By Jon Gallo


What do good schools and well thought out allowances have in common? Both teach your child a vitally important life skill: reflective thinking. Kids are naturally impulsive. Learning how to reflect before making a decision – learning to think in terms of choices, alternatives and consequences -- is a great life skill for kids to learn. Stanley Greenspan, M.D., one of the country’s leading child psychiatrists, says that children who develop the ability to think in terms of choices and consequences are likely to grow into teenagers and adults who “can solve problems and assess and evaluate their own impulses and desires.” Teens and adults who never develop this skill are “limited to their immediate and often impulsive reactions to events.”
What do we mean by a “well thought out allowance?” It’s been our experience that many parents simply haven’t a clue when it comes to their kid’s allowance. They don’t know when to start, how much to give or what the purpose of the allowance is in the first place.
Since back to school time is rapidly approaching, here are answers to the four most common questions we get from parents about allowances.
Q: When do you start giving your kids an allowance?
A: There’s no magic age. Start an allowance when your child becomes interested in money and using it to buy things. This is usually about age six. But if there are older children in the house already getting an allowance, don’t be surprised if your five year old asks for an allowance. For your child’s first allowance, look at the piggy bank recognized as a Parent’s Choice Award Winner that has four transparent chambers and four slots, labeled Save, Spend, Invest and Donate.
Q: How much should the allowance be?
A: While there is no magic age, there is a magic amount! The allowance should be enough to shift to your child the ability – and the responsibility -- to pay for some of the things you’ve been buying in the past. Keep track of what you’re spending on your child. Then figure out which items you will continue to be responsible for and which expenses you want the allowance to cover. Here’s a simple example. Your six year old is really into Yu-Gi-Oh and the allowance tracker shows that you’re laying out $4 a week on average for Dark Beginning Super Cards. We suggest you start him off with a $5 a week allowance. Fifty cents is for saving and another fifty cents is for charity. The remaining $4 can be spent any way he wants during the week but explain that you won’t be buying him Yu-Gi-Oh cards anymore. You’ve created a situation in which he is learning to think reflectively: “Should I spend the $4 on a toy at the drug store or on a Yu-Gi-Oh card or should I save for a few weeks so I can buy a more powerful Yu-Gi-Oh card?”
Q: How long a time period should the allowance cover?
A: When you first start, give the allowance weekly. As your child gets older, increase both the amount of the allowance so that it shifts more responsibility to your child, and the time period that the allowance covers. If your child is handling a weekly allowance responsibly, try extending it to two weeks, and then to a month at a time when your child is in his or her mid teens. And be consistent. A recent survey of school children in Chicago found that their biggest complaint about allowances wasn’t the amount or the frequency; it was their parents’ failure to provide the allowance consistently.
Q: Any special suggestions for teenagers?
A: Sure. As your kids get older, try a clothing allowance. At the start of each semester, work out a reasonable clothing budget and allow your child to select his or her own clothes. Clothes have tremendous symbolic importance for teenagers, and while they may be fiscally responsible in other areas of their lives, they can easily blow their entire month’s allowance on clothing. A separate clothing allowance prevents this from happening, and it also gives them control of something that has great meaning in their lives. Provide your kids with a clothing allowance that covers the clothes they need for one semester at school. Specify which types of clothing are covered by the allowance: school clothes, after school clothes, party clothes, etc. Try to let your child have as much autonomy in buying clothes as possible. If her school requires uniforms, we suggest that you buy school clothes for her and provide a clothing allowance for after-school clothes. Boys in particular usually aren’t interested in formal clothes. If you want your fourteen-year-old son to have a nice suit to wear on formal family occasions, pay for it yourself and let him use the clothing allowance to buy what he is interested in wearing.
Back to school is a time for new ideas. Using an allowance to help your kids learn to think reflectively can be a constructive new idea for your family.


About the author:
At Financially Intelligent Parent www.FIParent.com– you can download the FIP Allowance Tracker that allows you to chart what you are spending on your child for two weeks. As an on-line member, you’ll have access to an interactive FIP Allowance Advisor to help you figure out which items you want your child to be responsible for.

Eileen Gallo, Ph.D., and Jon Gallo, J.D.
Authors of “The Financially Intelligent Parent”
Creating positive money and life values for your children
www.FIParent.com(877) FIParent



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