We are raising our children in a time when over one billion advertising dollars are spent per year targeting the adolescent consumer (Escape). How do we help teens understand the responsible use and value of money when they are surrounded by so many messages about “having it all”?
One mother expressed it this way: “Giving our children ‘everything’ might more accurately mean giving them a clear understanding of the world in which they live. It might mean arming them with the skill to make conscious purchases and the ability to determine the difference between wants and needs. By doing this, we give them something of security in an insecure world” (Swenson).
Giving teens an allowance is an effective way to teach them about using money wisely.
Let Children Make Mistakes
Allowing children to make choices with their money—including poor choices—gives them the opportunity to learn realities concerning the use of money. Giving teens an allowance provides excellent opportunities for teaching: The choices are real, and the consequences emerge naturally from their decisions.
Parenting experts suggest we never insist that children save money from their allowance. It is good for them to learn the benefits of saving, but forced savings plans don't allow them to make that decision on their own. In fact, to help them learn life lessons we're encouraged to “allow children to spend, save, give, or waste the money any way they see fit” (253).
In fact, psychologists Cline and Fay remind us, “It is much better for a twelve-year-old to go bankrupt than it is for a twenty-seven-year-old whose first baby is on the way” (252)
Keep Allowance Separate from Chores.
Many parenting experts agree that “children do not earn their allowances” (Cline & Fay 252). This means that chores are simply an expectation for those living in your home, and the allowance is separate from work or behavior.
Chores beyond the usual expectation can be paid for. (Having a child who's saving for something is a boon to a weary parent—especially where housekeeping or yard work is concerned.)
Be Consistent and Reasonable
Allowances should be given at a consistent time each week, and policies and expectations should be consistent. Cline and Fay say, “when it's gone, it's gone” ; there shouldn't be advances on future allowance.
Cline and Fay also suggest, “A teen's allowance should be enough to cover most regular activities, but not much more than that” (253).
Parents should provide for weekly activities, as well as expenses such as birthday presents for relatives and friends, field trips, and similar needs. The rest is up to the child.
“If you need to, make a list of what you as the parent will cover when needed (school clothes, a place to live, meals, etc.) and the rest (concert tickets; that new jacket that is so cool; the latest, smallest, handheld portable music player; the latest, greatest video game,etc.) is [the teen's] responsibility to cover out of their allowance or the money they earn on their own” (Cline & Fay 253).
Now that credit and debit cards are so common, there are times when we don't have cash available. One mom figured out that withdrawing all of the allowance money at the beginning of each month and placing it in ready-to-distribute envelopes made it easier for her to be consistent in paying allowance at the chosen times.
Scheduling allowance day on your calendar can eliminate mix-ups: Didn't I already pay you? The consistency also lets children plan their finances (or at least believe you when you say that payday remains the same, even when they're bankrupt).
You should step in if your child is buying things that are illegal and/or harmful to her.
Do you ever begrudge the money you're doling out for allowance? Do you have trouble watching your child squander his allowance again and again? Here's a tip: Every time you want to roll your eyes, instead say a little thank you that your boss doesn't follow you home and sigh over what you're doing with what she pays you. Your teen is learning about money—even if it's what not to do.
Are you and your children getting tired of the same lecture—based on your personal experience? Enlist some experts; many strong and authoritative books on finances are available. After picking a favorite, you could use several family nights to teach your children what you've learned. New and interesting ways to look at money can be found in books such as Your Money or Your Life, by Joe Dominguez and Vicki Robin, and The Millionaire Next Door, by Thomas Stanley. These have been around a while and should be available at your library.
You may have to refigure the pay scale should the need arise. If Dad takes a pay cut, the family takes a pay cut. One mom cautions about allowance that we should not ”indulge them by giving them more than [we are] capable of giving“ (Swenson). Don't worry about keeping up with the Joneses; one of the most important lessons we can teach our children is to live strictly within our means regardless of the neighborhood or the peer group.
How to deal with money is an overwhelming topic. We're supposed to let our children learn through experience, yet we can save them some time. Family Home Evening might be your best opportunity to teach your children: lay out your family budget, talk about interest and investing or whatever it is you want to teach them. Allowing children to teach the lesson can be a good way to help them internalize a financial principle.
Teaching our children how to master their spending and understand the importance of living strictly within their means is a lesson of love. One mother wrote, “Showing the most love has nothing to do with the glamour of excess consumerism” (Swenson).
Letting children have an allowance that they use in any way they see fit (yes, even on that expensive pair of shoes that looks just like the cheaper pair) is a personal, real-world way to help them learn about money.
Cline, Foster, and Jim Fay. Parenting Teens with Love and Logic. USA: Pinion Press, 2006.
Escape from Affluenza. Produced by Vivia Boe and John de Graaf. A co-production of KCTS and John de Graaf. KCTS Seattle. 19 Jul. 1998.
Swenson, Mary Ann. “Showing the Most Love: One Mother's Perspective on Financial Planning.” Unpublished article.