How Much Allowance Money Should You Give Your Children?
Ron Lieber has a new piece in Slate today titled You’re Doing Allowance Wrong, which, you know, you probably are, so let’s take a look at what Slate recommends the “right” way of dispensing allowance should be.
1. Give allowance as soon as your children are old enough to ask about money.
That seems reasonable enough. I’m not sure what it means, but you can probably come up with your own definition. Lieber adds:
If not then, do it right after the tooth fairy comes. Kids will find money under the pillow, sense its power, and want more. Rather than have them try to pull out additional teeth, as some do, best to begin allowance that same week.
I sure “sensed the power” of that quarter. When I was a kid, there were about two things you could get for a quarter: a piece of candy at the pool canteen, or a soft-serve ice cream cone from the school cafeteria. Or you could wait a few weeks until you saved up fifty cents, which would get you two pieces of candy. I spent my quarters almost immediately.
Lieber agrees that most of us don’t give our children enough money. Of course we’re going to spend our quarters on candy, if all we can afford to buy is candy! Which brings us to:
2. Give your children one dollar per year of age per week, and don’t connect it to chores.
When I was fifteen, I got $4 a week, and every four weeks I spent my saved-up $16 on a single cassette at Sam Goody.
Imagine if I had gotten $15 a week, and could have taken $60 to Sam Goody instead. I would definitely have bought all 500 Fushigi Yuugi VHS tapes, which would have been an extremely poor investment. (Seriously — I saved up, bought the first Fushigi Yuugi tape, watched it, calculated how long it would take me to get the full set, and decided it wasn’t worth my time. This was one of my smarter financial moves.)
I love the idea of giving kids “one dollar per year of age per week,” because I would have been able to do so much with that money. Even now, a 15-year-old with $60 could buy, like, 60 individual iTunes tracks, or 30 episodes of their favorite anime. THIRTY!
I don’t have an opinion either way on connecting allowance to chores, so I’ll let you all tell me what you think about that one.
3. Then, give your children enough money to make all of their purchases for the year, and “watch them fail spectacularly.”
Have any of you done this? Lieber is suggesting — and it isn’t an original idea, I’ve seen it around the parenting sites before — that you sit down and figure out everything your child might need to buy over the course of a year, from school lunches to new sports cleats to birthday presents, calculate how much that “should” cost, and give your child all the money at once.
Once you know the entire budget, hand it over in a lump sum. Do the same for athletic equipment, musical instruments, art supplies, and anything else you’ve deemed a need. Then, stand back and watch them fail spectacularly. No bailouts; you should want them to feel their mistakes deeply and earn money to solve their problems if need be. Better now than at age 24, when errors lead to wrecked credit scores and worse.
I’ve got a few questions about this, including:
— Are you seriously going to let your child skip lunch because your child didn’t budget appropriately?
— In the real world, adults don’t often get lump sums; they get small sums spread out through the year, which changes they way they interact with money. You’d probably “fail spectacularly” too, if you got $60,000 at the beginning of the year and had to figure out how to ration it over 365 days.
— If it gets around the school that your kid is the one with, say, $3,500 in his bank account to spend how he wants, the other kids might try to exploit that, in the “everyone likes me because I bought them ice cream!” sense. At the very least, your kid is always going to be the one who gets stuck paying for gas, just because your kid is the one who has a full debit card.
But there it is, the “right” way to do allowance. Or, as Slate puts it:
Don’t start it too late, don’t link it to chores, and don’t skimp.
What do you think? Do you agree? How did you manage your allowance as a child, and how are you managing it with your own children?
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