In August my thirteen-year-old daughter had an idea. “You give me $100 and I’ll pay for everything for the whole school year.” She had gotten this idea from her cousin who is, shall we say, more of a money saver.
“What exactly does ‘everything’ include?” I asked.
My husband said, “Write a proposal.”
She quickly took pen to paper, visions of a $100 dollar bill dancing in her head.
I was resistant for one reason: I didn’t want to part with a lump sum of $100. But it didn’t take more than a minute to realize her idea was definitely going to work in my economic favor.
Thirteen-year-olds crave independence; mine certainly does. She doesn’t like me buttoning up her coat, brushing her hair, or telling her to clean her room. She wants to decide when she goes to bed, what she wears to school, what she packs for lunch – and beware you suggest a haircut.
The path ahead points to high school, college, budgeting, and hopefully, motherhood. One hundred dollars? A perfect segue to independence.
The $100 proposal stretched far and wide: All clothing, shoes, movies, food, sporting events, and birthday presents for friends. I hesitated. There was no way $100 would cover all expenses. But she insisted she’d be fine and handed me a pen. I signed on the dotted line.
September purchases:
- $20 worth of school supplies including a splurge of multi-colored ball-point pens
- A $5 shirt from American Eagle
- Two lip glosses for $7
- A pair of wedge shoes from Old Navy for $30
I’d like to say I kept my mouth shut regarding the wedge shoes, but when I gasped, “30 dollars!” she was irritated, reminding me that she was spending her money and I was raining on her parade. Within thirty minutes, buyer’s remorse set in and the shoes were returned.
But I made myself promise: Keep mouth shut. This was my daughter’s experience, her lesson to learn.
September was the honeymoon stage, spent with a happy leisure. My daughter felt rich and free to spend her large amount of cash. She bought a few candy bars, a pair of jeans marked down, and offered generous rewards to siblings for fetching items from upstairs.
October 1st: A stylish, shiny blue, soft and furry coat for $40.
And thus, the dream ended.
October 2nd: Broke.
October 5th: “I think we should reevaluate my budget,” she said, eyebrows knit in worry. No words were necessary from me. The dotted line was signed; there was no wiggle room.
That’s when she got busy. When I was dropping her younger siblings off somewhere, she’d call out, “Can you ask if I can babysit?”
When she did a chore around the house, she asked, “Can I get paid for that?”
She distributed a flyer around the neighborhood advertising her services. With Christmas looming, a weekend dance, and new shoes needed for Spring track, she was adding and subtracting in her head. She started to plan ahead.
She picked up dropped change. She practiced the piano more faithfully as she gets money from Grandma for every book passed off. She stopped turning down less-ideal babysitting jobs.
Who else has this been a good lesson for? Me. I like shopping for my kids, finding sales, picking up shirts here and there. But when it came to my oldest, I had to put shirts back; I knew I’d ruin the money lesson if I swooped in to save the day.
I did buy her a chapstick one day. “Thank you, Mommy!” she squealed, throwing her arms around me.
The end of the tale is not yet here. There are many months left of the school year, but in one month I’m seeing a girl manage her money better. I’m also seeing more gratitude for the things her parents buy for her. Another unexpected consequence is that her three younger siblings want a $100 allowance as well. Rather than grimace, I smile. I’m going to have a lot more spending money.
Here’s a recommended plan:
- Make expectations clear: Who will pay for what (it can work well to have kids pay for all “extra” or “fun” things with their own money)
- Help your child make a list of wants and needs and discuss what goes on each list
- Help your child create a personal budget and write the plan down on paper
- Sign the agreement
- Keep a simple notebook ledger (or an spreadsheet on the computer): Money in, money spent
- Don’t buy stuff for them or bail them out!
My daughter has yet to take me up on my offer of payment for weeding the garden, but I’m keeping my mouth shut. I know that when she needs the money badly enough, she’ll ask me for a job.
My mother used to say she gave us chores to build our self-esteem. I know what she means now. There is a look of empowerment on my daughter’s face when she has worked hard to earn something she really wants. It’s equivalent to happiness.
Want to know the next installment of this mother’s tale? The $100 Allowance Part II
QUESTION: How did your parents teach you to manage money? How have you taught your children to manage money? Please leave suggestions in the comments for other mothers to consider.
CHALLENGE: As the new year begins, think of at least one way that you can teach your children about managing money. You might consider instituting the idea of the $100 allowance or for a lot of additional ideas and step-by-step help setting up full work and money policies and practices in your home, check out our Teaching Kids about Work and Money program. Whatever you choose to do, big or small, get started this week.
