School Season and Allowances for Kids

Many of the ideas in the "Jobs for Kids" article can be applied during the school season however some parents might prefer to see their children focus on their studies instead.

There is no right or wrong answer to this. However I recommend that you still teach your child basic money management skills.

Start by sitting down with your child to develop a financial plan. Include clothing, school supplies, bus pass (if applicable). Don’t forget to allocate money for unforeseen field trips. You can contact the teachers to get a better idea on those costs. Determine the total amount of money that the child will required for the year. Since you were going to be paying the money anyway, this isn’t like giving them an allowance but rather giving them some financial responsibility. Teach them to be cautious on how they spend their money and evaluate good quality clothing vs. cheap and flashy. Let them make some mistakes along the way. People learn more from their mistakes than from getting it right the first time. As long as it doesn’t involved their safety or the safety of others, wouldn’t you rather they make their mistakes now than later in life when you aren’t there to catch them when they fall? This doesn’t mean it’s a free-for-all. IF they start to smell bad, tell them that bad hygiene isn’t acceptable. They have to be considerate of others. If they spend their money on clothing or toys instead of their bus pass, better that it happen in September or October when they can still walk to school. After a month of walking to school, their priorities will shift and they will be sure to put that money aside.

Like I said, an allowance is optional. Personally, I would rather give my child a dollar more than they need for lunch per day and see them figure out that they can save it rather than spend it. Theoretically, you would be giving them $5 a week, possibly more if they stop thinking about what they can get for their money and start thinking about how much they can save depending on their selection.

If you do decide to give an allowance, it should be enough to cover their basic needs with a little savings component (don’t forget to tax them and/or implement the 10% savings strategy). However it should not be so much that it meets all of their needs. Remember that we want them to learn that they can get more of what they want by working for their money. Consider it a little incentive program to help them stay connected with reality.

A parent I once meet gave me a great suggestion. At the beginning of each week, their child is given $1 allowance per year of age in play money. Throughout the week, they need to pay their parents back each time the parents need to clean up after them or make their bed (cleaning service fee), find a light that the child forgot to turn off (pay for wasted electricity), close an outside door that the child forgot to close (pay for wasted heating/cooling), clear up dishes the child didn’t (dishwashing services), do any other chore the child didn’t do, etc. At the end of the week, the parent exchanges real money for any money that the child has left. If they misplace the play money, they get nothing at the end of the week. Naturally expectations should be clearly disclosed and negotiated at the beginning of the program. The parent should also reserve the right to amend the program down the road. You may need to make adjustments at first. If there is nothing that the child is saving up for, this will of course provide very little motivation.

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