I don’t think I ever quite finished the tale of our money woes. No matter; I’ll get to that later. It ended happily enough and it doesn’t matter to this post except to provide a little background as to why we feel the way we do about kids and allowance. You see, we got into that $30,000+ mess because we’d either learned bad spending habits at our parents’ knees or learned nothing at all. Credit cards? That’s how you make ends meet when the paycheck doesn’t quite make it or how you buy the stuff you want but can’t afford on your modest income. Saving? What money we have barely covers what we need; we’ll use those credit cards in case of a rainy day. Tithing? There’s not enough money as it is; we can’t even think of giving some of it away. We learn what we live and a good many of us have learned these negative lessons all too well. Isn’t it time for a change? The weekly allowance provides us an excellent tool for teaching our own children wise money management skills. With an allowance, no matter how modest, we can teach them how to spend their money, how to save it, and how to give it away. Important lessons, all! But they can’t learn them if they don’t have a small sum to be responsible for.
We begin paying an allowance when a child first starts to understand what money is used for, typically around four years old, though Rosie was only two when she packed up her piggy bank for a shopping trip and six year old Jonathan still hasn’t quite grasped the concept. We also decided right off that the amount should be a multiple of three in order to be easily divided among the three categories we had in mind. We chose three dollars, but three quarters would be just as effective and, of course, you are welcome to give more if your means and desire permit, but a smaller allowance offers more opportunity for teaching other lessons. We also open up a children’s savings account, which makes them feel oh-so-grown-up. A piggy bank would work, though, too.
On Friday mornings, before we head out on our errands, I pay out each child’s allowance. One dollar is immediately set aside for the collection basket at Sunday Mass. Another dollar is set aside for savings until we make our monthly deposits. The remaining dollar can be spent on anything the child wants. Typically, they buy candy at the grocery store, but they also regularly save for things like cowboy boots, books, American Girl dolls, toys, and craft kits. They don’t manage these things strictly off the base allowance, though. They could, but we also have a credit/demerit system in place and they are usually able to earn a little extra each week. Also, when they get older and more helpful, I give them a raise, though the base allowance is not strictly attached to work. We are a family and so all work together to make the home livable, regardless of remuneration, but extra work is rewarded just as skipped or poorly done work is penalized.
A happy effect of giving children responsibility for their own money and purchasing is an end to the “Mommy, I want that!” syndrome. When you hear, “Mommy, I want that!” you can just smile sweetly and say, “That’s nice! You should save your money for that!” If they really want it, they will, forgoing certain other pleasures, like that grocery store candy, in order to meet their goal faster. Self-denial and delayed gratification are both extremely important lessons to learn. This is why it’s also helpful to make sure their allowance isn’t quite big enough to get whatever they want whenever they want it. Having to save up curbs impulse buying, too, giving them at least a week to decide if they really want to spend their limited finances on that particular item.
I’ll write about our credit and demerit system later, as it’s intimately related to our allowance system, but in the meanwhile, I’d be interested in hearing your take on it. How much do you give? How old when you start? Do you pay for chores? Talk to me! (I’m a little lonely.)