This article was originally published on January 6, 2013.
Love love this! And yes she probably learned her lesson better than any other way.
This is fabulous. My children are too young to do this exactly, but we can implement in other ways. For Christmas we had them do ‘extra’ chores for pay, so they could earn the money to buy their sibling a special gift. This was fun, but also realistic and a good teaching opportunity. Also, growing up for a time we had a similar system for spending. Only we were given enough to cover all that we needed for day to day (out side of food and such). I will tell you that I learned early how to avoid wasting shampoo and face wash…I was sure to hang up my clothes as I was paying for it. 🙂
The system I use came from the book The Money-Smart Family System (http://sonyawrites.com/2012/10/11/the-moneysmart-family-system/). It’s been working really well for us.
I got a kick out of this. Love the way you described it and stuck to your guns!! Good Job! Thanks for sharing!
I love your article and I am printing a copy of it to post on my board at home. (Why don’t you have a Print button?)
I have a 9year old, and we have spoken to him about Need and Want. And would correct him if for instance he would say “I need that toy”. I’d say – “need or want”, and he would “correct his sentence”. We want him to develop that conscious awareness and distinction between the two.
Over the past few years, he has accumulated some amount of money from gifts, plus vouchers. And he has saved all of them, and used the vouchers cautiously mostly reminding him to decide carefully on which items he really like. We also sometimes ‘pay’ him for helping do some chores, like cleaning my car or helping around the garden. BUT, good behavior is never ‘paid’. We told him that good behavior is always expected of him.
Recently, he is starting to talk about pocket money, and we give him a small allowance of R50 which he splits to – R30 bank, R10 small items, R10 to accumulate over 6 months if not 12 months for use to buy a Christmas gift he really likes. so it gives him the tangible goal of saving for the BIG thing.
So far, so good on this last strategy. But we are always looking for better ways to teach him how to handle money better.
Growing up, although my parents always talked about saving for the future, there had never been a tangible role play to save up, even though we got some allowance. That is why I think it is important for kids from a young age to ‘hold’ money tangibly and experience the save, buy and exchanging money for real.
Thanks again for your lovely article. I have bookmarked it in my Favorites.
My parents never taught me to manage money despite my father having been a credit manager for the largest hardware store in Australia and my mother being big on budgets. I asked her once why she never taught me to budget and she said that she thought we were taught that in school….”Hahahahahahaha” was my response, “No they just teach you to be a consumer.”….Thus I had to learn the hard way and have homeschooled my kids and taught them the practical things in life rather than the corporate things. 😀
Nice story. Good lesson. Uncle Phil
What a great story. Thank you for sharing. Our 14yo son thinks we should just buy him everything he wants. Perhaps this is a good time for me to start looking at things from a different point of view. Thanks.
My parents didn’t give us an allowance, but they did pay us (minimum wage when we were teens, less when we were younger) for doing chores that involved the family’s living space (i.e. washing dishes, mowing the lawn, mopping the floor, etc. — NOT cleaning our own rooms or the like).
great story & greater lesson. What a great mom she is and has.
LOVE IT! My children are younger 8,6,4 and 2. At our house, they get paid for doing things that are not expectations for being part of our family. For example, they are always expected to clean up after themselves, set the table, help their siblings. However, if they do something that I would pay someone else to do, they get paid. IE… vacuuming, picking weeds, they have even helped take down wallpaper (Once because I planned on repainting, other times it was less helpful :))
That is great! When I was a teenager, my parents gave me $100 quarterly to cover all my clothes, school supplies, eating out, entertainment, etc. They probably bailed me out on big purchases much more frequently than they should have, but it was still a great way to learn about managing money.
Being a home builder I too paid kids for work tasks. 50% pay to savings the rest they could save for stuff they wanted for themselves or someone else. Chores are expectations as part of family contribution.
I love this idea. When I was in high school my parents gave me a set amount 3 times a year to spend on clothes. If I needed a winter coat or pair of shoes I was expected to pay for half. Now I need to do this with my daughter. She is pretty good about saving her money. I do reward her with a bit extra for babysitting her siblings.
Such a great way to teach so many different principles about money, needs vs. wants, natural consequences, etc. And I totally agree with the comments about learning this lesson early. I wish my parents had taught me something similar to this when I was a teenager. Instead I had to learn this lesson the hard way while managing my own money during my first year of college. This is definitely an idea I’m going to keep handy for when my kids are a bit older.
