Stix ‘n Brix

Children’s allowances. As our first child became old enough to understand the uses of money, we were faced with familiar questions: Should we or shouldn’t we? How much is enough? How much is too much? These are questions that every parent has to grapple with as their children reach school age.

In some families parents dole out cash like clockwork, on a predetermined schedule. Others control all spending, allocating funds on a case-by-case basis. We’d seen enough spoiled children to be wary of the first approach, yet we wanted our children to have the experience of being responsible for their own finances. Our solution was a little unusual, but it worked beautifully.

In our years of operating a toy store we’d noticed how differently children of the same ages handled their money. Their attitudes ranged from the obsessed to the oblivious. What we needed was a method that was reasonably fair and predictable for our child, yet on ewhich took into account their personal level of “money awareness”.

Our solution was a modification of the scheduled allowance. Each child was entitled to a modest weekly allowance, enough to buy a small toy or paperback book. The amount grew slightly with each new school year. Each child was allowed to spend their money as they wished, subject to parental veto. We encouraged saving as a way to make larger purchases, but did not enforce a savings plan. We wanted to reinforce the concept of saving with a purpose, as opposed to blind parsimony.

That left the problem of adjusting for “money awareness”. It seemed a waste to dole out cash to a child who may have no interest in it. We didn’t want them to feel “entitled” to money, yet we didn’t want to turn this allowance into a paycheck by tying it tightly to chores. After all, we’re a family, and families work together and help each other simply because they are.

The solution was in our “Rules of Distribution”. They were simple and easy to comply with: All our child needed to do to receive their allowance was to ask one designated parent for it during the days Sunday through Wednesday of each week. If the request was forgotten or late, the allowance for that week was forfeited (not deferred, forfeited). There were no other conditions, and no exceptions to the rule.

The results were fascinating, and accomplished exactly what we wanted. As long as they were too young to be money-concious, each child was likely to forget to ask for their weekly stipend. As they grew, the requests became more reliable. There were times when they became frustrated with themselves for missing a week, but we stood firm behind the rules, and they seldom missed their window of opportunity the following week.

The fact that they had to wait to make larger purchases until their savings grew also was valuable. It taught them the joys of delayed gratification, and it also taught them that the importance of things can fade with the passage of time. Frequently they would find that, after long weeks of saving, the object of their desires no longer seemed worth parting with what they had so diligently hoarded.

I’ve not met anyone else who’s employed an allowance system quite like ours, but I’d love to hear from others who have invented systems that have worked well. How did you decide to handle juvenile finances? Would you do it differently next time?