on big chores like painting the house. They also do odd jobs for neighbors and I’ve started enlisting their help in my business for pay.

    However, we’re careful to not compensate them for things that we consider part of their household responsibilities. That’s why they only get money for big jobs or a share in household savings and profit from our big enterprises (like raising kids).

    This year we did start to implement an set clothing budget/allowance for my older daughter. This way she can make better decisions about buying clothes and supplement it with her own earned money as well. It makes a world of difference what she declares she ‘needs’ vs. what she wants. And I take great pleasure in watching her carefully tally up purchases in her head, compare prices and look for on sale items.

    Last weekend, we told our kids if they wanted to go snowboarding one more time with us they’d have to pitch in $20 each. I don’t think there’s been a snowboarding day that they enjoyed as much as that one.

    Making your kids work for rewards and manage money like this gives them so much great financial savvy as well as a real appreciation for what they do decide to use their money on.

    One tip on the big ticket item spreadsheet conundrum – try just paying them. And have them open a savings account. Our kids now look at their statements, understand interest and keep up their bank books. They’re even considering investing a bit.

    • Sarah, love your approach of putting your kids to work on the family farm/business. I had my daughter work for me last summer doing online marketing tasks and it was a great learning experience. She learned she didn’t want a computer/desk job like the old man has ;-)

      Note that the spreadsheet (or other online/by-hand tracking mechanism) and the savings (or investment) account are not mutually exclusive – we use the former as a “virtual family bank” for tracking initial income (allowance, jobs, BDay checks), short term spending money, charitable giving money, and purchases relative to budget. We periodically transfer sums from the virtual family bank spreadsheet to the real world savings/investment accounts. This way, we don’t have a lot of spending cash floating around in the kid’s hot little hands and we don’t have to hassle with opening less flexible and hidden-fee laden checking accounts (we do that ceremonially when they head off to college).

      Anyway, point is, you can use a lot of these tools together in interesting combinations.

      • Bill,
        that’s a great way to think about using the “family bank” as an interim step. Certainly it cuts out some of the problems when you have to make a trip to the bank for them all the time for deposits and withdrawals. Or not and spend all that time keeping track of who owes what.

        How many, IOU’s does it take to realize you’re a de facto family bank as it is!

  26. Your article had so many helpful reminders about allowance and what kids can learn from it!

    We have allowance in place for our 7, 10 and 12 year-olds. The allowance amount itself is quite small because we’ve additionally spent time helping the kids find money-making opportunities outside our home. The older two started a neighborhood services business involving snow shoveling (sometimes before school), pet care when people are on vacation, leaf raking, lawn mowing, etc.

    I’ve been pleasantly surprised to see that their small business has helped them gain additional skills related to money-management such as: responsibility (doing what you have said you will do), keeping track of jobs and following up on getting paid, and learning ways to find new business opportunities.

    For me, thinking about teaching my kids financial skills led me to think about making sure they grew up learning various work skills they would need to make money in the first place. I just wrote a post which I called Fall-back skills. I envisioned what it would look like if each of my kids entered adulthood having a profession (perhaps broadly defined) and a fall-back skill (something like fence building that they could always find people willing to pay for). In my post, I thought about how as a parent I could help foster the learning of fall-back skills during childhood. (https://playfightrepeat.wordpress.com/2011/01/06/fall-back-skills) -And I lamented that I didn’t have more fall-back skills myself!

    • Good points Suzita. Note that sports, music, and other activities can often form the basis for very marketable skills. For example, my daughter parlayed her competitive equestrian skills (and resulting comfort around horses of all temperaments) into some very, very lucrative work braiding horses before shows. Left some additional commentary on your excellent blot post. BTW: Love the name of your blog!

    • Suzita,

      {{Golf applause}} Love your intention and how your considering many aspects to the benefit of work, compensation and learning in a way that serves self and others. Your kids have great parents :).

  27. Great post. I have one daughter who is 11 and we have been giving her an allowance, not tied to chores, since she was about 6. We also use and Excel spreadsheet to track how much she has and how much she has spent with a balance. I have noticed though that in the last couple of years she has really started thinking about purchases made with her money. For example, she goes to camp every Summer for 4 weeks and is required to have a $100 account at the camp store. The first year she only spent $50 of it and I wanted to reward her for not spending all the money just because she had it — so I added the leftover $50 to her allowance balance. She chose to use this and her saved allowance to buy herself a Nintendo DS — and I KNOW she’s looked after this much better knowing that she paid for it! We also add any money she receives for Christmas and Birthdays so she doesn’t feel that she needs to spend it right away. She recently bought a Flip video with birthday money from October — she kept looking at them in the store, but it took a long time for her to decide that’s what she really wanted.
    I also like your idea of being really clear about what the allowances pays for and what you as parents pay for. We may need to be clearer on that. We pay for her ballet classes and ballet equipment including toe shoes which are pricey. When she recently left her water bottle not closed properly in her dance bag and ruined the toe shoes I asked her to pay for half the cost of replacing them since this was an extra expense that could have been avoided. She didn’t protest!