It seems like a better lesson would have been to talk to her up front about how much things really cost. When I was in Jr. High my parents helped me set up a budget (based on their actual budget for me) that included things like clothes, school lunches, spending money, gifts for friends and family, etc. Then they gave me a monthly allowance and I had to budget it and save for things like prom dresses, school supplies, Christmas gifts, etc. But just giving a random, too-small amount of money seems like setting her up for failure.
My understanding is that she was adamant that $100 would go a long way, which many children and teens would assume. This is a great way to teach the WHYS of budgeting before teaching the HOW TO, which I think go hand in hand. Especially if your kid isn’t excited about the budgeting process to begin with. Thanks for a great idea!
My first allowance was three dimes, which my dad had me put in three jars labeled: Give, Save and Spend. I wasn’t allowed to dip into the first two, and thus, learned to live on less than my net (yes, my 5-year-old self knew my $.30 net!). It was reinforced through high school (when I turned 13 I got a clothing allowance every month, but was fined $5 a day if my cleaning/chores weren’t done by 5pm Saturday). We didn’t have a lot of money, but my parents did a fabulous job helping me make the most of it, and knowing the value of each dollar.
Great story!
Fantastic lesson learned!!! How neat that you were “brave enough” to do it with her!
What a fantastic post and a what a great opportunity you had to teach your child about managing her money! The proposal is just what you needed to allow her to learn how to spend and save her money wisely. SO important to understand the VALUE of money!
great story…as a child growing up my mom always SAVED for what we needed. I always heard her talking about what she was saving up for…new dining suit…bedroom furniture and so on. Never used credit cards! I am happy to say I have no credit card debt. Your children watch you more than you think.
My parents gave me $20 a month for allowance, from age 5-18 no change in amount, but automatically half always went in the bank. When I started working at age 18 I did not think and only gave myself $20 off a paycheck as spending money on whatever, the rest went to room and board as well as saved. I had to hold that money if I wanted new clothes but I shopped at second hand stores. Once every few months I let myself have $100. BUT I paid for my wedding in cash and while I never went to school I was able to buy a relatively new van when I got pregnant but now I have kids and no money *shrug*
I’m a kid now and my parents are doing well with teaching me about money. My family is pretty frugal and that has definitely rubbed off on my siblings and I. We each have an allowance of $7 a week. So it’s really easy to realize how much everything costs. A movie ticket? That’s about a week and a half of allowance! That new shirt? Three weeks!
I do have to say that this has also negatively impacted me because I don’t like to spend my money and enjoy it! I only ever really spend money when I have to buy birthday presents for my friends (I try to keep it to $15-$20 each). This can get very pricy if there is about a birthday a month. So, I only really have about $10 for myself each month! I know I have to save some of my money… so I usually squirrel away in the bank if I can. Any time I get money for presents (which is unlikely) it ends up going into buying gifts for the holidays or birthday presents for others.
I just think that as parents, you also have to understand that sometimes kids DO understand money! I understand it so well that I am prevented from having fun and being a KID! Cut your kids some slack and really try to understand that though we don’t have to worry about rent and such, we also have necessities such as buying presents for others.
This is great! We did the same kind of thing with our 13yr & 18 yr old. we asked them to write a spreadsheet of daily expenses for school and for leisure etc etc. we give $50 each month to my 13yr old daughter for all her expenses and she also has to do her chores around the house for this pocket money.
This is good because me & my husband agreed that it teaches them about money and how to save and how much things cost. I would recommend all parents do this with their kids as I have seen the benefits of doing this.
What a great idea! I think it is funny that your daughter thought $100 was enough for a whole year. Kids have no idea how much money things are 🙂 If she had bought her coat at Good Will it would have lasted a little longer. We will probably use Dave Ramsey’s system for teaching our children about money. Several of our friends have used it and their kids are very responsible about money. We’ll see how it works for us when our kids are old enough 🙂
I would love it if you would share this (and anything else you have been working on) at my party! http://domesticrandomness.blogspot.com/2013/01/friday-fascinations-9-everything-linky.html
My sister did/does this with all three of her kids. Included are estimates for birthday parties, school functions, allowances, clothes, school lunches, etc. It’s a large sum of money she passes to her kids, once a year.
The oldest (only girl) quickly learned to hate the idea because she used to love going shopping with mom, who would just pay for everything. Now, the three of them pack more lunches from home, and the funniest thing I think I’ve ever heard is when we were about to take a family photo outside and the youngest (the wild child) stopped short of jumping outside without his shoes on. “Do you know the cost of SOCKS these days?” he asked. We just about fell over laughing!
