Life Lessons Learned from Allowances

There are many philosophies about giving an allowance. Do the kids have to work for what they get? Do they have spending responsibilities? How much do they get? What age do you start giving an allowance? There are a multitude of answers—probably as many answers as there are of you reading this! Of course, there is a correct answer for your family, which may not match anyone else’s choice. That’s OK. Whatever choices you make, there are life lessons that come from allowances.

Helping Others
We required our children to give ten percent of the allowance to God (church), put ten percent into savings, and then eighty percent was available to spend. Why did we do that? The biblical concept of tithing serves several purposes. First of all, it’s about obedience. Offering our first fruits to God is what He asks. We don’t give God the leftovers after we have purchased what we think we need. That funding must come out first, or it will never come out. Teaching young ones the philosophy of tithing plants seeds for later life. But it is also about taking your eyes off yourself and assisting others. There is no better way to teach caring for others than with money because it is what we often desire to hold onto the most. Tithing helps kids to know what their money is being used for. In a church, you can help them understand how members fund ministries and return to that message often. If you aren’t in a church, giving to a local charity like a pet shelter or a food bank enables the children to realize that part of our social responsibility is to care for others. Tithing money and time brings the caring-for-others message home. Developing a solid sense of community service benefits others, but it benefits your child the most. Colleges and employers are all looking for well-rounded people who have given to the community and demonstrated caring for others. Kids that grow up with a strong sense of contribution and commitment are usually far better community members as adults.

Money Management
This one is obvious. We certainly want our kids to be able to manage money by the time they leave home. Managing money is part of independent and successful living. I taught a class for sixth-graders at my church that involved taking overnight outings a couple of times a year. I was shocked at how many kids could not go into a fast-food restaurant, figure out what to order, and confidently know if they had enough money to pay for the order. I had to make a homework assignment for parents to cover this with their children before we took our trips! Knowing how much you have, how much you need in the short term, and how much you need in the longer term is a vital skill to develop. In this day and age, when cash is rarely used, it’s also important to develop those skills while they are young enough that they cannot have a credit card. Credit and debit cards make it quite hard to visualize the money in the bucket and the money spent. It’s a much easier skill to master with the actual dollars in your pocket.

Here is a funny story from my house. When my son was three years old, he got an allowance of one dollar each week. At that time, one dollar would buy a Hot Wheels car at Toys R Us. Upon receiving his allowance, he always wanted to go straight to the store to spend his money. One day, he realized there was something he wanted that cost more than the one dollar he had to spend. He said in his little advanced thought process, “If you give me next week’s allowance now, I can buy the car I really want, and you won’t have to give me allowance next week.” I replied, “Or you can wait and save your money until next week when you have enough. I am not floating a three-year-old a loan.” Disappointed, he chose to buy what he could afford, and we left with the lesser car. Lesson communicated: you must decide to save for something better.

As kids get older, these boundaries become even more critical. If your teenager spent too much of the monthly allotment and now wants to go to a concert or the beach with friends, you must be that loving brick wall that teaches there are consequences to our spending. All the tears and pleading in the world must not change your stance. Real-life situations demand real-life results. Learning rules of the road before flying the nest is far better than later defaulting on a loan!

The other lesson that comes from money management is the difference between necessities and wants. Even as adults, we sometimes struggle with this concept. Still, the wants can only come after the necessities are met. Sadly, there are always things we cannot afford, and we must keep priorities straight. It’s true in our families, and it’s something our kids need to learn early.

Self-Discipline
In some ways, self-discipline has already been covered. However, don’t short-change the value of financial discipline in morphing into self-control in other areas of life. It’s not a stretch to see that how having a savings account can help when those unexpected wants and needs arise. It’s not a stretch to see how we bank our time matters, too. A challenge most teens have is managing the activities on their plate and keeping balance. It takes more effort in college to balance the demands of money, study, and rest. Marriage and families require a strong time balance as well. Learning money management while young is tangible, whereas time management, for example, is not. Grasping the need for management with money makes it much easier to understand the concept in other aspects of one’s life.

The Rules
As you set up the allowance, be clear about the rules. If you are giving an amount that should cover clothing and entertainment costs, clearly communicate what happens when your child inevitably runs up against needing more money. If there are kinds of situations you might choose to help, be explicit about how that plays out before a problem arises. Maybe your son wants to go to a concert and doesn’t have enough funds. If it’s something important—a once-in-a-lifetime opportunity, perhaps you will help as long as you go with him. A consequence still must play.

If work is required for the allowance, be clear about what happens when he wants to go to that concert, but he ditched helping with dishes that week. Just like in a job, there is a contractual understanding of what must happen to receive the privilege of having the money and the freedom to spend it.

When boundaries and rules are set up and clearly understood ahead of time, you don’t have to be the bad parent when life comes crashing down—the consequences are no longer a surprise. You may even be able to sympathize with your child—but the rules were there; those rules are your backbone. When setting the rules, you can even type them up if you want, and you and your child sign and date the agreement. Just make sure you stick to the agreed rules. If you discover something needs to change, you can’t do it on the fly; it will have to be after the current event as a separate discussion. Your child can benefit from your example when you say that you were short-sighted and didn’t think of a series of events and how they should play out so you now need to adjust your agreement. We fail forward, learning together as a family how to honor house rules and respect each other.