Is Your Three-Year Old Ready for an Allowance?
BY CHRISTINA BAGLIVI TINGLOF, REPRINTED WITH PERMISSION
Intro by Arlene F. Harder, MA, MFT, Director of the Childhood Affirmations Program:
The author of this article notes that children younger than six don't have the capacity to understand money. Nevertheless, I include this article for children from three to six because I know parents are interested in the topic. At least it give you something to consider for how you might want to handle an allowance in the future.
When our children were little, beginning about three or four, they got a nickel for each year of age, which tells you how long ago that was and that we weren't overly generous. Once a week they would line up at my husband's desk and say, "Father sir, may I have my allowance now?" (They ordinarily didn't address him so formally, but it was a tradition around allowance time.)
My sister's family also got an allowance starting on the fourth birthday. She didn't have excessive rules in her house, but she did fine her kids for infractions she considered serious. Consequently, when her daughter turned four and was finally able to have an allowance, she came skipping down the stairs and excitedly sang, "I get to pay fines. I get to pay fines. I get to pay fines." Ah, well, prosperity depends on one's perspective, I guess. It may also be an example of how a four-year-old may not be ready for an allowance.
Every day during my three sons’ half–hour dose of commercial television, I hear the words, “Mom, can we get that?", at least a half dozen times. An innocent trip to any store with even just a hint of toys or candy turns into a three-act play of “The Gimmies.” Two of their favorite questions: “Can’t you just go to the ATM?” or “When’s your next payday?” leave me throwing up my arms up in frustration.
Yet my kids are hardly that unusual. In fact, most kids are just like them. (Maybe yours?) It’s not their fault, really. For better or worse, we live in a highly consumer-driven society where every day we’re bombarded with hundreds of ways in which we can feel better, look better, or live better if only we’d buy (you fill in the blank). Impressionable young children, naive in the manipulative ways of Madison Avenue and succumbing to the stylish whims of all their peers, are only too happy to comply (but yet again, so are many adults I know, too).
So how can I teach my sons to be savvy consumers and help them to become fiscally responsible adults? By giving them money, of course.
Your Dollar or Mine?
“An allowance is the best money management tool that you can give your kids,” says Janet Bodnar, Kiplinger’s Personal Finance executive editor, and author of four books on kids and money including, Dollars & Sense for Kids (Kiplinger Books; 1999). “Kids will spend unlimited amounts of money as long as it’s yours, but as soon as it’s their money that’s on the line, it’s a whole new ball game.”
It’s true. From the moment I started giving my boys an allowance they suddenly became very conscious of what things cost and how far their money would take them. (“Let’s see...I could spend this week’s allowance on this small toy, but if I wait three weeks, I can get this bigger toy.) Hey, money management and a lesson in delayed gratification all in one!
Yet for an allowance to succeed in teaching kids how to spend responsibly, Bodnar argues, parents should begin doling it out at an appropriate age, usually around six. “Any younger and they don’t really have a sense of what money actually is,” she says. “They can’t think in abstract terms.” It’s not until they reach the first grade, she notes, and start to learn about money—that four quarters equals a dollar, for instance—that they can begin to understand the concept and figure out how much that dollar will actually buy them.
Still, every family is different, and often when younger children see their older siblings getting an allowance they want one, too. There you can make an exception. “But make it small, and don’t expect the same level of sophistication as the older kids as far as budgeting goes,” Bodnar adds. Conversely, some six year olds may be a bit too immature to handle the responsibility. In her weekly column, Money-Smart Kids, Bodnar sites an example of a mother who wrote in seeking advice about her daughters ages six and four who kept losing their allowance or playing with it. “Obviously, the children weren’t ready,” Bodnar explains.
If you feel your little one is just a wee too young for an allowance but still want to introduce him to the world of finance, start with smaller, more concrete steps such as showing your child how to use a vending machine — you put money in and something comes out — or taking him to the supermarket, giving him a few quarters and allowing him to make a purchase.
How Much is Too Much?
Next big question: How much do you give each child? Once again, every family is different and you should do what feels comfortable, but as a guide the experts say an allowance about half your child’s age is appropriate. (A six year old would receive $3 a week; a ten year old gets $5.) If that much money raises your eyebrows, Bodnar insists that not enough actually defeats the purpose of an allowance. “If it’s too little, a child can’t make any real decisions on how to spend it,” she says. And spending it is how a child learns how to manage it.
