I admit, I’m somewhat unique in my implementation of the allowance plan that I provide for my kids. You see, they get an Allowance only to learn how to manage money. They don’t have to perform any work to collect their allowances, and that makes me an odd duck in the eyes of many of my peers.
Recently, while on vacation in Myrtle Beach, one of my wife’s friends started asking me about my approach to Allowances, with a reprimanding tone in her voice (apparently my wife told her of my Allowance policy and obviously she didn’t approve).
Instead of wanting to debate with her on the merits of my Allowance plan, I decided to verbally identify the past performance and the associated benefits that my kids have accomplished with their money management skills gained through getting such an Allowance policy.
- First, my son (on his own mind you) created a journal entry system that tracks his amount that he is saving and the amount that he has for spending. The far exceeded what I had taught him, and to be quite honest, I was somewhat floored by his idea for managing his money. If you were to look at his notebook, it’s literally looks like a checkbook journal minus the date field and column headings.
- My kids no longer ask for toys at the store because they know that they will be paying for it with their money from their allowance. It’s amazing how they don’t even look at the junk anymore and instead focus on those few items that they find the most joy from. Lego’s for my son and Build-A-Bear stuffed toys for my daughter.
- They actually get excited and proud when we deposit the money that they have saved into the bank, in some ways it’s like a game. Since my daughter is still young (she’s 8 now), she still has envelopes for the money to be split between area such as savings and spending…
- To make extra money, we still offer to pay them for work they want to pick up to make extra money around the house. So while they are learning money management skills from the allowance, they also are learning the value of a dollar. You’re probably wondering why I do this? Well, I don’t want them to associate money necessarily with hard (especially manual) work. I don’t want them to think of money as trading their labor and time for. Money is more than just hard (manual) work it’s a medium for exchanging things of value!
- Incredible math skills. Both of my kids score very high in math related topics in school. I attribute part of their fascination and superior performance with math in school, from their real life experience of managing their money. Math is no longer an abstract principle to know, instead it has a basis in reality that I think sharpens their focus on the topic.
While my son (who is almost 12), has made the most progress, my daughter is coming along nicely too. I’m impressed that already she doesn’t want to just spend and spend, like money is a forever resource.
After identifying the history of my plan my wife’s friend didn’t really debate me at all, and said “It sounds like they’re going a great job”. I was surprised and a bit happy with this response.
So while my approach around an Allowance might not work for every kid, it seems to be a perfect instrument in learning for my kids!