This is such a touchy subject and carries opinions that cover the spectrum. I know, because I’ve read many of these through the years as we have worked to figure out the best allowance system for our family. I’ve decided that’s what it takes…. doing what best works for your family and being willing to flex when necessary.
So I’m not going to cover all the different options (there are plenty to keep you busy reading for hours), but rather share what we do and how it is working well for us TODAY. (Also, every child is different so you have to tweak things for each one.) Here goes:
We have assigned chores to our daughters, but I have to be honest—they don’t really do them that well or that consistently and never have (yes, some of this falls on me). However, a big lesson I want my girls to learn from receiving an allowance is financial decision-making while they are still home with us when the hard lessons aren’t so catastrophic or life-changing to learn.
Before I go any further let me share that our girls are close to 17 and just turned 13, so we’ve been doing this for a while. Allowances began for our girls at the time when it was best for them to understand what money was and how it should be used. That was Kindergarten for one of them and Pre-K for the other. We have loosely used the $1 per year-in-age approach, so we’re not talking huge amounts of money. Truly, what kid needs a huge amount of money? I think there are SO many lessons that can be learned from not having lots of money in these early years. You rarely meet someone that had tons of money at their disposal growing up that is good with money as an adult. However, there are TONS of people that learned how to make the little they did have go far and are financially savvy adults and financial wizards because of their frugal ways. Could we afford to give them more? Yes, but we choose not to and we think the lessons they are learning are quite awesome.
Please do not think I’m bragging in any of this, but I have been asked to share our approach. I think this is one area where we have excelled in raising our girls. However, they are still under our roof so you never know what decisions they will make in the future.
Before they began getting allowance, we sat them down and shared about the fact that the money we have does not belong to us, it all belongs to the Lord and that the Lord wants us to give 10% back to Him. Therefore, they would need to do that too. We also shared with them that it was important to save 20% (that’s what we do) of their allowance/what they make for their first car. (In other words, it would be going into a savings account that wasn’t going to be touched for a LONG time. We did tell them that for every $1,000 they save in this account we would contribute $100 additional to that account.) Then they could use the remaining 70% for whatever they wanted. Obviously when they were young that was a very small amount of money. I really don’t remember in the early years how they spent or used their money but I remember being in Build-A-Bear, Claire’s and Justice looking at all the junk stuff for hours, so maybe that’s where it went!
For quite a few years now they have known that if they want to buy any souvenirs or keepsakes on vacation that it is up to them to save their money leading up to those trips. We even made a trip to Disney this last fall and every penny of what they purchased was money they had saved from allowances and birthday money from relatives. Do you know how freeing it is to not have your kids asking for money all the time? Mine haven’t asked me in years because they know the answer and it is habit and routine for them now.
So, you may be wondering if our almost 17-year-old had enough saved up from her 20% savings to purchase her first car. The answer is NO! Even very used cars are just so expensive now. However, we wanted to have her pay for some part of that transaction that would show her the purpose of having a savings account; plus, the satisfaction of knowing she paid for a certain part. So, we had her pay the taxes and fees on the vehicle we purchased for her. What do we tell her she is saving for now? She hasn’t asked, but I think she’s learned that money isn’t to be touched for anything close to everyday things.
Along the way we have come up with other things for the girls to pay for and that’s been so great towards not hearing the, “Can I have money?” comments too. One of those is that when we go to sporting events (we LOVE supporting the university football program and the high school football and basketball programs in our town), they just know they need to bring money to cover any snacks or drinks they want. Do I remind them to take money? No, because they have learned that a ballgame can seem kind of long when they haven’t brought any money for snacks and we wouldn’t give them any.
Why Have I Been So Passionate About This for My Girls?
Well, I knew of someone who never had a dollar to manage growing up because his parents thought he would waste it, so the parents did it all. Well, guess what? That adult lives in a trailer in his parents’ backyard and could not be any worse with money and responsibility. So, guess what? He has wasted so much and his parents are still having to do it all. Remember we are trying to create independent and high functioning adults! (Hard to remember sometimes, but so important to keep that knowledge in the back of our brains.)
What does this look like now with our almost senior in high school? When she was in the 9th grade, I took her to the bank where she opened a checking account and we deposited her month of allowance, clothing allowance, entertainment, and gas money. Is this a huge amount of money? NO…in fact we should probably increase it but instead choose to supplement some clothing purchases and fill up her gas tank every once in a while and encourage her to find a job. We deposit this money on the 1st of the month, or as soon as she has shown us her reconciled bank statement. She has become quite good at reconciling her statement…a skill I would venture many adults don’t have! When we had her set up the checking account, we told her that if she ever caused her account to be overdrawn, she would have to go to the bank president personally (we know him) and apologize. I can happily say that as of TODAY that has never happened.
It has been so interesting to see the financial personalities of our girls come out. One of them is a spender and the other one is a big time saver. The only time our saver uses her money is to pay for her dinner with the youth group (she pays one week & we pay the next) and snacks at ballgames. It may be a completely different thing when she gets her own checking account in a year or so and is responsible for paying for more.
So, I urge you to figure out what your end financial goal is for your kids and then figure out what steps you can begin taking to get them there. It’s a constant evaluative journey, that hopefully will have an end date…when they are earning their own way and paying for everything. I know that’s our goal!!