Whose Allowance is this Anyway?

Money management is really all about thinking ahead — not a skill that comes naturally to kids. So as your kids experiment with money management, be prepared to sit on your hands and don’t help unless asked for advice. Yes, it will be painful, but so are many of the other life lessons you watch kids learn.

How much control?

You can’t control what teens do with money. But, together, you can work out a structure for a budget. Create some categories within the budget and then assign some percentages to them. For example:

Spending

Every day expenses: snacks, school supplies, gas for the car _______%
Monthly expenses: auto insurance, money for the car pool, entertainment, clothes, “toys” (the definition of toys changes as teens get older) _______%

Savings

Let’s make it grow. Save for larger purchases — a computer, electronic gadgetry, etc. (Will you let your teen wipe out savings to make a purchase? Or must he/she keep a minimum balance at all times?) _______%
Savings/investing for the long term: car, college, foreign travel _______%

Giving

This is a lesson that many families insist on. It instills a sense of social responsibility at an early age and starts building a life-long habit. _______%

At the time you structure a budget, be sure to define terms so that everybody understands what is included under various headings of the structure. For example, who pays for field trips? Sports uniforms? Sports equipment? Sheet music? After you’ve established the structure, you more or less have to let teens muddle through as best they can.

One exception to the hands-off policy

Of course, you can intervene if you feel that your teen is purchasing something dangerous, unhealthful, or illegal.

From allowance to job

Even when allowances taper off because teens are earning money outside the home, you should decide if the budget structure still applies. Many parents insist that the budget structure remains as long as kids live at home. They feel that concepts must be reinforced whether parents or an employer provides the money. The financial source is less important than the money management process.