Sunday, August 17, 2014

Making Allowances

About a year ago, we changed the boys' allowance scheme.  They'd been getting something on the order of a dollar or two a week.  At that rate, we had to keep small bills and change around, and it wasn't adding up to money they could actually use to buy things they want.  We heard about an allowance scheme from a family at church that has raised at least two out of three responsible now-grown daughters.  (We know the oldest and the youngest but haven't met the middle one.)  They gave their children their age in dollars twice a month.  That gives the disciplined child a shot at being able to save up for something relatively valuable and promises a definite $2 monthly raise raise every birthday.  
We also set up some categories in a Google spreadsheet to help them think about how all money is not the same and that we can parcel money into different funds for different uses.  We distinguished between:
  • Spend - for purchasing anything from a snack to a toy, no strings attached.
  • Save - to be used only for an item that the child added to a list of savings target items.
  • Share - 10% for their tithe.
  • Presents - with increased funds comes increased responsibility to spend their own money to buy birthday presents for immediate family members (in addition to the Christmas presents they've been buying for immediate family and whatever extended family with whom we spend Christmas).
Ideally, I would now report that the influx of income and the carefully-constructed Google spreadsheet have turned them into shrewd resource planners.  Unfortunately, that's not true. They spend their money like NBA rookies.  As soon as money piles up to the point that they could buy something, they buy anything.  At 7, Teddy is especially prone to looking around for something to buy rather than planning and executing a purchase.  One of my favorites in this vein, was a little spreader knife with a silver lobster handle that he bought at the Stonewall Kitchen headquarters store in Maine.  He saw it, fell in love with it, had money burning a hole in his pocket (because we were on vacation) and bought it.  He still uses it regularly.  Other purchases like toys sold at tourist site gift shops have thrilled me less; the latest was a stealth fighter plane at the Wright Brothers Memorial in North Carolina.  I'm not sure he's touched it since vacation.

Wright Brothers Memorial gift shop
Charlie has not been much better; his money just accumulates faster.  On a school trip to a roller rink/arcade, he spent all seven dollars he brought on a game machine dangling an iPad Air as the halo prize.  Needless to say, he came home with no tablet and no money.  His discipline has increased more just this summer after nearly a year of the new scheme.  When the Target Nerf gun aisle didn't offer the gun he'd been looking at online, he kept his powder dry and saved his money for another day.

They're not the only ones that have had to adjust their decision-making and behavior.  We visited the Pro Football Hall of Fame in November, and I encouraged the boys to bring their money.  Charlie was interested in a collection of Steeler items including a rubber smaller-than-regulation football.  Something about the items he chose seemed like a bad investment to me; I thought he could probably buy the same things in a store around home.  I talked him out of the items he'd chosen.  He switched to several packs of football cards.  It all happened kind of quickly.  Football cards were clearly more banal and boring than the Steeler logo merch he'd first picked.  But I'd already talked him out of those items, so I didn't want to talk him out of the football cards.  Oops.  If the money belongs to him, and the point is for him to learn which uses of money are satisfying and which ones feel like a ripoff, I should have let him buy the things that first appealed to him. 

And that's the whole idea of this thing - to allow the boys to make their own decisions with small but not tiny amounts of money so that as the amounts grow in their lifetime, they'll have a framework for evaluating their own financial decisions based on their priorities, not just shininess. 

Another upside is that when the kids want something that I don't want to spend my money on - say a soft pretzel at a sporting event - I just ask them if they have enough money for it.  With the steady income they now collect, they ought to.  That means I don't have to weigh whether I want to spend money on that or not.

I'm curious about how other parents set allowance amounts and what input you then provide on your children's spending.


Amy Maddalena said...

Thanks for this, Jeff. We've been inconsistent with our allowance (out of my own lack of organization...) but when we do it, we give the older kids $.50/week, have them put a nickel in the church cup, save a quarter, and put 2 dimes in the "spend" pile. Because it comes out evenly that way :) And I guess we're cheap, judging by the amount of allowance other parents give! We are just getting started and the boys don't have a ton of opportunity to spend at this point, but they do long for legos and it's probably time to start trusting them with a little more $.
I've also gone back and forth about having allowance tied to chores. We haven't really, but just expect them to do the chores.

Anne H. said...

This seems like a good allowance plan and well thought out. Of course I like that you've built in the 10% tithe. they may be more likely to spend their money precipitously than some other children, but they're just the ones who can learn from this framework.

Lauren Jackson said...

I think this is one of the big challenges of parenting, as you've recounted. I hate it when my kids choose to buy something that I think is a waste of money and I'm not very good at letting them just do it. At the moment, Colin is spending all his money on fish. He walks down into Yonhi-dong to the fish store with his friend and comes back with neon tetras or an angel fish or a fancy new rock. I'm pretty pleased with this trend.

We give the boys allowance monthly, about $20/month, same for both kids as they do exactly the same chores. Allowance is loosely tied to chores for us and keeps the boys pretty responsible for handwashing breakfast dishes, feeding cats and cleaning litter box and taking out/sorting garbage as well as personal room/clothing tidiness.