I love this! The only thing I would add (forgive me if I’m repeating anyone else, I didn’t read all the comments) would be that one of the conditions is the child has to put a certain percentage of all money earned into “emergency” savings and it can’t be touched (10% seems a fair start); starting with the $100 from Mom. My husband and I both worked all through high school and college but neither set of parents taught us how to budget and how to save. We both ended up accumulating a lot of debt during college because we were used to being able to spend what we earned … and then those “great deal” credit cards started showing up in our college mailboxes. We are 30 now and finally 90% debt free … just in time to buy a house. 😉
I’ve learned the importance of saving just for the sake of saving. We have an emergency savings account, a home savings account, a taxes savings account, a fun savings account, and even a savings account for our animals (emergency vet bills are NO JOKE!)on top of our 401k and Roth IRA.
They’re never too young to start respecting the value of saving.
HA! I started babysitting at age 11, and from that point on, I had to pay for everything except school fees, room and board. I never got an allowance of $100… I got a full time job at 15, babysitting on the side…started taking college classes at 16 while still working full time and babysitting in order to help pay household bills since my father was disabled. I bought my first car for 3,000…cash!
This mother seems WAY more than generous with her allowance.
I’m 13 and get 50 dollars a week for keeping my room and bathroom clean. Keeping an eye on my new puppy so she doesn’t have any accidents and keeping up with my schoolwork.And cleaning up after our other dogs.
That was amazing cope has told me about this a couple times but this is way better 😉
My mother let me “borrow” $5 whenever I asked, even though she knew it would not be paid back. I also did laundry for a family of 5 for $5/week so maybe she got the better end of that deal. I have taught my kids the value of clipping and using coupons and comparison shopping for the best price. My four year old once told daddy that they couldn’t get anything at the supermarket because they didn’t have mommy’s coupons! Thankfully, we can afford to shop without coupons, but I don’t know what the future holds for these kids and I want them to be able to make ends meet. Thanks for a great article!
I love this idea. When I was growing up money was really tight and that was all I knew about money really. I would get money sometimes for my Birthday and Christmas from family and I would save that money until I went on vacation with my grandparents. Most of the time I spent that money on gifts for my mom and grandparents. I would also get myself something. I also remeber that when my Mom got her tax refund I was allowed to get one special treat $5 or under and it was all mine. Other than Christmas that was my favorite time of year.
My Mom also taught me the value in couponing and waiting to see if the price would go down on something we really needed/wanted.
I was given $100 to purchase my school clothes for the entire year (7th grade). I was sent to the mall with an older cousin–it was tragic. I spent one-third of my budget on one shirt (and this was over twenty years ago so one-third was ridiculously expensive). It was the hardest lesson I ever learned. As an adult I was so glad to have the natural consequences earlier rather than later when they would be so much harder to learn. Your daughter will appreciate the $100 lesson–it just may take a decade for her to understand:)
https://awellstockedlife.wordpress.com/2015/02/09/ten-ways-to-save-money-this-week/
My parents did something similar. We got $200. $100 from mom and $100 from dad. Both me and my sister got this. She saw it as I can get a new shirt every week for church. I didn’t need a new shirt every week. I also was driving so it went towards gas and other more important things. I always shop sales and clearance. Not my sister it had a name brand something but she was young. We both now have full time jobs and we budget better because of that money our parents gave us.
I have my kids buy their own school wardrobes. I give them a certain amount of money and tell them how many outfits they have to buy minimum.
I give them an undersized amount of cash so they have to look at sales and thrift stores to get the best deals. They always come home with over twice the wardrobe I expect.
My oldest kids are grown up now and are really good at stretching a dollar.
I am having a bit of trouble trying to determine what $100 today would have been when I was a kid.
My family wasn’t wealthy but nor were we poor. In 1976 at the age of 16 I was working full time for the grand sum of $36 PW.
When I had last received pocket money I was 14 and the sum was $1.
Then, as now, a dollar didn’t buy a whole lot. I remember going to see ‘The Towering Inferno’ at a city cinema. This trip cost $7; bus fare, cinema ticket, popcorn and I had to save for it.
Personally I think kids get far too much money these days, far too early. On the other hand I often felt impoverished, left out, when I couldn’t keep up with my peers. It is a real puzzle, finding that balance.
I figure there is a middle ground. Half the price of a cinema ticket is probably a good amount for a kid to receive as an allowance. This would teach them to save. In the realm of acquiring money saving is probably the most important, yet most neglected enterprise. Just that regular depositing of money into an account you don’t touch is the first step towards aquiring wealth.
This is awesome. I plan to do something similar with my son when he’s older. He’s currently 9, and he is responsible for paying for certain things with his allowance, such as batteries (because he goes through a lot of those!).