Here’s how to get started with using allowance to jump start the budgeting process. Prepare for this discussion by giving your child a copy of their prior allowance contract. Ask her to indicate any additional expenses she thinks she will need to cover during the next three months that she would like to take personal responsibility for now.
Re-examine with your child the final categories chosen, and make realistic changes to the money you are handing over for each category.
Suggest that your child budget with her allowance going forward. Help her think about what she wants or may need as the year progresses and how she can allocate or move some of that allowance money around to realize those goals.
Then, as a final step, sit down with each child, one at a time, and work out the new written contract. Remember that a written contract signed by both parent and child is critical to making sure everyone’s memories stay on track. Here is the link again for the allowance contract: http://www.msgen.com/downloads/msk_allowance_contract.pdf. A periodic renegotiation of your child’s allowance contract will give you a window into your child’s perspectives on money and how she has matured (or not) in her money attitudes over the summer.
It will also indicate your serious intention to continue to trust your child to manage money in his or her life.
Next time I want to explore the topic of money choice.