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.
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.
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.
More Parenting Tips and Budgeting Tips
I’m a mom of 3, a veteran and military spouse. I’ve moved into 20+ homes all around the world. My passion is helping busy people make the space and time for what’s really important to them.