    • Beth, you sound a lot like us and our children. You comment about camp money is similar to how we handled our kids’ banks at camp (what was remaining they were allowed to keep). It’s amazing how they stewarded their funds with that in mind.

      And I’m so proud of how you handled the water bottle spill; it’s not always easy to require your children to suffer the consequences of their actions, but it will always teach them. Her response is telling of learning those lessons :).

  28. Interesting post! I’ve found that with our four kids, the lesson is best tailored to the kids. Some things have worked with some while others learned best with different methods. Different things worked at different maturity levels too. Glad it’s going well for you all.

    I do have a couple of questions. You write that in your opinion, allowances end when kids find outside employment. Is there a limit on this? For instance, if kids babysit off and on, does this count? What about summer jobs? Do they lose it for the summer and then get it back like unemployment? Any thoughts about working teens saying it’s unfair? I can see my kids arguing that it’s like getting penalized for getting a job (especially if it’s a low paying job), kind of like the minimum wage workers who complain about those on welfare. LOL My kids are very good at coming up with questions like this so I just thought I’d ask your take on it. :)

    • Alicia,

      GREAT QUESTIONS! Forgive me for taking so long to share my thoughts. Here’s how we handled it:

      When my daughter was babysitting, because it was sporadic, we continued to offer her an allowance; BUT when she got a “real” job with a paycheck, we cut it then. There were no complaints because she was making MUCH more than any ol’ allowance we were willing to pony up.

      My kids know the “it’s unfair” argument doesn’t work for us, because from their earliest ages we’d agree, Life ISN’T fair :). And we’re very reasonable/flexible about all of this. If their job went away, we would begin it again. We take what’s going on externally into consideration with this.

      Does that help?? :)

  29. I have been teaching my kids about money since they were old enough not to eat it. They have banks for different purposes. One bank is their savings bank, which about 75 % of their money goes in. Any money from holidays or birthdays go in their bank, and then when we have a decent amount of coins, we bring it to the bank for their savings accounts . They usually get gift cards they can spend, which is enough to make them happy. They are only 7 and 5, so we don’t have set allowances. Any money they find, they can put that in their spending bank. If they do earn money for something they save most of it, and spend some of it. Really depends on how much it is, but we always save at least 50% of any money (except found coins that goes in their spending bank). They know Mommy shops on a budget and only buys sale items, and uses coupons, so they will request something, but always ask if it is on sale. If it isn’t they are always fine with the alternative brand yogurt, cookie, pretzel, etc.

    I feel my kids have a good foundation started. Just recently the 7 year old wanted a DS, I said I will give you money for your birthday towards it, but you need to save up for it, with your other birthday money and gift cards. He said if he saved up enough, he would also buy one for his brother. Well, he requested gift cards from friends and family, and managed to buy himself 2 games, and a XL DS, and a ds lite for his brother and another game. Was one of those amazingly proud Mommy moments!

  30. avatar
    Jessica in Sacramento, CA says:

    Let me just start by saying that my son is only 7, so not a teen or tween yet. At about 6 yrs old, we had a chore chart and we had allowance. And we had a couple of jars labeled – spend and save. He was more excited by the chore chart than the allowance, and always chose to stick his money in the save jar. Eventually, I dropped the whole thing because I figured out that he doesnt care about money yet. But he does still request that I bring back his chore chart. Weird kid.

    I’m thinking, well how do i make him responsible with his money? I’ve finally decided very recently to let him keep his naivety with money. I’m hoping to teach him instead, how to make the best use out of what he has, get things for free (can you say Freecycle?), and bartering. Money isn’t the only way to get things, and i dont want him consumed with consumerism.

    • Good for helping him maintain focus and being creative in how he can get things. And it sounds like you’re doing a good job of “listening,” realizing for now what best makes him tick. I will note this, though, my kids have not been consumed with consumerism as you word it…so that’s not necessarily a byproduct of providing money management instruction.

  31. Thanks for the article and insight into your “experiment.” The collaboration among teens is especially neat.

  32. Had great time reading this post. Growing up, I did not had the opportunity to handle my own finances. Not one of us in the family did because our parents would give us money on a daily basis. We asked what we needed and sometimes they’d be the ones to buy stuffs for us. I started handling money and deciding how to spend them when I started working. At first, it was really hard considering that there were times when I could not stop myself from buying stuffs. Good thing that I soon learned to manage.

    Right now, we are teaching our nephews to handle allowances because we want then to learn it early.

    • Sandra,

      GOOD for you! I can’t imagine having to learn self control after a childhood of no restraint! Sounds like you avoided becoming spoiled, especially since you’re now helping to teach your nephew.

  33. Terrific article on the importance of instilling the values of money on children. Thank you for the generosity of giving. This will expand in our household as well!

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