Comprehensive Allowance and Budgeting for Teens – Part Two

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I’d like to be able to claim this allowance budgeting as my original brilliant idea.  But I cannot tell a lie; my parents used it with me when I was a teenager (back when dinosaurs roamed the earth, if you ask my teen daughters).   My parents taught me well about budgeting, managing my money and financial responsibility.  The lessons they taught me shaped my adult life and have served me well.

When I was 13,  my parents started me on an allowance of $35/month.  I’m not sure how they arrived at that amount, but knowing my parents, they had contemplated it a long time.  It was a good amount of money for a 13-year old.  But the “catch” was that I had to pay for EVERYTHING.  I had to budget for all my own clothing, my entertainment, school supplies, gifts for friends and family and other “stuff” a teenager just has to buy.

Mother and child with piggybank

What did I learn from my parents’  financial lessons?
1.  I learned to budget my money.  I learned the difference between necessities and nice-to-haves (do I need it or do I want it).  Would I rather  have the most expensive pair of designer jeans and then not be able to go do anything fun with my friends OR would I rather have a less expensive pair of jeans and have money left over to go out with my friends?
2.  I learned to earn money to supplement my allowance so I could  buy more of those nice-to-have (I want it) things.
3.  I learned to save a significant portion of the money I so carefully earned and budgeted.  There was very little frivolous spending of MY hard-earned money.
4.  I learned how to balance a checkbook.  My parents had me open a checking account at age 16 so I could learn how to write checks and balance a checkbook.  (I’m constantly surprised at how many of my adult friends don’t balance their checkbooks!)
5.  I learned to delay gratification.  I waited until Christmas or my birthday to ask for expensive items so that I didn’t have to spend MY money.
6.  I learned critical budgeting and financial responsibility lessons that only become more important as you start a family and deal with larger dollar amounts.

Comprehensive Allowance and Budgeting for Teens  

Having had the experience my parents gave me, my husband and I have decided to do the same with our children.   My oldest daughter has been on a comprehensive allowance for almost 4 years and my youngest daughter has been on it for  over a year.  It has been such a great learning experience that several of my friends have started the same with their children.

printable Teen Allowance Worksheet

When we first started planning my eldest daughter’s  allowance, I created a spreadsheet to figure out a realistic amount for her monthly allowance.
Let me start with the disclaimers. 
1.  I created this spreadsheet when we lived in Alabama, so don’t get hung up on the amounts of different types of clothing items; we were living in a much warmer climate.
2.  I created this spreadsheet when my daughter was still growing so she didn’t have many items of clothing that she wore more than one season. 
3.  Because my daughter was 12-years old when I first created this worksheet, I didn’t budget much for entertainment.  But I figure it all evens out since she’s not buying new coats or pajamas every year any more.  
4.  The girls are expected to tithe from their allowance (and any money they earn). We specifically did not include a line item for tithe.  We want them to understand that they are choosing to give that amount as a donation; we are not giving them money to then give as a donation.

The spreadsheet allowed my husband and me to arrive at a reasonable total amount for allowance, how my daughter chooses to allocate that allowance is part of her learning process.

I’ve left the “Cost Each” block blank because you have to determine this based on your family’s finances, your family’s principles and the area of the country you live in.  When we filled the worksheet out 4 years ago, I budgeted $20 for jeans, so $100 total for jeans for school.  As my daughters will tell you, that’s not enough (said in an offended 13-year old voice).  But I figured you could get a pair of jeans at Target for $9.99 ($7.99 on sale) or you could but a pair of jeans for more than $100.  I explained to my daughters that they had several choices:
1.  My daughters could choose to buy 5 pairs of Target jeans and have money left over for other things.

2.  They could choose to buy 1 pair of $100 jeans.

3.   They could buy jeans that cost somewhere between $9.99 and $100, with fewer pairs of more expensive jeans or more pairs of less expensive jeans or any combination of less expensive and more expensive.

4.  They could choose to earn money to buy more pairs of expensive jeans

5.  They could ask for jeans for their birthday or Christmas.

As you can imagine, the conversation was a great learning experience for my daughters (I didn’t say it was a happy learning experience or an easy one, but it is a critical one).  We were able to discuss the trade-offs of the different jean purchasing options.  We discussed our family principles when it comes to budgeting and finances.  We discussed saving for a rainy day.  We discussed whether having the “trendiest” jeans were important or whether having money to do things with friends was important.  We discussed ways to save money so that you can have more of both trendiest things AND doing fun things. 

I’d like to tell you that after one discussion, that was it.  My daughters have learned and implement all the budgeting, spending and financial wisdom we’ve shared with them.  But, unfortunately, no. 

