Kids, allowances, and lessons

In My Humble Opinion
1

Our daughter is six, and for the last year or so we’ve been giving her a weekly allowance. We have been, for the most part, letting her choose what she wants to buy (exceptions being things that are unsafe, messy, or unhealthy). We’ve also been pretty consistent, when she points out something she wants in the store, to tell her to buy it herself, and if she doesn’t have the money, too bad.

The idea here, of course, is letting her make her own decisions, and if she makes a bad decision with her money, she gets to deal with the consequences of not having any left to buy the next thing she wants.

Except… I’m not sure she’s actually learning that lesson. We talk occasionally about saving up for something special, and she’s usually on board with the idea, but then she sees something shiny buys it impulsively. Which would be OK if then she felt the consequences, but when I point out that she won’t have the money to buy the special thing, she just kind of shrugs her shoulders, and is totally fine with the shiny impulsive buy.

My wife, getting a little frustrated, points out that we might be teaching her the exact *opposite *of the intended lesson: that money is to be spent on a whim, and there’s no downside to impulsive spending.

So: is there a better way to manage allowances? I don’t want my daughter to lose the ability to make choices and mistakes, but neither do I want to be teaching the wrong lesson. Or am I expecting too much from a six-year-old?

2

My first instinct is that you are expecting too much of a six year old.

My second instinct is that you’ve been gifted with a daughter who doesn’t hang her every last hope and gut-wrenching focus on physical objects and buying. She makes her choices and she lives with them. Would she have enjoyed the special thing? Sure… but it wasn’t SO special. The shiny thing is special too. It’s all good.

By giving her a hard time about her ultimate decision, you are interfering with her ability to make decisions. You’re telling her she’s making the wrong ones. You are undermining her confidence and not trusting her own taste and thought processes.

Frankly, I would ease off of her for fear of creating complexes about (1) material competition and (2) not trusting her own decision-making ability.

3

When my kids were allowance age I put them on my payroll. Every two weeks they got a paycheck ($20 a week) and in exchange they were expected to do some work. My daughter was a real help; filing, cleaning, paperwork, etc. My son did whatever bare minimum he thought he could get away with.

My son eventually had outside interests draw him away, but he still got paid. My daughter always spent some time earning her pay. Her coworkers became her friends and they shared makeup tips, music, etc.

When my daughter turned 16 she asked if I would help her buy a car. I happily offered to match whatever savings she had, assuming I’d also be kicking in additional cash to get something that wasn’t junk. It turned out she had $2,500 saved from her allowance, babysitting, etc. I was shocked and she got a nice ride.

4

You contradict yourself.( or else I’m not understanding). Why does she not feel the consequences?
Has she ever started to cry because she wanted something that she doesn’t have the money for?
What’s the problem?

She impulsively bought something shiny now, and she seems to realize that she will not be able to buy something shiny 10 minutes from now, or a day from now. (Interesting question: how far into the future can she imagine her actions?)

5

OK, so she has made a decision you disagree with. And? Isn’t it her decision to make? She is comfortable with the consequences. So long as she doesn’t later whine about not having what she would have saved for, if she had wanted it more than the shiny (she is the one who decided she didn’t), where’s the problem?

Once she finds something she wants enough to save for it, she will. So far, she hasn’t. She’s six, she’s unlikely to want things which are both more expensive than her pocket money warrants and cheap enough to be within her saving power.

6

Ha ha - I think you may be jumping the gun with your expectation/hope that your wee one strategizes sound financial decisions. She has many years to go before her brain can fully execute impulse control (prefrontal cortex isn’t completely developed until early 20’s, executive functioning remains decreased until then, etc…)

With my own kid, I have set her up with a savings account at the bank and I have her deposit half of whatever money she comes into. The other half she gets to spend on whatever shiny she likes. Might this work as a solution for you, too? A six year old will probably be just as excited to go shopping with $10 than $20.

7

My parents took the same tack with me as the OP has with his daughter, and at the same age.

A six year old has VERY limited capability to plan ahead. I didn’t get it until around 12 or 13, which is pretty normal for larval humans.

In other words, she’s a normal six year old.

That said, I don’t think a forced savings of half an allowance does anything for a 6 year old, either. Again, the brain development isn’t there to learn anything from it. A teenager might gain some benefit from that but not a six year old.

So, what to do?

Well, to start, don’t expect a six year old to be anything more than a six year old. Give her the allowance. Let her make her own decisions. Is she going to screw up? Of course. But she’ll screw up as a kid with low-risk decisions with limited impact rather than as a 30 year old when it can screw up her finances for decades. Managing money is something you learn, you make mistakes while learning, and that’s why it’s important to let the young kids make those mistakes early.

She’s already learned that if she doesn’t have the money she doesn’t get the shiny thing, right? If so, she’s already ahead of some adults I know. If she’s gotten that far she’s doing very well for her age.

Has she learned that, with limited funds, she can’t have everything and she has to make either/or buying decisions? If so, again, she’s doing very well for her age and is ahead of some adults I know.

Those are two very important financial lessons. If she gets them at six or seven she’s doing great.

You will spend YEARS encouraging her to save, pointing out the advantages, and watching her impulse buy. Do it anyway, because at some point the lesson/advice will kick in. You won’t know when, exactly, until it happens but by starting early you’ll give her the best chance of honing these skills early.

Two of us siblings, despite financial hardships, are debt-free. The one that does have debt is still keeping it at a level such that it doesn’t overwhelm her income (student loans for medical school are substantial, but she’s able to pay for them without undue hardship). I think this is largely because we were allowed to make mistakes when we were very young. If we hadn’t been allowed to manage small amounts of money we would not have learned to manage the larger amounts we have been responsible for as adults, or learned the very hard way like some of our friends.

