Q: I need some guidance on allowance. My 9-year-old has always been Mr. Money. He loves it and will do anything to get it—and then spends it at the first opportunity. Granted, he is very generous and frequently uses it to buy things for other people, and we always encourage giving to church and charity and savings. While we don’t connect chores to allowance, we sometimes let him earn extra money by doing special jobs. However, what usually happens is as soon as he blows his money, he immediately wants to start doing jobs to earn more.
I doubt this cycle of spend-earn-repeat is teaching him good money management. If I let him do more jobs, then he doesn’t see the need to restrain himself from a spending spree because he thinks he can just go home and earn more. We need to set some boundaries here, but I need help!
A: Guiding kids to a life of good money management is usually a top concern among parents. Kudos to you for not connecting chores to allowance, which is a mistake many parents make. Chores are done because children are part of the family, and shouldn’t be rewarded with money.
However, you’re also right in that he needs to develop some good money management foundations. That foundation should be one that emphasizes living within his means, which translates into your not advancing funds to him for any reason. As I tell my children, I am not an ATM or credit card—allowance is paid each Saturday and not before. Overall, showing him how you and your spouse live within your means is the number one way that he’ll learn that concept.
Also watch how you talk about money. Don’t use words like, “We can’t afford that” when not wanting to spend your money on an item or event. Instead, say, “We are not choosing to spend our money that way.” That makes it more about choice instead of how much money you have. We also talk about budgets with our kids. For instance, when shoe shopping recently, I pointed out the high end price I was willing to pay and then let the children look for themselves within that range.
You can help your son manage his money better by setting up three jars labeled Spend, Save and Give. He should divide his allowance each week into those three jars. The only stipulation I would make is that the amount must be larger than a nickel (no single pennies!). The Save and Give jars cannot be emptied to buy things for himself. You can let him decide where to donate the Give amount when it reaches $1 unless you wish him to give that every week in the church offering or something similar. For the Save, it’s merely like a visible bank for him to watch money accumulate.
Allow him to spend the rest as he sees fit. Yes, this means he will likely blow through his money quickly, but that’s okay. It is his money, and you can suggest but I wouldn’t stop him (other than saying you’re not making a special trip to the store for him).
I would also stop the special jobs for payment because he’s using those as his personal ATM—and a sort of cushion against totally being broke. Just say that you’ve decided to eliminate that option.
Finally, don’t forget to talk about money with him on a regular basis. For example, take him grocery shopping with him and talk about how to pick the best produce and figure out what you’ll pay for it. Let him add up coupons to see how much you’ll save. Discuss why buying the store brand can help save more money over a name brand—and taste just as good most of the time. Interacting with the real world about money and what things cost is one of the best lessons we can give our children.