Allowance, Summer Jobs and College

ALLOWANCE by Joe Lanza
Many parents start teaching kids money management through allowance. Giving your kids an allowance is not a guarantee of teaching monetary responsibility – in fact, you may be teaching them that money will just show up. How can you create an allowance system that also teaches responsibility?

I’m a fan of allowance. I loved watching my kids evaluate whether something they wanted was worth their money (of course it was worth my money!). But not everyone agrees that kids learn healthy spending habits. The great allowance debate roars on, and may have moved to a whole new level with a personal-finance scholar’s recent assertion that a “regular, unconditional allowance may be akin to cruelty to children.” Read more:

The challenge is to create an allowance framework that teaches budgeting, saving and credit concerns. Many parents also use allowance to teach philanthropy – what Adlerians call “interest in the interests of others.” Here are some guidelines:

1. Separate allowance from chores. Allowance is given to develop a child’s responsibility, sense of the value of money; not as a reward for getting chores done.
2. Control the sense of entitlement in our culture of affluence. Do your kids tend to think that they MUST have the current popular item? Ask them how important clothes are when picking friends? Do they have friends who can’t afford cell phones, laptops, video games and how does that affect them socializing?
3. Setting amounts. Decide what you would like your child to pay for and how much you would like your child to have for discretionary spending. It’s important that it be enough to experience whimsical purchasing and then experience wishing you had some money left.
4. Let them make mistakes. Don’t bail them out. Don’t let them borrow money. Don’t make a lot of rules about what they can buy.
5. Require a percentage to savings and to philanthropy. I teach a “three-jar” system: “share,” “save” and “spend smart.” My 7-year-old daughter gets a $7 allowance every Friday. Each week, we require that she deposit two dollars into her “save” jar and one into her “share” jar. She can divvy up the four remaining dollars among any of the jars.

A summer job can be a real eye-opener for kids about the real world. They can learn:
• Why education is important (I don’t want to spend my life in jobs like this one)
• The importance of arriving on time, being focused on work, understanding what bosses are looking for in employees, what an 8 hour work day feels like!
• I can do it! Just realizing you can call or walk in and ask for a job (and survive rejection) is an important life lesson
• A new vision of themselves – I can succeed in the adult world of work
• The value of a dollar – when you work all day and end up with X, it’s a reality check
• Social skills of interviewing for the job, interacting with colleagues, bosses, customers.

Many kids end up graduating with debt, for their education and for their poor money management decisions. This website is from a 20-year-old and is a gold mine of ideas on spending decisions and credit card decisions. This link is to credit card information – but spend time on his other sections:

Summary: Make responsibility a part of the family dialogue:
• What options are you considering?
• That’s your decision.
• I think you can handle that.
• How do feel about how that worked out?


“You are the biggest financial influence in your child’s life. Most of what your children will learn about handling money will come from watching you handle yours.” Michelle Singletary