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Last week, I shared some tips for setting up an allowance system. After reading this, Thad (from
Thadthoughts.com) asked a very thoughtful question in our comments section.
What do you do when your teenager actually begins to earn some money through babysitting or other jobs?
Thad raised a great point. There are many articles and books written on
the pros and cons of giving an allowance to your child. Heck, I have written about it several times
myself! One often overlooked aspect is determining when to stop giving the allowance. It is important have a clear exit strategy so
that everyone (parent and child) is on the same page.
Determining when to stop an allowance depends on the overall purpose of
the allowance.
- If the purpose of the allowance is to teach budgeting for some of their basic needs, then the allowance should continue for a longer period of time. Some parents give their teen a bigger allowance but put the teen in charge of buying their own clothes, school supplies, gifts, haircuts, etc. This concept is described wonderfully in the No Cash Allowance by Lynne Finch. She refers to this type of allowance as a Spending plan and gives practical tips for using this method with kids and teens of all ages.
Ultimately, the decision to end an allowance is different for each family. However, if you have a clear purpose for the allowance initially, it will help you determine the appropriate time to bring it to a conclusion.
Do you give your child an allowance? When did you decide to end it? Please share your thoughts.
Thanks for the mention Pam! It is a current (not contentious) issue in our house. But the consistency just isn't there yet, so continuing it is important for now. I am grateful for a couple of things already, namely that my teen is looking to find a job at a young age (no sense of entitlement that Dad will be the ATM), and that people have actually asked for her. With teen unemployment, having a job is super important.
ReplyDeleteGive yourself a pat on the back for raising a teen with no sense of entitlement. Sounds like you have a fabulous daughter.
DeleteIt is definitely becoming more difficult for many teens to find jobs. I have been talking with my two teens about their thoughts for the summer. They need to get started early.
I ended my child's allowance when he turned 16 and was able to get a job. My feeling is that beyond that point the allowance becomes an enabler to avoid joining the adult workforce. This probably has something to do with the fact that I started working at 16 myself, but I see no reason to give money to someone who is capable of earning it on their own.
ReplyDeleteI definitely see your point. My allowance ended when I was about 16 also; however, my parents did send me spending money occasionally in college.
DeleteI am struggling with this issue with my teens at the moment. I want their focus to be on school but I also want them to be financially responsible. It can be a tough balancing act. Our oldest has spent time volunteering and getting some experience in possible future careers. Her focus on school work has definitely been worth it. She was recently named Salutatorian which has earned her a really great scholarship to public universities in GA.
Ahhh..if only there were a parenting handbook with all the right answers for all the different situations!
I like the idea of continuing the allowance through high school, whether or not your teen is earning money, and increasing it with the understanding that the teen will use it to begin buying their own necessaries (clothes, food and etc) so that they understand how much things cost and learn to make good buying decisions.
ReplyDeleteWhy punish your teen for getting a job by taking away their allowance?
Practicing budgeting while they are at home gives them a very strong financial foundation for their adult life.
DeleteI believe that the ecomomics of a family also plays a factor in this discussion of whether or not an allowance is given and if so, how long.
ReplyDeleteI was one of six children with a father working 2 jobs and a wonderful stay at home mother, who did an insanely awesome job at instilling wonderful values. And two of those values were "work ethic and the value of money".
With no extras, we all started working in high school, (they put us through 12 year of private school),to help with the incidental things we needed and any special school events. Our grades did not suffer for working. We all went on to college and received some academic scholarships to support us.
Sure, my Dad would give us a "little change" when we were small if we did some special task outside of our normally assigned chores, (yes, an organized Mom with a weekly assigned list of duties that was shared between the 3 boys and 3 girls;another lesson that boys could do housework not just the girls).
I am not sure if my parents had more money if they would have given us an allowance. But, the parents I who truly "got the worth and importance of money" would have been judicious and wise in explaining its purpose as well as being discriminating in handing it out to us. There would surely have been a specific task or something earned in order to receive it.
If parents can help their children during their years in college with "spending money" that could be the ideal time. But to me, small children, already get food, clothes and shelter and they really do not need an allowance.
However, when parents want to start teaching their children about money, they can do that by showing them the reality of what things cost and how mom and dad are doing it... best lesson possible.
Special monies for special tasks or exceptional work in school or a kind deed could be an occasion to give a child alittle money gift to treat themselves to something. Otherwise, not sure that receiving an allowance should be ongoing expectation on the part of children.
Why not enjoy a few outings with the kids, specifically their birthdays, and if it is financially possible giving them a small gift of money at that time, "earmarked" especially for them, that would be fine.
Hope these ideas help...
Deciding to give an allowance or not is a decision that each individual family must make. I have chatted with many families over the past few years and have seen fairly equal numbers that give an allowance vs. those who do not. What seems to make the difference in the success of teaching the children money management is the interaction of the parents and kids. Families that talk about money, needs vs wants, smart spending habits, etc. are most successful in teaching responsible money management skills. Letting children practice managing their own money, whether it comes from allowance, jobs or occasional special treats, allows them to make mistakes (and successes!) while the consequences are minor.
