Friday, July 11, 2008

Parents, Don't Be Sissies: Teach Your Kids to Manage Allowances

How many times do parents hear these words…“Mom, buy me a book.” or “Mom, I need money for the movies.” You give in and hand over extra money because they blew their allowance and it’s the easy way out. What are you teaching them to do? You are teaching them to spend YOUR money and that it is OK for them to spend more than they have. Take a look at these five ways to help jump start good money managing skills for you and your child.

1. Stop giving allowances. That’s harsh but what is your child or children doing to earn that allowance now? Watching TV and playing with friends? You might as well call it an endowment to your kid’s summer fund. Show your kids that allowances are actually earnings for work performed. Here’s how.

2. Determine what type of work your child is able to complete. Create a list of extra work that is unrelated to normal household responsibilities such as making the bed or feeding the dog.

3. Start Giving Allowances: But I just stopped them. Yes, I know but now you will be giving allowances to help teach your children how to manage money and learn from their own successes and failures. Instead of doling out money the “sissie” way make a list of what they will be expected to pay for. Also, pay your child on time. This teaches your children the value of honoring obligations.

4. Create a spending plan. In the past your kids’ plan was to ask you for more money. Now that they can see some savings add up, it is time to help them plan how not to spend it all at once. A small notebook will be adequate enough for the time being to write down income and expenses. Designing a spending plan can be as simple as writing a “to-do” list. If one of your child’s objectives is to go to the movies twice a week then this simple method will help them to check availability of money. When you hear the words “Mom I need money for the movies,” just ask “can you afford it?”

5. Set examples. This is by far the most important step. If your child watches you spend unwisely, he/she will tend to emulate you and believe it is OK to spend money well over your budget. Generally speaking your child will learn how to manage money through their own experience and your guidance.

Managing money is not easy and many people never learn how to turn it into a tool that will benefit the rest of their life. Schools don’t teach money management so it is left up to parents. Follow these five tips to help your child gain control over money instead of letting money control him or her. You will no longer have to take the "sissie" way out and give in to unwanted requests and you will also have a financially healthy child

To read more on how to teach kids to manage money go to Kids’ Money here and visit the Kids’ Money Store for more books.

Write it down,



  1. This is a great post, Carma. My son starts secondary school next year and I'm going to take the opportunity to put your ideas into action. I do encourage him to take responsibility for his own money to a certain extent, but your post has shown how I can do this in a more structured way. I'm also going to recommend your method to a friend who's son struggles to understand the concept of money. Thanks, best wishes, Dorothy

  2. Excellent post Carma! We struggled with the whole money, chores, allowance thing for years. Now we are working on a budget for each child. Better late than never.


  3. Hi Carma,

    Well, I have to disagree with this one. I know that grownups get paid for the work they do. But, hopefully the parent wants more for their kids than they have. Education and the ability to seek out opportunity and be ready to jump on it, are what I believe teach anyone how to handle money. Giving a flat allowance teaches a kid how to spend wiseby because when it is gone, the goods stop coming in.

    I still think you write a clear an concise blog. You get your ideas out there. There's a posting today on Achenblog that pertains to this same point, and he sure got more than the 10 responses he usually gets. Most of thecomments are stupid, nonetheless.

    xoxo Lisa

  4. Hi Carma,

    Brilliant post. I started my daughter the same way - she got 50 cents, but put 25 cents in her bank. She started doing the same with birthday and Christmas checks and then her paychecks. We started that at the tender age of 4 or 5.

    I think there is also a lesson to be learned that because you "want it", does not mean that you should "get it" or that you "need it". That requires some decision making on their part, which is a life lesson also.

    Thanks again for a thoughtful post.
    Take care,

  5. Hi there
    This is great advice! Children need to learn the value of money - whether they have little of lots - and it isn't taught anywhere other than at home. I see so many people use money and gifts as a way to "parent" and it usually backfires in the end. It is our responsibility to love and cherish our children and teach them how to be functional and productive in the world.
    If they can't manage $10 now how will they manage $10,000 later?

    Great article!

  6. Hi Dorothy,
    I'm happy you will get such use from this post. Learning about money and putting it in the proper perspective has always been a challenge for me. I wished I had known some of this stuff when my kids lived at home.

  7. Theresa, yes it is always better late than never. I didn't learn that soon enough either.

  8. Lisa, I agree about the education and opportunity part but giving a flat out allowance with out structure will not work. This is not earned money.

    My point was to turn allowance into earnings. I think what motivates most kids and people in general is that when the money dries up there are no more goods. Thanks for the thoughtful post.

  9. Judy, it looks like you were way ahead of most parents in the money managing field.

  10. Melanie, I agree wholeheartedly. It is not the amount of money it is the practice of learning to put it to work for us.

    As long as money is used to bribe it will have control over us. It's all a work in progress. Thanks so much for your comments.

  11. Melanie, You have an awesome site. I need this information for sure. I will be sure to visit and recommend it to others.

  12. Carma,

    The allowance issue (whether to give it or not) has been around for ages. It's hard to determine which method works except by trial and error. I like the "stop giving" and then the "start giving" part. It seems it would allow the child to understand what allowance is about...kind of a "wake-up call."

    Lisa Kirby