Friday, July 20, 2012

Speaking of Finances...and Children

Though small was your allowance,
You saved a little store:
And those who save a little
Shall get a plenty more.
~William Makepeace Thackeray

Allowance is usually a topic where people have strong opinions, basically you are either for it or against it and all for justifiable reasons.

I was not raised with an allowance nor was my husband. The first time I had weekly pay was from working a job at twelve years old, in which I also handled money for the gas station my father managed. My husband felt he had to ask his parents for everything so he began mowing lawns when he was ten or so. We both probably thought children who got allowances were spoiled. However, after seeing how many young adults today were making such bad financial decisions and being so far in debt because they lack patience and experience with personal finances, I began to look for a way to train my daughter about managing her own. With where we live and our current lifestyle, it would be difficult for my daughter to begin working a paying job at a young age like we did. A weekly allowance seem to be a good investment:

  1. Firstly, I see allowances as being instrumental in a hands-on educational experience giving children the opportunity to make mistakes with money and learn from them at a young age, while in the security of living at home and under their parents guidance to provide wisdom. My daughter quickly learned to buy only the things she really wants and not to just look to buy something just because she has some money burning in her pocket.
  2. Secondly, I feel her allowance should just be enough to let the child learn about money, not to make her particularly comfortable with the amount being given.
  3. Thirdly, allowance here is not associated with chores unless I am having to do her chores because the Princess does not do them. Then I will charge her for the chore. (This has not yet happened but it is in the rules and the reminder works.) The reasoning behind separation of chores and allowance is that the child might just refuse to any chore unless paid for it and that cannot be an option as she must learn that there are many duties she will have to do for our family and her own for which there is no monetary compensation. Also, she would have to pay someone else to do them if she did not.
  4. Fourthly, if the Princess wants to make extra money, I am open to negotiation for her to do extra chores for pay. If the allowance amount is in the right range, there will be times when she will want something that she needs to make more sooner to get it.
  5. Fifthly, I want my child to learn to not to ask me for money just because I will have it and she has not enough. I think that whole "entitlement" attitude innocently begins or ends at home. It ends in mine. I will give her gifts now and then just because I love her or as rewards for her good attitude during the week or for an extra special job she did, which is rarely in the form of handing her money, but there have been a few times. I want her to learn to be generous so I am generous, but not to the point that she should ever expect it.
  6. Sixthly, raises in allowance do not need to coincide with birthdays. The last raise started as a promised to give her a bonus of 50¢ each week she would stop biting her nails and begin filing and buffing them as needed. I bought her what she needed and showed her how to do it. I also promised if she could keep her nails looking nice for three months, I would raise her allowance by $1 permanently or until she started biting her nails again. She has short (for piano, guitar, and art) but good-looking nails now!
We set the allowance up this way because our child does not receive much money in the way of gifts. We started with just two dollars a week, which was just 80¢ spending money (explained below), at the age of eight--not that that is the best age, that is just when we started. For a time, I gave her more than she is getting even now, so that she could have a budget plan for the expenses of her hamster. At one point, the hamster's plastic cage broke and she had been thrifty enough with her hamster's funds that she was able to pay for the same cage barely used off Craig's List. At ten years old, she handled the deal herself from inspecting the used cage to handing over $15, a bargain since the cage was one of the expensive ones. In fact, the lady tried to just give the cage to her, after realizing it was her own money, but the Princess was determined to pay the lady for it. The Princess was concerned about having enough to pay for his food later, but I knew that she would have enough for it too and assured her of that. Right now, at age eleven, she receives $5.00 per week, but only $2 is spending money.

Since the beginning as I wrote in 2009, Weekly Allowance, we structured it so that she gave 20% as her tithe, so that when she is making money on her own she will be used to giving tithes and to help her understand the difference between gross income and net income for when she gets a job later on. Then we split the remaining 80% in half, one part goes to savings and the other to spending however and whenever she wants. She can even buy candy, but that does not mean she will be allowed to eat the candy whenever she wants. That teaches her that just because she owns something does not mean she can use it to break a rule or a law. (Think teenager with a car.)

For the last couple of weeks we have been shopping back-to-school sales and she has found some things she thinks are pretty, like a spiral notebook with a pink glittery cover, pricier than a basic model. Such upgrades are not necessary for the homeschooling program and not in my budget, so she bought one herself as she likes to make journals. She bought a calico-print, quilted backpack purse that was brand new at Goodwill a couple of weeks ago for around $6. She often buys used books for her own enjoyment too, but I will pay for the educational ones, if I approve of them.

The allowance seems to be working well for what we intended. She is learning to define value in her own eyes; I have seen her really like something, but pass it up when she looked at the price of it, even though she had enough money to buy it. An added plus is that I see on what she thinks is worth spending her money just because it is her money. I advise but let her make up her own mind when we are shopping. So far, I am very pleased.

~ My Lord, thank you for your guidance and may we continue in Your will as we teach our daughter about finances. ~

2 comments:

  1. I think girls, on the whole, have a much better financial grasp of how money works than most boys. All my boys made [& spent] their own money from an early age with the attitude I can make more where that came from. It does not make for good money management habits.

    The girls, who were on a very small allowance, always have money. They manage what they have well ~ & are far more generous with what they do have.

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    1. I would not go so far as to say it is a "guy thing" or a "girl thing." I have known some very spendy women and careful men. However, my husband basically had the same attitude as your boys. He has changed over the years but I would say it is far more definite since the job loss--was it four years ago?--and the last job which was such a severe pay cut. Anyway, he appreciates my strict budgeting more than ever now, so he tells me, and he is more careful himself as well.

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