Money matters: Teaching kids how to manage their budget
Most Parenting Panel responders said they didn’t link allowance to chores
Teaching children money management skills is best done a little at a time.
The query: How are you teaching money management skills to your kids? If you give one, how do you handle an allowance (for example, how often given, earn from doing chores, must use money in a certain way, etc.)?
Frugal and unafraid: Somehow we raised very frugal children, but it wasn’t via paid chores or allowances. As parents, we couldn’t get comfortable with paying kids for being kids or for helping with tasks that we regarded as family responsibilities. Instead we offered money for what they wanted or needed whenever they made a well-reasoned request, and they just didn’t request very much money or ask very often! I think if kids see parents being frugal yet unafraid to justify an expenditure, kids learn to do the same. I think things only get warped when money becomes a pawn in emotion-laden interactions between parents and kids (see: guilt, anger), or when kids are allowed to begin believing that they are owed spending money just for being kids. Had we to do it over, though, we would figure out how to get more chore help!
— Ellen W., of Eugene, a 58-year-old mother of kids, 22 and 17.
Start with small consequences: We always believed in the principle of allowing children to make mistakes while the consequences are small. This relates, in particular, to money. Our two daughters got a monthly clothing allowance starting at age 10. They could spend it all every month or save for larger purchases. They learned wise money management “on the ground” when the worst that could happen was coming up short on buying some desired item. To this day both of them are far more sophisticated about money than I was at their age. They balance college debt, mortgages, car payments, and the cost of raising children with incredible savvy.
This kind of system provides a clear structure for the child. They know what to expect and what is expected of them. One time I was in The Gap with my youngest daughter and one of her friends. While my daughter was carefully examining price tags and creating unique outfits, her friend whipped through the store rather joylessly with her mother’s credit card and was done. As we waited for my daughter, the friend said this to me, “I wish I knew what my parents expected. Sometimes I think I’ve spent too much and sometimes not enough. I just think it would be more fun if it mattered more to them.”
Self-reliant adults start as children who were allowed to learn personal responsibility. Being 12 and not able to buy a new shirt because of poor money management is far preferable to being 40 and losing one’s home to foreclosure.
— Cheryl C., of Eugene, remarried mother of two adult daughters and grandmother to five boys.
Talk about it often: As a parent to two adult children I am very proud of their money management skills and feel it is an area that was done well. They both lived on a budget during college and now that they are employed are saving for retirement and other big ticket items.
Money was always talked about, at the grocery store we would discuss prices (learning how to figure out the best buy), choices were made when purchasing clothing, we turned out lights to save money, we didn’t waste food and you didn’t get everything you wanted, parents included. A weekly allowance was given starting at an early age and while chores were expected it was not tied to the allowance. Your allowance was to purchase anything that you wanted, toys, games etc or as the children aged, movies, outings with friends, etc. When the kids got to high school the allowance increased, was given monthly and they were expected to buy, clothing, lunches and gas for car. In high school parents paid for sport’s fees, school sport necessities and hair cuts.
— Laurie R., of Eugene, divorced single mother of two adult children.
Joint management: That’s a tough one as my daughter still can not mange money. That’s not unusual for young adults with special needs. Her money is managed by a Grantee who helps her prioritize how she wants to spend any extra funds left after obligations are met.
—Jae M., of Eugene, mother to a 28 year-old daughter, who has cerebral palsy and mental illness
Grow and sell: Money skills were taught early in my family. My dad was an economist and lived through the Depression and my mom was a budget-minded parent, and they had five children. We had a weekend routine of chores that were expected, and we were not paid to do them. There was one exception and that was the chore of our gardens. My parents involved us from the ground up. We had a large lot and my parents parceled off an area for a garden. I had four brothers and we planted on our lot our own produce. We tilled the soil, planted, weeded and watered. When the produce was ready, we sold it to our parents for our family meals. We had lots of ownership and pride in our contribution. Food always tastes better when you grow it yourself. Mom and Dad paid us the going rate for our produce and then put the money in a college fund. All of us went to college thanks to our parent’s foresight. When money came from hard work, it wasn’t spent frivolously.
—Anita H., of Eugene, mom to three adult children, of which two are deceased, grandmother to two (8 and 10) and Parenting Now! program manager.
