As a mom my job was to help guide my adorable toddlers to grow up to be competent adults. One important challenge was teaching them about money, something I definitely did not learn as a kid. Our family’s experience taught me seven surprising things about allowances.
In my determination to teach them about money I started when they were in pre-school. My kids were “adults in training” even if they stood only three feet tall. We faced a long journey from potty training to high school graduation.
What was my biggest fear?
Let’s start with my biggest fear. I did not want to fight with my kids about money. The very idea made me think about all those allowance scenarios every parent can relate to.
Kids pleading in a store, screaming, putting things in a shopping cart while mom isn’t looking. Kids at home begging mom for money, then moving on to dad when that didn’t work. Kids getting some money and immediately wanting to go shopping.
My kids deserved a learning experience rather than a power struggle with me. If I wanted then to be independent I needed a way to avoid those nightmares. But what to do?
Allowances are a lengthy learning process
When my kids were in pre-school I taught them about money with games and counting activities. They liked to play store. Using real money taught them how to count and make change.
When we gave them an allowance we settled on a written account system where they managed their money as a number. They received a weekly amount like a stipend with opportunities to earn more money through work and incentives.
Over the years this strategy taught my kids more about life than dollars and cents. But I didn’t know that until they flew the nest and retrospective moments set in.
Kids are really smart
- Understand abstract concepts about money. Even before they started kindergarten, they didn’t care if they had cash in hand or money in their account. All they really wanted was to know how much spending power they had.
- Accept responsibility for spending decisions. Because they owned their spending decisions they could not be upset with us when the new toy broke one day one.
- Analyze how money is transferred without cash. Much to our surprise they started transferring money between their accounts. On top of that they charged each other interest and thought they had invented it themselves.
- Negotiate. With our kids allowances started early their money needs increased over the years. One day they announced, “We need a raise.” We were so impressed with their presentation that we agreed on the spot.
- Perform complex money management. By high school our kids were managing hundreds of dollars each semester for many of their day-to-day expenses.
- Learn from mistakes. A $10 mistake by a kid is a learning experiences compared to a maxed out credit card as a young adult.
- Take their skills with them. They went off to college knowing they would be responsible for managing their loans, work income and money from our contribution.
One day after the last college graduation we realized, “Our kids never called home from college to ask for money.”
Allowances produce recognizable results
Our allowance strategy provided a consistent, reliable system, one that our kids were fully vested in. We saw progress over the years, much like seeing their growth next to measuring stick in the kitchen doorway.
Learn more about The No-Cash Allowance
As a result, they did not ask for money. They did not beg in stores. We did not argue about money. Oh, but they did learn how to negotiate with us!
In the end, I learned that when our kids tracked their money as a number they learned what many adults struggle with. Kid-size spending mistakes are gentle lessons. More importantly, these mistakes could not seriously damage to their future.
As a mom, I guided my “adults in training”. Years later I understood why and how my kids learned those essential life skills.
Of course, as a mom I cheered their academic and extra-curricular accomplishments. But in looking back I am most proud of their ability to manage their financial resources as kids with the same concern and attention as competent adults.
Now that my kids have families of their own I see the process repeating with the next generation, my grandchildren.