An al­lowance doesn’t teach chil­dren how to man­age money

The Mercury (Pottstown, PA) - - BUSINESS - Michelle Sin­gle­tary The Color Of Money

WASHINGTON, D.C. » I went to live with my ma­ter­nal grand­mother, Big Mama, when I was 4. And at 4, I stepped into her fi­nan­cial class.

“Big Mama, can we go to McDon­ald’s?”

This ques­tion and every other sim­i­lar re­quest to buy me any­thing that wasn’t a ne­ces­sity were met with a money les­son. Every. Sin­gle. Time.

That’s how I learned to be a good money man­ager. Big Mama talked in­ces­santly about sav­ing, spend­ing wisely and stay­ing out of debt.

I watched her man­age on so lit­tle and still pay all her bills on time. Big Mama was so tight with her money that if she held a penny, Lin­coln would scream.

Hands down, this woman taught me more about money man­age­ment than any fi­nan­cial ex­pert I’ve ever met or in­ter­viewed. And she did this with­out ever giv­ing my sib­lings or me an al­lowance. Big Mama couldn’t af­ford to have us on her pay­roll.

There’s no power in an al­lowance alone. You raise mon­eysmart chil­dren by con­stantly en­gag­ing them in dis­cus­sions about how to save and spend the money you give them. And by mod­el­ing fi­nan­cial re­spon­si­bil­ity your­self.

So, when­ever par­ents ask me if they should give their child an al­lowance, my an­swer is: It’s not re­ally nec­es­sary. I’m not say­ing it doesn’t help, but the ab­sence of an al­lowance doesn’t pro­duce spend­thrift chil­dren ei­ther.

Dur­ing a re­cent on­line dis­cus­sion, the ques­tion came up about whether an al­lowance is the key to teach­ing chil­dren to be fi­nan­cially re­spon­si­ble.

“Hav­ing an al­lowance to man­age on their own pro­vides real prac­tice in an en­vi­ron­ment where you can help them learn from their mis­takes!” one reader wrote. “My daugh­ter had an al­lowance tied to her age un­til the day she left for college. She was ex­pected to pay for so­cial out­ings and all of her ‘wants’ with it. No money, no movie with friends. And we also never tied it to chores. Al­lowance teaches you how to man­age money; chores teach you how to man­age your life, take care of your­self, and be a good house­mate. That said, if she was ever short on funds and wanted to make a lit­tle ex­tra, I would ‘sell’ my chores to her.”

An­other wrote: “I grew up

poor, but my dad quit smok­ing to give me $10 a week in high school to use for spend­ing or to buy my lunches. There was no fi­nan­cial ed­u­ca­tion, and I paid the price by get­ting in over my head on credit card debt in college.”

A lot of peo­ple swear by the power of the al­lowance.

“In my opin­ion, the most im­por­tant as­pect about al­lowances is it teaches young chil­dren about choices and em­pow­ers them to make choices,”

one reader wrote.

Folks be­lieve an al­lowance teaches kids about nat­u­ral con­se­quences.

“If your teen doesn’t have money of her own and you are giv­ing it to her as she needs it, then she is not learn­ing how to de­lay grat­i­fi­ca­tion and save,” an­other reader wrote. “Give your teen an al­lowance and when they spend it all, it’s gone un­til the next al­lowance. I gave my teen an al­lowance once a month. At first, it was dif­fi­cult be­cause she wasn’t used to bud­get­ing, but a few months of spend­ing it all too soon cured that. Now she is re­ally great with her money.”

Here’s a con­ver­sa­tion one mother said she had with her 7-year-old son.

Son: “Mom, what’s an al­lowance?”

Me: “It’s when some­one gives you money.”

Son: “For do­ing noth­ing?” Me: “Yes.” Son: “Why would any­one do that?” Me: “Good ques­tion!” What’s the com­mon de­nom­i­na­tor in the com­ments from the par­ents? They were talk­ing to their chil­dren about money. You use an al­lowance as an op­por­tu­nity to have fi­nan­cial dis­cus­sions and re­lay your fam­ily val­ues. But the talks can oc­cur with­out

the tool.

My hus­band and I gave our three chil­dren al­lowances some­times, but mostly we didn’t. When­ever our chil­dren, who are still young enough to rely on our sup­port, need or want money, we talk. Some­times, it’s a quick con­ver­sa­tion. Other times, it’s a, “why don’t you sit down” type of di­a­logue. They groan, of course, but our money comes with a teach­able mo­ment. Every. Sin­gle. Time.

With two of our chil­dren in college and one headed there in the fall, they earn enough from part-time jobs that their fi­nan­cial re­quests for

per­sonal ex­penses have greatly di­min­ished. They make money mis­takes. They re­gret pur­chases. But de­spite liv­ing, for the most part, an al­lowance­free child­hood, they are ex­cel­lent money man­agers.

There’s no power in an al­lowance alone. You raise money-smart chil­dren by con­stantly en­gag­ing them in dis­cus­sions about how to save and spend the money you give them. And by mod­el­ing fi­nan­cial re­spon­si­bil­ity your­self.

Give an al­lowance, don’t give one — it’s re­ally up to you. But in ei­ther case, it’s your in­ter­ac­tions that make the dif­fer­ence.

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