Next, parents need to decide what financial expenses are tied in with the allowance; after all it isn’t “bonus” money. For instance, will they now be responsible for purchasing birthday gifts for friends? Cinema refreshments? Vacation souvenirs?
Once a dollar amount is in place and what expenses are expected to come out of it, parents should essentially back off and set the kids free, allowing them to make their own discoveries, and many times, mistakes.
“We want them to learn to become savvy consumers, and one way is through action,” says Paul Lermitte, a registered financial planner, and author of Making Allowances: A Dollars-and-Sense Guide to Teaching Kids About Money (McGraw Hill; 2002). (Personally, as a mother, it’s hard for me to keep my mouth shut when my sons’ want to buy something that I think is poorly made and will fall apart in a matter of minutes, but the experts are all in agreement: Unless your kids want to purchase something that you find objectionable—like a violent video game—or unsafe—air riffle comes to mind—butt out.)
“You have to let them make choices,” Lermitte says. Apparently, when it comes to money management, failure is a good thing—it teaches the kids to be smarter consumers the next time around. The experts do, however, say that it’s perfectly fine to give an opinion on the impending purchase—after all it’s your responsibility as a parent to put in your two cents—but the decision to buy or not to buy should ultimately be up to your child. According to Lermitte, it’s all about confidence building. “You’re teaching them to make good decisions by making some bad decisions that really don’t cost a lot of money,” he explains.
Laying It All Out
Yet many parents would feel more comfortable if there were a few ground rules attached to an allowance, but Bodnar warns, keep them simple. “What very often happens is that parents setup elaborate allowance systems that last about a week,” she says. “Then they forget to keep track.” For instance, don’t tie allowance in with chores. Shouldn’t every member of the household be pitching in regardless? Besides, Bodnar says, “Some kids aren’t motivated by money. If they don’t feel they need more money to spend, then they’re not going to do the work.” (You might want to offer bonus bucks for extra chores such as cleaning the garage, washing the car, or raking leaves, however.)
And what about forcing the kids to cough up some dough for charitable donations or long-term savings? Again, Bodnar stresses simplicity. “The more ways you divide an allowance, the more difficult it’s going to be for them to manage,” she notes. Instead parents should choose one important lesson they’d like to teach, such as charitable giving, and emphasize that. You could, for instance, set up a “charity jar,” where every child adds ten percent of his or her allowance to it each week. Once the jar is filled decide as a family where you’d like to donate the proceeds.
And finally, don’t withhold an allowance for discipline infractions. Sooner or later, you won’t be able to control your kids with money, especially when they start making it themselves. Besides discipline has no relationship with money—it needs to come from other areas. Plus, Bodnar says, you’ll be penalizing yourself by taking away a worthwhile money-management tool from your kids.
Do As I Say, Not As I Do
When it comes to teaching savvy money management skills to your kids, a parent’s role is more than just the cashier. Actions, the experts warn, speak louder than words. Believe it or not, parents’ personal savings and spending habits—both directly and indirectly—have a huge impact on their children. “If you tend to be a spendthrift and money runs through your fingers, that tends to be the kind of habits you pass along to your kids,” says Bodnar.
Lermitte agrees. He teases that his book is filled with subliminal messages to parents. “Are you saving money? Are you planning and writing down your goals? Are you an impulse buyer?” he laughs. “Absolutely kids pick up on these things!”
The lesson is clear: If you want your kids to act responsibly when it comes to money, you need to set a good example, too.
It’s a Different World
In an era of “plastic money,” designer clothes for babies, and $200 gym shoes, it’s more important than ever to instill good money values in our kids—to teach them to use credit responsibly, look carefully at each and every purchase, and to save for their futures.
So now when my kids cry, “Mom, can we get that?” I have the perfect answer.
“Sure. Save your allowance.”
© 2002-2004 Christina Baglivi Tinglof, All rights reserved. Reprinted with permission. You will find a great deal of great information from her on mom-in-the-middle, an excellent website "where midlife moms (and moms-to-be) come for information, inspiration, and appreciation."
Parenting author Christina Baglivi Tinglof's latest book is The Organized Parent: 365 Simple Solutions to Managing Your Home, Your Time, and Your Family's Life. |