Give it a schedule: I was never really taught about money, how to save, and how to make financial decisions but I think these are important lessons for a child to learn. I believe that allowances can be a good means of learning about handling money however, I don’t believe in tying allowance to household chores. Rather, I see the household chores as learning about what it takes to be a part of a family, a community, that everyone needs to do their part in order for things to run smoothly. Allowances need to be given on a regular schedule like a paycheck so the child can learn to make the money last for the “pay period,” if they choose to spend it. Allowances can be seen as the paycheck for “the work” they do outside the home, meaning school and play — depending on the age of the child.
— Suzanne M., of Eugene, married mother to two adult daughters and a grandchild
Spend how they wish: It was several years ago, so I don’t remember the amount, but our kids got their allowance once per month. Our daughter spent it immediately and then had to do without. Our sons were much more conservative and made it last. No limits on how it could be spent — it was THEIR money. That was the whole point. They had to do chores around the house, but the allowance was not tied to the chores. We also had a “toll box.” If a family member left an item (toy, clothes, etc.) somewhere it did not belong (like the living room floor) anyone else could put it in the “toll box.” Owner had to pay a nickel to get it back. When there was enough money in the box, we all went out for ice cream.
— Sandy and Jim B., of Springfield, married parents of three adult children and grandmother of two.
Open savings account: When my children were old enough to receive an allowance (at about 6 or 7), they were taken to the bank to open savings accounts. They were expected to save 40 percent of their allowances that was deposited in their bank accounts, leaving 60 percent to spend as they wished. I can remember how excited they would become when going to bank to make the deposit and how proud they were of their bank books. They were given age appropriate chores to do in exchange for the money they received each week.
My youngest daughter was quite frugal and happily watched her savings grow and my oldest daughter also did well and accumulated enough to buy some of her clothes. My son had trouble keeping from spending the whole allowance, but he soon learned the value of saving. I think teaching a child the value of money and how to spend (and save) wisely is an important life lesson.
— Patricia B., of Springfield, mother of three adult children (two are adopted and interracial) and grandmother of 10
Extra work: Teaching children about money management is a very important life skill that can start at a very young age. We did not give our daughter an allowance and we did not pay her to do chores. As a family, we all have responsibilities and we do our assigned tasks with a happy heart because we function together better, when everyone does their part. We also created a chart of extra work or chores that could be done with a value assigned to each task. That gives kids the opportunity to earn money they can spend as they like. As a parent, you should be guiding your kids choices about saving and spending, and let them suffer consequences if they aren’t harmful. We taught the biblical principle of tithing because that’s what we believe in as a family. You can teach about saving, interest, borrowing and other life skills that will eventually come up for them!
— Lori W., of Eugene, married with a grown daughter and two foster kids.
Must earn it: We found that when our kids had to “earn” their spending money they put much thought into what they spent it on. “Money” was put into context — “hours worked.”
When my daughter was 10, she wanted an American Girl Doll. We could have bought it for her, but instead we told her she needed to earn the money to buy it herself. It took a bit of time, but she mowed the lawn and cleaned the house until she earned enough to buy her doll. This was a big boost to her self-esteem. She had “earned” it herself.
— Kim L., of Springfield, mother of three grown children and grandmother to one
Learning to prioritize: We began teaching financial principles when each of our children reached ninth grade. Up until then, we provided everything that our kids needed, from haircuts to sports fees to birthday gifts for their friends. When they reached high school, we started giving them $60 per month and taught them how to plan ahead and budget, so that they would have enough money to cover all of their expenses. This was difficult at times because inevitably each of them reached a point where they had spent more on “entertainment” expenses and didn’t have enough for something else they needed. They learned about prioritizing expenses, so that they would have enough money for the important things, and they learned to do without, at times. They have learned to be frugal and to spend within their means —both important life skills.
— Dave and Dawn L., of Eugene, parents to four kids (ages 9 to 21, one with autism, one a foster child that they adopted)
Dollar store math: One of my favorite ways to teach my kids how to use their money is by going to a dollar store. Whether cashing in rewards for work done or buying sibling gifts, whenever we go to a dollar store we have all kinds of money discussions. We talk about saving money, setting budgets, needs versus wants, what kinds of gifts are appropriate for the recipients, what makes something a good value, assessing quality, cost per unit, and how to stick to one’s list and priorities when there are other tempting items on the shelves. It’s amazing how careful they are with their own money! Dollar store math is simple and the store is small, so my kids can estimate their costs, count their money, and complete the transaction themselves. Dollar stores are consumer economics with training wheels.
— Emilyann L., of Eugene, married mother of six (ages 3 to 13)