I foresee huge fights between my husband and I over allowance. Should we give our children an allowance? I got an allowance, he didn’t. We both think “the way our parents did it” is the right way. We are still several years away from this issue, but I’m already bracing for it. I believe receiving an allowance was the start of my financial education – even though my husband is a huge saver so clearly his father’s approach was not all wrong. What do you think?
Should we give our kids an allowance? How much?
As I kid, when my husband needed something, he asked his Dad for it. His Dad always knew what he was spending money on, but it still seems like a crazy system to me. Instead of letting a child experiment with small amount of money, you manage it for them, preventing failures, but also preventing them from learning from those failures. Me, biased?
When I was little, I got my allowance every Saturday after I cleaned my room, which sometimes got so disgusting my oldest sister would clean it for me. It was that repulsive. But I digress. I immediately walked one block to the corner store and bought candy or beef jerky with my allowance. By the time I walked back to my house, the money and my treat – gone. As I got older, I started to save my allowance so I could buy presents at Christmas and birthday gifts. In high school, my allowance went to movie tickets and my favorite burrito spot (Gordo’s in Berkeley – eat there if you can!)
I’d like to give my children an allowance so they can:
- practice the math skills that using money requires
- experiment with the emotions money can cause
- enjoy the satisfaction of buying something you want
- gain confidence from doing things for themselves
- learn from mistakes, like spending money too quickly
- share their money with others through gifts and donations
But I can easily imagine how giving a child an allowance can go terribly wrong.
Where do kids get money to buy drugs? To buy alcohol? If they don’t have a job, it’s coming from their allowance or they’re stealing it. Many of my friends in high school did not get an allowance – they had to work for spending money. (Which btw, I hope they invested in a Roth IRA as a teenager.) I did receive an allowance, but because my mother limited it to $10 a week as a high school senior, I always had less money than my friends. (At the time, a movie ticket was about $6.50.)
How did you handle allowance with your kids?
Myke’s comment (on Dacia’s post about staying out of debt) that strict allowances are the key to teaching children financial responsibility, got me thinking. Myke wrote:
Let’s go back to the older days when kids had an allowance and learned to use it. Too many parents will buy their child whatever they want when the child wants it. Other than necessities (which differ with the economic situations of the household) there are things that children should be taught that they may have to buy for them selves i.e. a specific toy when it’s not their birthday or a holiday. Many of these item that the parents buy will be used once or twice and then ignored.
Children need to learn how to save their money for what they want. This which will make them think twice about the purchase, and by the time they have the money saved, they may not want to spend it anymore on that item at all. It will teach them decision making, financial responsibility and patience.
So is Myke right? Is allowance the key to teaching financial savvy?Or are parents who say “yes” to their children the problem?
If parents overspend, upgrading their cell phone at every opportunity, taking lavish vacations, buying clothes every season, will their children become over spenders, too? Are lax parental standards – buying them whatever they want, when they want it – to blame for so much of our personal credit card debt?
I’d be fascinated to know if credit card debt is more prevalent among adults whose parents also have credit card debt. As if it’s a lifestyle that gets passed on, similar to how children are more likely to be obese if their parents are.
I’m curious how you handled allowance with your kids. Did you change anything compared to how your parents handled allowance with you?