The New Dirty Word on the Playground
Contributed by Michael Weiss
I recently planned to ask some kids and parents a few innocent questions about their spending habits, on behalf of website Kidworth.com. But within one sentence, I dropped a word so foul on these people that I thought I was going to get stabbed with my own pen and kicked off the playground. What’s the new dirty word in grade school? ALLOWANCE. That’s right, the A-bomb. A family tradition as old as making your bed. To my surprise, it seemed like nobody had one anymore…
Kids just looked flustered and angry when I brought it up. Parents crossed their arms and shook their heads. One dad heard me drop an A-bomb on his daughter and slid in between us, glaring down through his shades. “Did you just tell my daughter I should be giving her an allowance?” (I wound up having a terrific conversation with this guy….).
The One and Only
The truth is, I didn’t come with a moral stance on whether parents should give their kids an allowance or not. I was just trying to find out how different families managed their money. But I never got that far, because that day I only found ONE kid who actually got an allowance. Many parents felt like an allowance would become a power struggle with their kids who would want to blow it on junk. One mom said her kids don’t need allowance, she buys them everything and that way she can control what they get…
So I went home and did some research. Should kids have an allowance? And if so, what are some ways for parents to effectively manage this apparently scandalous ritual?
I found that most financial and parenting experts agree, an allowance is a healthy way to give your children financial skills that they can carry on through their adult lives. It’s only a dirty word if you make it one!
Allowance Tips for Parents
- Don’t tie an allowance to doing ‘citizen of the house’ chores. This was the biggest fear I found when speaking to parents and it turns out it’s well founded. Tying money to chores instantly turns it into a power struggle–something parents have enough of already. An allowance should be an independent stream of income, used as its own learning experience, not a facilitator for others.
- Start at the right age, with the right amount of money. Most experts suggest $1 for every year of a child’s age. 5-6 year olds can start to grasp the concept of saving and spending money. 7-12 years are really in the sweet spot for starting healthy financial habits. They want to buy things and are good at math.
- Have some short term goals–toys, candy, games, etc. But suggest some long term spending goals that you know will come up– electronic gear, a bike, expensive clothing.
- Use it as a real teaching opportunity. Let your child pick a charity and donate to it every few months. Start a college or private school savings account that they can contribute to. Even if it’s only a small portion of the real money you’ll need, let them feel what it’s like to save for these important life goals. Money guru Warren Buffett says he bought his first stock at age 11, so you can never think too big.
- Develop a system and stick with it. Some people use a three jar method for saving, spending and donations. Others have bank accounts. We set up our goal center at Kidworth.com as a tool to help families manage their financial habits online.
The most important thing to do is be active about your children and their money. When approached correctly, “allowance” doesn’t have to be a dirty word – it can be a positive partnership between parents and their kids that will last a lifetime!
Michael Weiss is a contributor to Kidworth.com, a site devoted to helping parents help their kids to set financial goals and learn about money – how Fab & Fru is that?!| Print