Because January 1 was a holiday, the girls did not get their allowance until this past weekend. And, because this was January, they also got a reminder about why they get an allowance. It was a sobering discussion that sent my oldest back to the budget drawing board. Allowance for our girls covers the expenses of lunch at school, toiletries and clothing. From each allowance payout, the girls are required to save some, donate some and invest some. The rest they spend. Over the past year I have noticed a new expense — their ever-growing social life. As teens, they have “entertainment” expenses that I did not anticipate. And, as long as I am paying, they seem to be living rather large!
January – time to review
January is a good time to take a look at the allowance contract . Then you can talk about a raise or additional expense categories to add to help kids learn how to budget for new costs. We are adding “entertainment” to both of our teens’ allowances. This will give them a set amount to work with to get them used to thinking about whether they can afford another pizza night out with friends.
Lump sum or monthly
Allison, 17, took the allowance we gave her and our reminder about what it covered and worked on a new budget. Interestingly, she did not ask for more money. She started by listing her own expenses as she knew them and backing in to the allowance amount she is being given to see where she needed to manage better. She also signed on to get three months of allowance at a time to see if she could manage that large of a payout at once. Her younger sister, Amanda, 15, would not take the three month payout. She said she was not ready for that kind of responsibility.
Watch and learn
Bottom line, allowance is a journey. You learn through the allowance process about your child and their ability to manage money. If you do not have an allowance contract on hand, here’s a link to one on our website that you can print as often as you need it: http://www.moneysavvy.com/downloads/allowance_contract2018_8.pdf.