Now that Anne Weeks’ son Lucas is turning 12, she’s considering giving him a raise in his allowance. “He’s got new things he wants to buy now, and I think he’s ready to handle more financial responsibility.”
As a single parent, Weeks isn’t able to be too generous with allowances, giving Lucas just $3 a week, but she believes it’s helped him learn about managing his money. “I decided to start allowances several years ago when I told my two sons that I couldn’t afford something they wanted, and Lucas said, ‘Just go to the bank machine, Mom.’ I realized then that they had a few things to learn about financial realities!”
Now Lucas has a bank account of his own and saves for things he wants. “Sometimes he even takes me for coffee — his treat,” says Weeks.
Weeks isn’t the average parent, says Scott Wooding, a Calgary child psychologist and author, who wrote I Hate School. “I really find very few kids these days who actually get an allowance. But they should be getting them.” Why? Wooding says allowances are the best way for kids to learn money management through real experiences.
Wooding’s allowance advice
• Don’t tie the allowance to doing household chores. “Parents don’t get paid for cutting the grass and doing the laundry, and kids also have a responsibility to help keep the house up. That’s separate from the allowance, which is really given for the purpose of teaching them to handle money,” Wooding explains.
• Hand over the cash on a weekly basis. “Remember that your kids are just learning to manage money,” says Wooding. “It’s easier if the money comes weekly rather than monthly.”
• Negotiate what the money is expected to cover. If they need to cover some school costs or transportation, make sure the allowance is enough to pay for those things plus some extra they can spend the way they want. You can also have them use their allowance to “top up” your budget. For example, if the Mark’s Work Wearhouse jeans fit your budget, but your teen really wants a more expensive pair, he can pay the difference. You may also want to have your child put a fixed percentage into savings; if so, adjust the amount you give accordingly.
• Talk to your bank about opening a youth bank account. These accounts usually have no fees and put some limits on withdrawals.
• Perhaps the hardest part: Let your teen make his own mistakes. (Of course, you may have restrictions on what can be purchased, such as no violent video games or clothing that doesn’t meet your guidelines.) “This requires tremendous discipline on the part of the parents,” Wooding says. “You need to let him spend the money how he wants, and if he blows it all on junk food the first day he gets his allowance, and then doesn’t have any left when he wants to go to the movies with his friends at the end of the week, don’t give in and hand over more money. This is the lesson you want him to learn — how to look ahead and manage money so he has it when he needs it.”
“I do think Lucas has learned a lot since getting an allowance,” says Weeks. He’s found it frustrating at times because his savings don’t add up as fast as he’d like — but that’s reality. And it’s probably better to learn that lesson when you’re saving for a new iPod than when you’re saving for a down payment on a house.