8

Yeah, it sounds like what you really want is for your daughter to be able to delay gratification. The Wikipedia article I linked to claims that “children under 5 years old demonstrate a marked lack of delayed gratification ability and most commonly seek immediate gratification.”

If, as your daughter gets older, she still has trouble with this, you can look into what the experts say about helping children learn delayed gratification.

9

Yeah, part of my question was how I should be calibrating my own expectations. If she’s six, and is just too young to get the whole planning-and-saving thing, that’s fine.

To be clear here, I’m not really giving her a hard time about her choices. The conversation is more like:
Daughter: Dad, can I get Shiny Thing?
Me: You’ll have to pay for it with your own money.
Daughter: That’s OK, let’s buy it!
Me: Remember, you told me you were going to save your money for Other Thing.
Daughter: That’s OK, I want Shiny Thing.
Me: OK, don’t complain when you can’t get Other Thing.
And she’ll get Shiny Thing, and actually won’t really complain about not having enough money for Other Thing.

I’m totally on board with this, it’s just that I was starting to worry that I’m missing some step here that will make the the lesson/advice more obvious.

Thanks for the thoughtful replies, everyone.

10

The reason to start the “forced” (I would say “default”) savings plan at 6 is so that you don’t have a power struggle when you introduce it as a teenager.

I concur that at six, it really is okay just to let her live with very short term consequences. When she gets a little older, there’s something to be said for giving her the responsibility to save for really big things that actually matter, and raising her allowance to cover it. So, for example, if she wants to play soccer or go to girl scout camp and there are costs associated with that, explain them to her and help her set up a budget to cover it well in advance. If the only things she “has” to pay for are really, truly, trivial, there aren’t many chances to learn.

This may mean raising her allowance to a level that seems silly for a 10 year old, but it’s really not giving her more money, it’s just changing the pathway. But I wouldn’t do this unless or until I was pretty sure it would be successful, and if I were really willing to let her live with the consequences of screwing it up.

11

In defense of my daughter’s saving account: she went along with it without a gripe. I explained the logic to her and she accepted it. Lucky me. Also, I’d like to make the point that teaching a saving strategy prior to or aligned with spending strategies is sound logic, as well. Counterintuitive to strategies of the masses of recent times, however, I hold the thought that saving should precede spending. Rainy days and all that…

12

I started getting an allowance in first grade. Got a piggy as well; the second one was a model that I could open without breaking it (being younger, my brothers always got piggies that opened without breaking). The money from the piggy rarely got touched, but it was accesible; there would be times when the piggy got fatter (mostly winter, when I rarely was outdoors) and others when he barely got fed (because, spending time at the pool and the parks, I had more chances to see a shiny and buy it). I started asking to put money in the bank (and therefore, to save long term) when I was 10. The idea of long-term savings and the bank account were there much earlier, but the internal need for them wasn’t. When you’re six, a month is long-term; the 12 years until college are… twice your age!

Every time I opened the piggy it had more money that I’d thought. Every time my next brother did, it had less money that he’d thought. Every time the youngest did… he just wanted to count it, but then, this is the brother whose favourite tale was the three pigs and who now works in finance.

13

To echo what others are saying: 6 year olds are rarely good at delayed gratification. And they rarely regret having a shiny toy.

If you want to teach the value of saving, you could require her to save a percentage of her allowance each week (say, 10%). Then you could explain that it is important to save, and she can see what happens over time as savings pile up.

14

My youngest was an extremely impulsive buyer. I made a rule if she was looking at something and thought she wanted it, she had to do something else for 5 minutes, look around the store, or go to a different one, and then we would come back for it if she still wanted it. Nine times out of 10, once it was out of sight, she didn’t care about it any more.

Another thing that cut down on impulse buying was to just talk about the item for a bit. Admire its good points, and talk about what she might do with it. Many times, she would put the item back after that. She could bask in its cool shininess without having to own it.

15

She’s fine.

She also hasn’t found the Big Thing that’s worth it yet. That’s cool. It will happen in its own time, and it will come out of left field and you’ll be surprised by what she suddenly places so much value on that she’ll walk past the Shiny Things. For my daughter, it was an orange ukelele, of all things. She saved thirty freaking dollars a quarter at a time for that ukelele. Played it about 6 weeks, which is an eternity for a wee one.

16

I think it’s fine. We’ve been giving our daughter an allowance since she was 5 and for the first couple of years that money burned a hole in her pocket. She had to spend it right away!

Now she’s 12 and saves up for things she wants. She did end up with a lot of useless crap (mood ring, silly bands, those stupid puzzle erasers) but we did ended the constant bugging for us to buy them for her.

After a while she realized that stuff was crap and now she’s a pretty savvy shopper. Her last two purchases were a cell phone case (she paid for 1/2 the phone – $50) and boots ($24).

17

She seems pleased with her buying choices, and it’s her money, so that’s kind of the point isn’t it?

Forcing or convincing her to save is a big mistake. In a few years, she won’t be a six-year-old, but a teenager. Sometimes your kid who was too irresponsible to save NOT having control of a big chunk of cash is actually a very good thing.

18

She’s fine. In my experience, in theory it’s easy to say “you can buy whatever you want with your own money”, but in practice I’ve found that harder to implement. I really try not to say anything when my 8-year-old blows her allowance on dollar store crap just because she can, not because she wants anything in particular, but I am not always successful.