Kids And Money

A couple of years ago, I posted about the process my daughter went through to save for an American Girl doll. Despite my misgivings with her spending over $100 for a doll that was almost certainly overpriced due to demand, I wanted to remain true to my mantra that her allowance was hers to learn about money responsibility. She saved for and purchased the doll.

Just recently, almost two years - and numerous conversations - later, she came in to my office and wondered why she had even bought the doll in the first place. It wasn't any better quality than similar dolls at Target (which were one third the price) and she was bored of the doll. We had already discussed that the marketing behind the dolls drove up the demand and thus the price, that collecting items like these were driven by our consumer culture and that she wasn't paying for additional quality, but rather for a brand.

I just replied, "Well, you learned something, didn't you."

I think shed did.

The Benefits of an Allowance

2012-03-13T06:53:00.000-07:00

There are some HUGE benefits to setting up an allowance. Doing so, and giving your kids control of their money, is very empowering and engenders positive associations about money. In a society in which so much negativity is directed towards money and the accumulation of money (some warranted, some not), wouldn't it be nice to raise of generation of kids who used money for what it is - a tool. Nothing more. Nothing less. No baggage.

Giving an allowance can also help you reduce the "I want 'ems." You know, you go to the store with your child. "I want this. I want that." Making them responsible for small purchases can dramatically reduce in-store tension. Remember, I'm not saying the "I want 'ems" will end, but you will certainly have a context for a conversation rather than a knock-down, drag-out war in the store.

And don't forget that an important part of the allowance formula is to set savings goals. Teaching your child to set and achieve goals is arguably one of the most important life skills you can teach them.

Is the time burden of a weekly allowance stopping you? Do it bi-weekly or monthly. Whatever you do, make it purposeful and take advantage of its benefits. Good luck!