Allowances: how much, how often, what for?

There is nothing I like better than a peek inside the inner workings of another family. And so today, I bring you some of our philosophies on allowances. I hope you will share your thoughts too. Grab my ideas that you like, put them in your idea bag and when it is time to think allowance, you will be prepared.

Allowance is a tool to teach your kids to handle money. It is not stagnant. As the girls get older our allowance practices have changed. The goal of allowance is to teach kids to be responsible, to be discerning about value, to make a budget, and my favorite, to learn delayed gratification.

I started giving the girls an allowance way too young. I think they were 4 and 6. I was tired of saying no. No, you can't have that plastic glow-in-the dark snake. No, you can't have an edible pinwheel. I started thinking in cliches like, "I'm not made of money you know." So I started wondering about allowance. I wanted to say, "Well you have your own money." When I am unsure about an idea, I do research.

Several sites suggested allowance amounts should equal the age of the child. Such generosity was not in the budget. I settled on giving them half their age. Per week. And then it turned out, I wasn't good at paying them weekly. So I pay them half their age x 4 weeks per month. This means that there are only 48 weeks in our allowance calendar, but they haven't noticed. They think they are special since none of their friends get an allowance!

Five minutes of reading about allowance, convinced me that allowance would just be a privelege of being in our family. I didn't want the girls to decide that they wouldn't do their chores because they didn't need money or to start earning so much babysitting money that they quite their chores. Chores are required.

I also knew I wanted one of those banks, divided into categories. I wanted it to be clear so they could see the money and plastic so they could drop the bank and not have it break (in pre-allowance days they dropped a piggy bank once). The exact percentages (usually 70-15-15) have altered over the years, but a little goes in saving, some in giving, and the rest in spending. I've seen banks with a fourth

In retrospect, I would have started allowances later, after the girls could actually count money well (1st or 2nd grade).  In starting so young, the girls wasted a lot of money on toys and plastic things they never used. Eventually, I started saying, "Sorry, but that isn't worth your money. No." So I still had to say no.

But maybe those early money lessons were good. We talked about the materialism monster and how he makes us think that if we just get the super sonic glowing miniature plastic pet with big eyes we will be happy. And we are, for 2 days or maybe 2 hours. And then we need the underwater swimming doll with special removable tatoos. And because the girls made their own choices and bought the doll bed they never used or the squinkies they lost within a week, they've learned first hand about wasting money.

And the American Girl my daughter bought? She worked hard to save her money, resisting other exciting spending opportunites and she appreciates that doll more than most girls. She marvels at girls who want 3 or four of those dolls, wondering if they know what else $100 would buy.

Currently, we don't regularly offer chores the girls can do for money. They get an allowance and that is sufficient for most things. As they get older that might change, but we like our system for now. Their allowance means I don't pay for school popcorn, school fairs, book fairs, or most hair accessories (when they kept losing them, I quit buying). And while I assist, they pay for part of the gifts they buy each other. On the occasion when the girls want more money, they have to save.

Helpful hints:

• Never let your kids borrow from future allowance. It is a bad habit. 
• Give your kids allowance in bills that allow them to split it into the categories you have chosen.
• When they are young, use banks that allow the kids to see the money inside and that are not easily broken. 
• Sometimes, let them spend their money on whatever they want, even if it is a waste of cash. 
• Talk with them about your budget, your spending philosophies, and your money management. They will soak it up. (Even little things, like if you use a debit card, never put it away in your pocket!) 
• Add to the allowance occasionally. The girls don't get enough allowance to buy school supplies and clothes at the beginning of the year. So I give them a budget. We make a list of the supplies they need, cross off what they have and they can use the rest of the budget to fill in the holes of their wardrobe. This teaches them to budget, to save, to plan, to see what they already have. It's a great addition to our allowance lessons. And without this system, they think they need new markers every year! 

Share your thoughts on allowance and then come back tomorrow and I will share some allowance resources with you: where to find different banks, different books to read, etc.