Originally Posted by IdentityCrisisMama
I'm at a weird place with this. A big part of me feels that giving kids small sums of money to save or spend at will while they are provided for by parents is really not helpful in terms of helping kids learn money management. I know this is a pretty widely held view but I doesn't make much sense to me.
It depends on the household, I think. In households where parents buy the kids anything they ask for when it's asked for, I agree on not seeing the point. Of course, there I think buying someone everything they ask for is the bigger problem than the allowance.
But in households where that doesn't happen, kids can still learn money management because if they want something, they have to manage their money to get it. For example, because it's back to school time- you can either give your kids a budget ("I'm willing to spend $X on clothes and school supplies, if you want the fancier ones- you have to use your own money. If you can manage to get them cheaper, you can keep the rest") or say that if they want something more expensive than you're willing to buy, they have to pay the difference (basically a budget, but on individual items). I would start warning the kids about back to school and that this is what's going to happen a few months in advance so that they know, and also steel yourself to stick to what you said. You could also use it as a chance to teach them about coupons and sales.
Personally, I'm very
opposed to a kid saying "I'll pay you back with my allowance for the next few weeks!" when abig expense comes up. It's too easy to do that in the modern world and you can get in trouble FAST with debt. There may be times when an advance on allowance is okay, but it would have to be something very special. I'd much rather that kids learn they should always have some money saved up just in case. You can, however, work out a compromise- my dad would pay for half when it was a really big expense. I'd still have to save up for months (constantly having to decide if a smaller expense was worth the set-back to saving up) to get it. It also let me learn that if I saved up my allowance rather than spending it every week, then when I came across a big expense- I could either get it right then or wouldn't have to save up for nearly as long.
My partner, as a kid, got an allowance and when there was a big expense coming up- my partner would ask FIL to save the allowance for them so they wouldn't be tempted to spend it. Meaning they never had to learn real self-restraint. Fortunately they're not so irresponsible as to ignore necessary expenses, but if it were up to my partner I don't think we'd have much of anything in savings. As an adult, they got into a bad habit of spending their weekly allowance before they even got it- made me so
mad. Since we stopped doing allowance because we were in a bad financial situation, they'll still
try to spend money on frivolous things.
I got a weekly allowance and there were quite a few times that I saved up for weeks or even months to buy something I really wanted, as well as one time that I did a lemonade stand to earn money for something.
Frankly, wants and needs are different. An allowance means that you can focus on the needs and let your child have responsibility for their own wants. It's a very important lesson. I'm certainly not opposed to ever giving a kid something they want- but I don't think it's a good idea to go without for a child's wants, either.