DeleteI absolutely agree that the economics of the family needs to be taken into account. Parents should not feel like they have to give an allowance just because the neighbor's kids get $10 a week.
Thanks for sharing your story and thoughts. It sounds like your family was marvelous!
It sounds like a good plan, but you'd probably want to structure it like the EITC... don't take the allowance away dollar for dollar. If you're giving $40 and they make $20? You don't want to take away $40... maybe take away $10. That way they have $50 total and they will try to earn more... instead of worrying about losing access to allowance, heh.
ReplyDeleteThink that would work? I'm just thinking it through in my head and I don't have any practice yet!
That's a great idea! I could see that keeping up with it could be challenging. Maybe you could shift the allowance to percentage based, such as giving an extra 20% of what they make. So, if they earned $40 in one month, you would add an additional $8 as allowance.
DeleteYou have given me something new to ponder... :)
Teens, in our society, have what might seem to be the perfect relationship with money–plenty of money to spend with few recurring debts or financial responsibilities. As a group, teens are big spenders, expected to spend almost $209 billion in 2011. Yet it is only a short journey from a teen’s world to that of an adult who is legally responsible for his spending.
ReplyDeleteSurveys show that most of a teen’s money is spent on entertainment (movies, music, games), clothing and snack food. We also know that teens, in general, are not spending money on housing, groceries, insurance, or loans. This creates a huge disconnect that guarantees a rough landing for many young adults when the real bills start piling up.
I agree with Pam in encouraging parents to have a clear purpose for an allowance. We did not allow our teens to work, but rather negotiated spending plans as explained in my book. (Thanks for mentioning it, Pam!) Our purpose was to introduce our kids to the reality of having to pay their own expenses and manage money for fun. The sizable amount of money we provided to them to manage was money we would have spent on them anyway; we were simply transferring control and decision-making to them.
Parents can help their teens transition to the adult world of money by creating a semi-independent stage where teens assume increasing responsibility for more of their own day-to-day expenses, such as school, transportation, communication (cell phones, mobile devices), and education. Whether the money is through allowances, work or a combination of both, by requiring teens to pay "expenses" they will be better prepared to manage money responsibly as an adult.
Great point about the disconnect between what teens are typically paying for and what they will be expected to pay for in adulthood. Teens definitely need to practice more budgeting and responsibility with their money.
DeleteThanks for weighing in on our discussion.
The blog poses a great question and so many outstanding answers have been shared.
ReplyDeleteMy 16 year old has a weekend job for which he gets paid minimum wage. We've taught him to divide this up into savings, charitable giving, investment, and spending money. By the time this is done, the spending money doesn't amount to much. We give him an allowance to supplement the basics as long as he is responsible.
What complicates matters in our household is the exorbitant amount of gift money he gets from his grandparents that pads his bank account. To keep him a bit more on his toes both financially and while driving, we've asked him to pay his portion of the car insurance. He's also bought Apple stock which as of late has peaked his interest in investing!
In the end, you are right that each family is different. As long as I see fiscal responsibility I'm okay indulging him with an allowance. for now....
My parents love to slip a little extra money to my kids too. I think it gives them as much pleasure to give it than it does to my kids to receive it.
DeleteOur teens have to pay for their own cell phones and optional, big school trips. It definitely makes them more accountable and helps them to prioritize their "needs."
My 15 year old has become interested in the stock market and has been playing a virtual game with his friends. Last time I checked he was up $2000.
I used to give my daughter an allowance until she stopped cleaning up after herself. I'm sure she'll get back into the swing of things eventually. I stopped getting an allowance when I moved out.
ReplyDeleteI haven't tried that yet but based upon the condition of my kids' rooms at the moment, it might be worth trying! :)
DeleteGreat article. I never really thought about when you should stop giving the child money. I am glad mine are only a few years old so I have many years before that happens. Great post and good idea that never really gets talked about Thad!
ReplyDeleteI just love the toddler age! Enjoy it now...they grow up so quickly!
DeleteI give money to my daughters with one condition -- they have to be accountable for every penny. And, they have to justify each penny they spend. it's a great way to teach kids how to be responsible with the money. I also given them incentive like I match every penny when they save money instead of spending. It's fun way to teach value of money.
ReplyDeleteTeaching them to be accountable for their money is fabulous! It is so easy, even for adults, to lose track of a dollar here and a dollar there. I am a firm believer in the theory that if you know exactly what you have, you will make more thoughtful decisions with it. There are some great systems to help kids and teens keep track of their money. I am a bit partial to www.moneytrail.net --- crazy, huh? Frank and I built the MoneyTrail system to teach our kids how to keep track of their cash, IOUs, allowances and gift cards. It's a free website. I would love for you to check it out and share your thoughts.
DeleteIn my house my kids understand that as soon as they reach 16 and are legally able to get a job their allowance will be cut, basically forcing them to get a job.
ReplyDeleteUntil that time though I think it's nice to help out your children with a bit of spending money, after all you would hate for them to miss out on parts of their childhood for the sake of £10 (or $10) a week!
- Mary
Thanks for joining the conversation, Mary. Just curious...what kind of jobs did your teens get? Do they work during the school year? Did you see that they were more careful with their money when they started earning it for themselves?
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