Budgeting and managing money is a life-long learning process.  What I will tell you is that there have been many benefits beyond the obvious one of financial education for my children:

1.  I don’t like to shop and I used to dread going shopping with my daughters and being begged for some item.  Then I would have to be the “bad guy” and say no.  Now I don’t mind at all going shopping with the girls.  They’ll ask me if I like an item and I can simply answer “yes” or “no.”  It’s up to them if they have the money for it   I do help them think through whether it’s a practical item or whether it’s worth the price, I’m guiding them in their decision, not making it for them.  I do still have veto power if the clothing is immodest or inappropriate.  But it’s not the emotional battle it was before.

2.  I’ve been impressed by how motiviated my daughters have been to find work and earn money.   Good work ethic developing early. Yea!

3.  They are careful not to “waste” money that they have earned.  It’s interesting to watch my two daughters and the choices they make in what to spend their money on and what they each think is wasteful.  They have different interests and priorities, but they each weigh whether they want to spend (“waste”) money on something before they spend it.

4.  When we started the comprehensive allowance with my oldest daughter, we lived in a small town in Alabama where the cost of living was lower.  Two years ago we moved to Northern Virginia, ironically, to the wealthiest county in the country, so the cost of living is much higher.  Since my husband is in the military, our income did not increase when we moved here and so we did not increase my daughters’ allowance.  The higher cost of living has led to many in-depth discussions about finances, salaries, wages, cost of living and the trade-offs that you have to make in budgeting and managing your finances.  My daughters are very aware of what things cost and what things are worth.

5.  Living in the wealthiest county in America has made my daughters aware of how others choose to spend their money as compared to how we choose to spend ours.  We’ve had many in-depth talks about money, its importance and that there is more to life than money, and the priorities we choose in our lives. 

6.  It’s fun to watch the creative ways the girls have come up with to save money and get the most for their hard-earned dollar.  Whether it be signing up for text coupons at their favorite clothing store, or buying school supplies on sale, or going in together to buy birthday gifts for family members.

7.  Now that my daughters have real-life experience with budgeting and the trade-offs that have to be made, we have been able to have advanced discussions about the economy and choices that our government leaders are making.  Economic and political discussions have more meaning to them since they have practical budgeting experience.

If you’re interested in calculating a comprehensive allowance for your teen, you can download my worksheet {here}.  Let me know how it goes for your family.

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  1. Very smart! My parents put my brother and I on an allowance too, and the catch was also that we were responsible for buying things for ourselves. And I feel really financially prepared now, so I guess it worked! Thanks for sharing at The Fun In Functional!

  2. Jessi, I think your parents are brilliant! šŸ™‚ Glad to hear another success story. I think learning financial responsibility is as important as earning your diploma.

  3. This is so helpful! My son is only 3 and we just started him with a responsibility chart so he can start learning the value of money. I will definitely be coming back to this in the years ahead.

  4. It’s wonderful that you’re starting early with teaching your son responsibility. He’ll grow up thinking that living responsibly is just the way life is because he learned it at a young age.

  5. This is great! I started something similar with my kids and I have a son whose money burns a hole in his pocket too. šŸ™‚ I figure I’ve got two sensible ones of the three so maybe it will rub off on the middle one! lol Thanks for the tips for teens.

    1. The jury is still out on my youngest, but I’m afraid he’s going to be the one with the burned hole in his pocket. I’m just thankful right now that my daughters are doing so well with managing money. But you must being doing a great job with your kids and the middle one is just keeping you on your toes. šŸ™‚ My middle one would say that’s their job.

  6. Brilliant! I noticed when I lived n America, (I’m back in England now, where kids do not get as much “stuff” as their American counterparts) in a rich neighbourhood, that most of the kids had a feeling of entitlement and got everything they wanted. The high school parking lot had Porshe’s BMW’s and brand new cars for example, I drove a ten year old people carrier lol I worried my kids would feel like those other kids, but due to my always having explained our finances to them they didn’t feel entitled at all. My daughter got a part time job at Arbie’s at 14, she “accidentally” put her birth year one year earlier I later learned, as you had to be 15 to work there, and by age 16 she had enough money to pay for driver’s ed and buy a little car. My son started work later, I told him, you can have money or time, he chose time for a couple of years, then went for the money and got a part time job. They are now aged 28 and 30 and both own lovely homes, travel abroad every year, and have great lives due to their life time of saving, so I know it works to be open about money and the cost of living with children and to teach them to budget. I have to say I did buy their clothes until they left school, but I had a budget so they chose, less items that cost more or a lot of cheaper items, just like your kids.
    I’m really enjoying your blog.
    Angela xx

  7. Great article! I have a 15 yo son who has been hounding me with wants & I’m excited to put this in practice. I was unable to downloaded the chart- would you mind emailing it too me?
    Thanks in advance!

  8. This spreadsheet has helped me start a conversation with my teens about healthy spending habits, the value of goods and planning for what you want and need. Thanks Susan!

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