Teaching financial skills helps balance children's personal whims By Danielle Braff :::::::::::::::::::::::::::::::::
Ask 100 parents "What is your allowance philosophy?" and you'll get 100 different answers. A survey of parents of every culture, race and class shows they differ on virtually every detail of money-giving. Some parents give their children an allowance in return for chores completed. Some give a set amount per week no matter what. And some simply hand over money whenever a child needs it.
But there is one thing all parents seem to agree about: The personality of each child dictates their money-spending habits regardless of how much allowance they get or how hard they work for it.
The disparity of spending habits within a family makes it difficult for parents to determine whether their allowance system is working, they report in the poll by Harris Interactive, a market research and consulting firm based in New York.
It's certainly an issue for Chicago mom Ora Deshazer with her 11-year-old triplets and 10-year-old daughter. Each child gets $3 a week. If Deshazer notices a child is spending the bulk of the money on candy or pop, she slowly lowers the child's allowance. But if the child spends the money on something important, or saves the cash, the allowance rises accordingly.
"I see how they do," Deshazer says. "One of my sons buys junk, so his allowance has stayed the same. One daughter buys cards, so she is doing better."
Nancy Cottrell, a Park Ridge homemaker, doesn't give allowances to her four children, ages 10, 12, 14 and 17. Instead, they earn money doing what Cottrell describes as "above and beyond chores," such as washing the car.
Although her approach to giving cash is far different from Deshazer's, her children's spending habits vary as widely as Deshazer's. "They're all different," Cottrell says. "The 12-year-old spends the most. A lot of it is the pressure from his peers."
Joline Godfrey, author of Raising Financially Fit Kids, calls the ages between 5 and 18 "financial apprentice years." She recommends parents use allowance as "a tool for learning how to manage money."
But if the personalities of the children, rather than your allowance system, dictate their spending habits, it can be a challenge to turn your young apprentices into financial experts.
Clarity is the key, says Marena Sabo, clinical social worker and therapist at Children's Memorial Hospital. It's imperative that parents establish clear routines with whatever system they choose.
The amount of allowance will vary from household to household depending on family income. The Harris Interactive survey found that 32 percent of children under the age of 17 get a weekly allowance and the average is $9.65 a week.
But the amount is far less important than the process in terms of training children how to manage money, Sabo says.
"What's really critical is how parents go about doing it rather than how much they give," Sabo says.
The first step is to determine your own expectations of the allowance. Is it a way to teach your child the benefits of saving? A way to teach the principles of budgeting? To keep a child from putting out his hand every time he wants a new toy?
Once you decide your own priorities, have a family meeting to explain the system, Sabo says. During the meeting, be clear about how much of the allowance the child should spend and how much should be saved. Once the rules are clear, determine the day and time when the allowance will be paid each week. If you stick to the payment schedule, your children are more likely to stick to the spending rules.
Homewood mom Gayle Campbell, a Marshall Field's jewelry specialist, says her four children, ages 11, 14, 16 and 18, get spending money from their part-time jobs-ranging from a paper route for the youngest to a job at a grocery store for the oldest.
But even with jobs, Campbell says some of her children have always been responsible with their money and some have never been.
"My 16-year-old is extremely resourceful-he saves every penny he ever had. He's been putting about 10 percent away for college. My 11-year-old has an account at the bank and she's earning interest. If my 14-year-old has $30, it's gone the next day," she says. "It's his personality-he enjoys living for the moment. The others are more resourceful."
Danielle Braff is a writer who lives in Chicago with her cat, Mr. Trevor.