March 2010: Amp Up Your Allowance
Some families do allowances and some don’t. If you’re lucky enough to get one, it can be a great head start on your financial future–if you manage it wisely. If you don’t get an allowance, or if you think it’s time for a “raise,” we’ve got some tips for you, too.
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Why allowance?
An allowance is really part of the family budget. Different families manage allowances differently. There are really two basic philosophies when it comes to allowances: either the allowance is provided in exchange for something, such as good grades or doing chores, or it’s given simply as a way to help you learn to manage their money.
Believe it or not, many experts believe that the latter is the way to go. If you always get a set amount, it helps you learn how to plan your expenses. If it’s about what you do, the point about learning to manage money can get lost in the negotations over which chores you do and when.
What do you think? Do you have to do something to get an allowance or do you get one no matter what? What are some of the advantages and disadvantages of getting an allowance versus just asking your parents for money when you want something?
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What can you do with an allowance?
Balancing saving, spending, and sharing is what every budget should be about, and there’s no better place to start than with an allowance.
- Saving means paying yourself first–putting some money away in a savings account or other investment–which is the only sure-fire way to build wealth.
- Spending means buying stuff–sometimes tied to saving, if what you want to buy costs more than you’re paid at one time.
- Sharing means donating some of your money to a worthy cause. Giving to charity is an investment of a different kind–one that makes the world a better place.
Here are a couple of tools to help you get a handle on how to manage your allowance income. The sites are written toward parents, but don’t let that stop you!
- Moonjar: A cool money box with separate compartments for saving, spending, and sharing.
- Money Savvy Generation: The Money Savvy Pig has compartments for saving, spending, and donating. Their version also adds investing into the mix–a great thing for Biz Kid$ like you.
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Talk about it
Not sure why you get an allowance? Not sure what to do with it? Talk about it. It used to be that parents didn’t talk about money with their children. And it can be a stressful topic, especially in tough economic times. But parents who talk to their kids about money help create financially responsible adults. And kids who show that they are interested in managing their money wisely may find that they suddenly have more of it.
Speaking of more, if you’re trying to get your parents to increase the amount of allowance you get, make a plan. Ask yourself the same questions they might ask you: Why do you want a larger allowance? What are you going to do with it? Are there ways you could use what you already get more carefully to accomplish the same things?
Here are a few tools your family can use to create conversation around money management:
- FamZoo: A virtual family bank to help kids learn good money management skills.
- KidsSave: Software just for kids to help you manage your money.
- MyRewardBoard: If your allowance is linked to chores or other tasks, this is a great way to track your progress.
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