Allowance -- spending for the sake of spending?

[mommahhh]

My 7 year old gets an allowance, plus the grandparents often slip her some money.  My problem is that she sometimes gets a sizable amount (ex: $20 here, $20 there, $5 here, allowance, etc).  She has constant goals because every time we go anywhere she sees 4 things she neeeeeeds.  But her obsessions are things that are quickly forgotten (mainly over-priced stuffed animals).  I am so conflicted because it is her money and she should be able to buy things that are important to her.  I wouldn't mind if it were things that had ongoing potential (fun games, puzzles, craft items, pretty clothes).  But I cringe when she decides she wants to spend $20 on yet another stuffed animal that will be played with for less than a week.  We have so many stuffed animals that she has collected over her 7 years on this earth.  She does play with them (she has tea parties, or uses them in role-play, etc) but I don't really want any more in my house.

After Christmas, she now has $80 to spend (money from grandparents/aunts/uncles). Lately she has been really into these little figurines, and I got her a box of the horses and 1 rider for Christmas.  But she wants to add on to her collection.  Problem is, they are expensive!  And when we looked at them casually before Christmas, I told her they were pretty expensive and she'd need to save her money if she wanted to buy them.  But now she has money.  And 1 dragon costs $28!  I just feel a bit queasy letting her spend $80 (we are on a budget, so that sounds like a sizable amount to me) on figurines that probably won't be played with for long.  I can't be sure of that...she may play with them for a year.  But I know she generally gets bored quickly.

I've tried explaining and encouraging the concept of saving, but she doesn't like it.  "What am I saving for?  I don't want to save money for later....I want _____  now."   I suggested she may want to save her money for a bike in the summer, but she says she doesn't want a bike.  Also, I'm trying to teach her the worth of money, and how if she wastes her money she won't be able to buy something else later.  But she just tells me she doesn't want anything else later, she really wants _____ now.  She's a rather immature 7, and she really got the "shopping gene" unfortunately (not from me!).  She seems to constantly need something new....like she's addicted to the hunt and the "getting" of new items.  It all kind of scares me.  My mom is such a crazy shopper, spending entirely too much money on stuff she doesn't need (and sometimes doesn't even take out of the bag!!).  She has clothes in her closet with the tags still on.  When I think of the $$ she wastes, I feel sick and even a bit angry.  I'm terrified my kid will turn out like her.  It is an addiction and if you don't have a huge wallet to support it, it is pretty scary.

So do I let her essentially waste so much money on stupid stuff?  And am I even right to suggest it is stupid since it is something she cares about?     She just wasted $22 two weeks ago on YET ANOTHER stuffed animal that is now lying at the bottom of a basket.  So frustrating.

[Smidge]

I'm not sure if you're Christan or not, but Christian Personal Finance is an awesome site and this particular post is about teaching kids about money http://christianpf.com/how-to-teach-kids-about-money/

HTHs :)

[LynnS6]

I think that there are several issues here, and it might help to tease them apart.

Issue #1: Having too many things so that you can't/don't use the things that you have. My kids have a ton of stuffed animals, but they all have a role in the 'family'. Ds needs 23 just for animal baseball alone (18 players + 4 umpires). If your dd truly doesn't play with them after the first week, then maybe you could have a rule like they do on some of the housecleaning shows: For everything you bring in, 1 or 2 things need to go out. I regularly encourage my kids to clean out stuff they don't use and we take it to the Goodwill. I just cleaned out dd's drawers tonight because she's outgrown her size 6/6x stuff and I'd just bought her some new 7/8 stuff.  Could your dd donate some of her stuffed animals to the local sherriff's office, for example? Or a local children's hospital? Ours collects stuffed animals to give to children in traumatic situations.

Issue #2: Spending for the sake of spending. For that, I'd suggest making a list. If she sees something in the store that she neeeeds, say you'll add it to the list. Then say every 2-3 months, go through the list and see which of those things she is still interested in. If she can't remember it/doesn't want it anymore, great. If she does, then prioritize what she can get with the money that she has. I'd take her shopping to find the best price and let her spend the money on it. The list teaches delayed gratification, and the shopping around teaches her to shop for deals. Another way to approach this is to never go to the store without something specific in mind. Always shop with a list. That goes for you and for her. Shopping should be functional, not entertainment. If you see something while you're out that she wants, it goes on the list, but it doesn't get bought.

