Allowance Taught Creative Budgeting

by Jane
(Ontario Canada)

Allowances taught creative budgeting and money management, not just having pocket money for chores done.

When I was young (a lot of years ago), I was given money on Saturday mornings. When I look back on it, I believe the money was given strictly for the chores done on Saturday mornings, which helped out my parents while they ran our family business.

I was expected to put laundry in the dryer, fold it and put it away. I had to clean my bedroom thoroughly, and tidy our living room. The money was given after I was finished doing those chores, and was meant for my spending on the weekend. I don't think my parents meant it to last me for the entire week, as they paid for extra necessities. Allowance was given for "Saturday" spending after Saturday chores were done.

With my own daughter, she got money given to her on the weekend, which was a much larger amount, of course, and took into consideration what she might want during the week in terms of the extra foods at school. She was certainly expected to do chores, and if she needed something else, I paid, but that wasn't the main reason I gave her the money. I expected her to actually think about spreading it out, and making it last. In other words, she was quite free to spend it all in one day, but if she did that, she would have nothing more until the following week.

The reason for this? The schools provided all kinds of extras, like pizza for example, something I never had. My daughter had a lunch, of course, but she had to decide if the pizza would be a treat or an everyday thing. She had to decide if she could afford the everyday trip outside the school for a hamburger and fries with friends, or make it a "treat" once in awhile. She had the means to do either one, which I hoped would make her think about saving and priorities.

In this way, she learned creative budgeting and decision-making, and overall, it worked out well in teaching her money management skills.

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May 26, 2012
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Budgeting is Good Money Management
by: FaithfulStewardInvesting.com

Jane,

Thank you for your contribution. I moved your submission to Kids' Money Management because I feel it will fit in nicely here.

I like your idea of allowing your daughter to chose whether or not to spend her money on school food that she doesn't "need", or save it for something special. Choices are what teach them what is important to them, and how to make their money last.

I'm not sure how well the lesson could be learned if you gave her money for other things that came up. You didn't give any examples, so it's hard to say whether or not that may have hindered the money management training. It will be interesting to see how she does on her own when you're no longer giving her money for things that come up. Keep us posted, so we can see how it all turns out!

So far, it sounds like she makes pretty good choices, and that will surely bode well in her favor as she grows and develops into a self-reliant young lady.

Your daughter is off to a great start! Keep encouraging her to make sound money decisions, and she will do you proud!

All the best,
FaithfulStewardInvesting

Jul 13, 2012
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Teach Them How to Budget
by: Susan D.

I like this idea. It's got me thinking of how I can incorporate budgeting into my daughter's allowance.

After reading this, I'm now toying with the idea of figuring out about how much we typically spend on her for clothes, shoes, and school lunches in a year, and breaking that down into a weekly or monthly allotment. This would be in addition to what we already give her for allowance.

She would then be expected to set aside the allotted amount, saving up to buy her own clothes, etc. as those needs and wants come up. I'm thinking this would be a good way to get her started on budgeting for real expenses, not just saving up for various luxury items as she does now.

Thanks for the great idea! I will incorporate this into our own kids' money management training!

Susan D.

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