Finances are an important lesson to teach our children. It is especially important that students have a strong understanding about money before leaving for college. Parenting experts Bret and Tracie Shroyer share their expertise on allowance and help you get started teaching these concepts today!
The website is broken into 3 different parts:
- Young Children
- How to start kids with their first allowance.
- If kids don’t really know what money is.
- Medium Kids
- Some experience with birthday money.
- Maybe you are thinking of starting an allowance.
- Big Kids
- Teenagers or children with experience having an allowance and what to do next.
- How to wean your child off the allowance.
A common mistake is that parents don’t give children an allowance and parents pay for all of their expenses such as clothes, activity fees, etc. “The kids are learning not to manage money or manage a budget, but they are learning to spend their entertainment budget,” explains Bret Shroyer.
“Use that same money that you are spending on them anyway and make them accountable for it,” says Tracie Shroyer. “Then you are teaching them how to manage a budget and manage their expenses.”
Allowance is defined as the amount of the household budget that a child is allowed to spend on their own behalf.
Great beginning items to allow children to start with managing are school lunch, shoes, and then clothes.
Think about what you spend on something per year, for example shoes. Divide that total yearly amount you usually spend by 12 for a monthly budget. Children are then in charge of that money, but have to save it up for shoes at a later date.
“There are some categories that we don’t give them control of and we continue to manage,” shares Tracie. There are also some very expensive activities/sports that children should partially have control of, but not the whole price tag.
“You have to let the kid make some mistakes; it’s the only way we learn how to manage money is by making boneheaded mistakes. The responsibility of this budget is so that your kid makes mistakes and they learn from it,” states Bret Shroyer.
“It’s much better for them to make that mistake now, rather than waiting until they move out on their own,” adds Tracie Shroyer.
Allowance During and After High School
The peak of allowance is 15 years old. Once the student gets an outside job, start lessening their allowance quarterly until it is $0 just after they graduate from high school.
Parents must also have a conversation with their child about what they can and will contribute to college expenses. Also consider what debt students must take on to finance college and will be left with after graduating.
“Your number one job as a high school student is getting good grades. That doesn’t take all of your time,” indicates Bret Shroyer. It should be an expectation that students are working about 10-15 hours a week. This will go up or down depending upon activities.
“The average teenager cannot actually make enough money in a part time job to really be able to use that money and learn how to spend it responsibly. They would need to work a 40 hour a week job,” stresses Tracie.
Be sure to also include long-term saving as part of your allowance plan.
Mechanics of Allowance
“Start with the cold hard cash and then move up to a checking account,” The Shroyers recommend.
It is very important to start with cash.
A checking account is a great next step. This usually comes with a debit card. The debit card is not wise to use for everyday purchases. Try prepaid spending cards instead such as FamZoo.com
Famzoo has multiple features including loans, tracking spending, and total parental control.
There are other prepaid cards available, but the Shroyers recommend FamZoo.
LINKS AND RESOURCES:
- Many resources available on the website
- Facebook: Allowance Academy
- Podcast available on iTunes: Parenting Success
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