Issue #3: Not wanting to save. This is partly an age issue. At 7, there probably aren't a lot of big things that she wants to save for. I think this will improve with age. You could encourage her to save by matching her savings. When we do allowances, we ask the kids to put 1/3 into savings, 1/3 into giving and 1/3 can be for immediate spending. This summer we're going to open up a savings account for them, and match dollar for dollar what they put in. We actually slacked off majorly on allowances this last year because there wasn't anything that my kids wanted to buy, and they had nothing to save for. I'm going to start again soon, because I want to encourage giving/saving.

I'd also add a 4th issue: Spending her money only on herself. I think it's really important to both model and encourage giving to others. It could be money, time or things. We go through our kids drawers every season and weed out things they've outgrown and take them to the Clothes Closet if they're still wearable. I encourage my kids to spend some of their giving money on food for the food bank. Ds went shopping with his Sunday School teacher before Thanksgiving and spent $10 of his own money to buy items for a food box for a family in need. The 3 other children with him did the same, and so these 9 year olds put together a food box on their own. Dd wants to donate her new Rainbow Magic books to the school library. I had actually planned sell these books (I could get ~$25-$30), but I'm going to let her donate them because that impulse is one that I want to encourage. She thought about who might be able to use them when she was done and made a plan. Encouraging giving/thinking of others might help your child see the value of things in a way that saving money wouldn't. If they're in great shape, why not? Our kids also have to contribute to birthday presents for their siblings and their parents. This is really hard for dd -- "why should I spend MY money?" but again, I think it teaches generosity.

[Needle in the Hay]

I think age has a lot to do with it. I definitely wouldn't fret that she'll be a shopaholic. That can be an awful addiction but there's no reason to suspect that's what she's turning into. It's very normal that money burns a hole in her pocket at this age. While some 7 year-olds might want to save their money to buy a bike months from now, I would guess that most wouldn't.

My son, who is 9, is starting to get better at saving money and being more careful about what he buys with it. This last year or so he has regretted a few purchases. I pretty much just offered my sympathy and figure it's all part of learning and growing. That doesn't mean I've never offered guidance, but ultimately he has been able to choose what to buy with his money (except spending it all on candy--which I don't think he'd even want to do now but has in the past).

As for giving, I model it and he will occasionally give too. One time, he dropped his whole allowance in a donation box at a pharmacy. He saw the box and the picture of the kids on it and wanted to help (and this he never mentioned regretting). Sometimes he'll do the same with change he gets back from a puchase or he'll want to give it to me or to a street musician...

eta: While I haven't required or even suggested he donate a portion of his money, talking about giving and helping in general seems to be working. I mentioned a Christmas present donation I made to a charity and DS was really happy about that. I think the mood lift that giving can produce is key and hopefully something that will stick with him.
Edited by Needle in the Hay - 1/3/11 at 2:00am

[One_Girl]

I think you should let her get the figurines since it is something she planned for rather than just an impulse buy.  My dd went through a phase like that and it helped for me to stop buying things on impulse in front of her.  I do a lot of crafts and would buy cheap craft supplies in front of her, I bought clothes just on impulse, and I would grab stuff at the front by the checkstand also.  DD didn't see the difference between me buying on impulse and her buying on impulse. We agreed to not do any purchases on impulse and to wait a week if we saw an impulse buy to see if it was still that important to us in a week.  We are both saving a lot of money because hardly anything is worth it after having time to think and plan other purchases.  She almost always has a big goal that she is saving for and she had made some impulse buys that she regretted later because she had less money, so I am usually able to use those examples to help her remember to stick with her goal.

[eepster]

It sounds like this is a very emotional issue for you.  I think you need to find a way to work through you own baggage from your mom's overspending before you can start teaching your DD about reasonable frugality.  

[sublimeliving]

Having three saving jars (one for spending, saving, and giving) is essential in teaching about money. My seven-year-old daughter often goes through her things and decides what she doesn't need anymore. The things she doesn't need, we sell. The same thing for her clothes that are too small (she takes them to the consignment shop). The money from that goes directly into her savings account. What I did for my older daughter (now getting ready to go to college next year) was have her get CDs (certificates of deposit) and savings bonds at the bank. She has quite a few now, and it will help her either pay for college or will be saved for a down payment on a house. My seven-year-old has saved  money strictly to invest it. 

She is only seven, you need to put an end to unneeded shopping. If you don't take her to the mall/stores, she can't spend her money. Teach her about interest rates, bonds, CDs, stocks... She will appreciate being taught when she is a teenager wanting a car or needing to pay for college. I hope this helps a little : )