Allowances for Kids – Examples of Effective Use
by Michael Harvan
The main purpose for giving allowances is to teach children how to manage money wisely. In the learning process, children will develop the ability not only to make good financial decisions, but also to delay gratification, to save for what they want.
Let’s look at some examples. Take Jimmy, for instance. Jimmy is five years old, not too young to begin to understand the use of money. Jimmy isn’t mature enough to make major purchases, such as clothing or personal hygiene articles. However, he is old enough to ask for money to put into the coin-operated gumball machines at the exit of the local Walmart. He also knows how to make it unpleasant for us as we walk down the toy aisle in that same store, whining all the way about what he wants us to buy for him. No need to beg and whine, though, if he has his own money.
If we give Jimmy an allowance of $2.50 a week, we could teach him that 10% goes to the church, which leaves him $2.25 to spend when he goes to Walmart. He can spend his $2.25 on something in the toy aisle, save it until he has enough money to buy something he wants for $4.00, spend some of it on the gumball machine, or take it home and not spend any of it. No need for whining, since he has money to spend.
Many lessons can be learned in the process. If he buys a cheap toy and it breaks while he’s in the car on the way home, he may learn the lesson, with some interpretation (not lecture) on your part, that quality is often related to cost. If he spends most of his $2.25, he might not be able to buy something else he wanted that costs $4.00 until he saves up enough money. He will now have to wait until he accumulates enough money from two week’s allowances.
Here’s an example with twelve-year-old Mary. If Mary has been getting allowances from the age of five, has been getting larger and larger allowances and has been expected to assume more responsibility for purchasing what she needs, she is already pretty financially savvy. At this point you may be giving Mary substantial allowances. If she would need an annual wardrobe that included two pairs of jeans, two pairs of shoes, seven changes of underwear, seven pairs of socks, seven tops, two dresses, one jacket, etc. An allowance just for clothing could run into $30 to $40 per month. You could also include money for personal hygiene needs, another $5 per month; money for entertainment could add another $15 per month; school lunches could add another $30. Mary could be receiving a sizable amount of allowance money; in this case, up to $90 per month, depending on what she was expected to be responsible.
Do you give her that much money to manage? What if she just blows it? What if she spends $45 on CDs every other month and doesn’t have enough money to buy the pair of jeans she wants? That’s the teaching part. You, as parents, don’t have to do anything but say, “Sorry, honey. We gave you enough money to buy the clothes you need. Guess you’ll have to do without until you save up enough money for that pair of jeans you want.” Consequences of our children’s actions, when they do it to themselves, teach oh so much better than parental lectures.
Using allowances for teaching responsibility works best when started early, but nothing says, since parents are in charge, that we cannot announce “We are going to start something new” with our preteens. When they fail at this age, the landing is just a little bit harder, but the lessons learned are the same and perhaps learned more rapidly than by younger children.
© Michael Harvan, Aug. 7, 2009
Michael Harvan, PhD
Practicing psychology for 34 years, being married, and having children and grandchildren have all taught me a lot about life. With a wealth of life experiences, I believe that I can offer ideas to help others live life more fully, more enjoyably, and with greater satisfaction. Come and take a look at my blog. Feel free to browse and contact me with any topics that you might want me to address. I look forward to hearing from you.
Written by Michael Harvan, PhD. Practicing psychology for 34 years, being married, and having children and grandchildren have all taught me a lot about life. With a wealth of life experiences, I believe that I can offer ideas to help others live life more fully, more enjoyably, and with greater satisfaction.
Reprinted with permission.
