How Having an Allowance as a Kid Governed the Way I Save Money as an Adult

by Liz Niemer

My parents started giving me an allowance to teach me a lesson. They wanted me to be responsible with money; they wanted me to understand that money has value, and that having money means spending it wisely. As a seven-year-old, I was not particularly interested in their reasoning, but I do remember the breakdown of that first allowance deal: I would get as many dollars per week as my age; 10 percent would go to charity, and 15 percent would go to savings. This left me with $5.25 a week in spending money.
My allowance was never tied to chores — I was supposed to do those out of familial duty without any extrinsic reward. At the time, I remember being miffed that I wouldn’t get anything extra for doing my share of household work, but I was also pretty pleased by the idea that if I didn’t do my chores, I would still get my whole allowance.

Five dollars and twenty-five cents a week adds up pretty quickly when you have absolutely no expenses. It’s not like I went anywhere by myself as a seven-year-old, and my parents certainly didn’t stop providing for my basic needs. When my parents realized that I had over $100 after five months of this, they came up with some new rules. If I wanted school lunch, I would have to pay for it myself. This had been a point of contention since I was critical of the lunches my mom made me and desperately wanted to sit with the cool kids who bought their lunch.

I’d also always been picky about clothes (there was a period in my toddler years when I only wore purple) so my mom said that if I wanted to buy any clothes at full price, I would have to buy them myself. If it was on sale, she would pay half.

This arrangement continued until I was 8 or 9, I forget which. I do remember that I hoarded outrageous amounts of cash. Every so often my mom and I would go to the credit union, and I would gleefully look at the deposit slip that the teller handed back to me, excited at the growth in my account. I’ve always been a saver — I would stash away my Halloween candy until Easter, taunting my brother after he burned through his before Thanksgiving.

I think my parents got tired of giving me all this money and watching me not spend it; how was I going to learn my lesson about thriftiness if I always had a stash of cash in the bank? They changed the deal: I would now get as many dollars a week as the grade I was in, but I wouldn’t be responsible for buying my own school lunch. The clothing deal changed too — my mom would now pay the full amount if I found something on sale, but I would still have to pony up if I wanted something full price.

The cut from $9 per week to $3 per week didn’t affect me as much as I thought it would. I still didn’t have many expenses, so between my allowance, birthday, and Christmas, my bases were pretty much covered. If I wanted something reasonable (mostly books), I could ask and pretty much expect to get it. By the time I started going to the movies and the mall on my own, my allowance had adjusted to fit. I’d get pretty much all of my clothes on sale, so I never really paid for clothes.

I think my parents wanted me to experience the necessity of making a budget and sticking to it, and maybe even find out what it means not have enough money to cover the things I wanted, but that never really happened. Either I had enough money saved up, or it was something “useful” or “educational” that I could talk my parents into getting for me. Once my allowance was supplemented by an after-school job, I had more than enough to cover my spending habits.

In high school, my parents got me a “student check card” to teach me about plastic money, and also switched the schedule to once a month instead of once a week (though the total amount structure remained the same.) It was essentially a debit card tied to one of their accounts — they could go online and check the balance, but so could I. The ingrained lesson was: “Plastic money is real money. Credit cards are scary, and debt will cripple you for life.”

Not all my parents’ lessons about money came from the money they gave me. My mom would make me calculate which brand was the cheapest at the grocery store, before they conveniently labeled things by “price per ounce.” My dad loves to tell me about the first car he and my mom bought with a loan from the dealership, the lesson they learned, and the second car they bought with no loan at all — just cash up front. (When I was younger I thought that my dad had actually gone to the car dealership with briefcases full of cash.)

My parents could afford to pay for my college education up front as well, and my dad made sure I knew that was because they started preparing for it from the moment I was born. They’ve always stressed that the way to have nice things when it matters is to save whenever you can on the things that don’t. Trips to Europe can be financed by constantly scouring Kayak for a good deal and always buying cereal in a bag.

Even though my younger brother grew up in the same house I did and got the same allowance deal (money relating to grade though, and not to age), he’s definitely more of a spender than I am. He’s generally more impulsive — when I go home for the holidays, I have to remember that there is no more concept of “saving the last slice of pie for later.” You snooze, you lose.

I remember going to Target with my brother and watching him calculate how many new Lego sets he could buy with his allowance. It took me half a year to spend my Christmas money; his would be gone by the end of January. Part of my brother’s inclination to spend more money might simply be because he has more of a social life than I ever did. Combine that with the fact that in my hometown, guys might be expected to treat on dates (girls certainly never had that obligation) and it’s easy to see where his money goes.

During college breaks I would always be amazed that my brother would ask my dad for an extra $20 to go to the movies — shouldn’t his allowance have covered that? To counteract this a little, my parents also started offering “extra” chores that my brother could do to earn some cash, like mowing the lawn. When I asked why I never had that opportunity, my parents’ response was, “Well, you never asked.” I talked to my brother, and the rules about his allowance have relaxed quite a bit. He’s teaching swim lessons and still gets money from my parents, but not on a scheduled basis. He also seemed determined to gain as much financial independence as possible, and I think he’ll have things figured out by the time he goes to college next fall.

Some of the lessons my parents taught me have definitely stayed with me. In general I’m still pretty thrifty; I always shop around online and see where I can get the best deal before I commit to a big purchase, and in general I think it’s pretty absurd to pay full price for most “re-usable” things — clothes, bike gear, etc. When I do buy things, half the time I talk myself out of the purchase, since it’s probably not something I need. I’m trying to sell my boyfriend on the idea of shopping at Aldi, even though there’s a Whole Foods right across the street from my office. I’m still terrified of debt — I’m maniacal about paying off my credit card at the end of every month, and if I ever buy a car, I’ll probably save up and pay for it in cash if I can. The “intrinsic-not-extrinsic” motivation for chores may have had an impact — now that I’m living on my own, I’m more inclined to do the dishes before I go to bed instead of letting them pile up, and I do see the value of cleanliness in general.

With my recently acquired full-time job, I’m going to start putting 15 percent each month into an IRA. I do need to get more consistent about giving to charity; previously it was always around the holidays if I had anything extra left over. The message of financial independence has also imprinted itself on my brain; I terrified myself with nightmares of failure to get a job after graduation. I still enjoy having a nice cushion of “on-hand” savings that I can use if necessary, and I definitely worry if it drops below a certain amount (about $3,000). I have yet to see if “lifestyle creep” will set in now that I have a full-time job, but I’m hopeful my parents’ lessons will stick.

Liz Niemer lives in Minneapolis, Minn.

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