Kids can learn that waiting pays dividends

Healthy finances - September 2005


Susan Beacham


In our house, on the first of the month, allowance gets paid out. We remind our girls about the four choices they have for their allowance money: save, spend, donate and invest. We have only two rules about their allowance: They pay themselves first by putting some money in "save," and they take four weeks of "donate" out at one time, put it into an envelope and bring it to church that first week. (We all noticed that it is easier to pay all donation money in one lump sum. Otherwise, we tend to forget to bring the money each week.)

The money left over is to used for the expenses that are their responsibility, invested or budgeted for a larger future goal.

As regular readers of this column know, the allowance my girls get primarily covers clothes, toiletries and food at camp or school.

When we began giving our girls allowance, I noticed that they were often broke by Day Two of the month. This result probably would not surprise most parents—but it surprised me. My challenge became figuring out how to slow down the spending on Day Two (sometimes the afternoon of Day One) so the girls were not turning to me when they were tapped out.

Guess what? The kids themselves showed me the way. Here are a few things they taught me this summer:

Earned money isn’t spent as quickly

Since the girls believed they needed more money than the allowance they were getting, both blanketed the neighborhood with flyers this summer—offering their services for a price. Allison, being older, offered dog-walking and mother’s helper services at $5 an hour. Amanda offered to water plants when people were on vacation for, yes, $5 a visit. Both girls got several takers and did very well supplementing their income this way. I never suggested this approach. They just went to the computer, printed the flyers and were suddenly open for business.

I observed something very interesting: Getting a job made both girls want to hang onto the money they were "earning." There was a difference between the money Mom and Dad gave them and the money they earned. Spending started to slow. Accumulation started to feel better to them. They saw that they were able to purchase better clothing if they saved up for a time. The money they earned had more value.

Note to parents: Children are very entrepreneurial but unsophisticated in business dealings. I pitched in with a suggestion that the girls personalize the flyers by adding neighbors’ names and distribute by ringing doorbells rather than just leaving flyers at the door. They took my advice and, as a result, met many of our neighbors and got a lot of good advice on who else in the neighborhood to approach.

Incentives work

During our summer vacation we all noticed how expensive soda was on restaurant menus (close to $2 each). At fast-food restaurants, the drinks were sometimes more expensive than the actual meal. So I offered to pay the girls the cost of the soda if they skipped it and drank the free water. It was an easy $2 to make each time we ate, and it provided me another insight into their values. Water was just fine most of the time. They began to see it as a healthier choice both fiscally and physically.

Gifts don’t have to cost money

In July, on our 18th wedding anniversary, Michael and I woke up to balloons and pictures of a queen and a king taped to our chairs. It was the absolute best gift we could have received from our youngest daughter, Amanda, and it didn’t cost her anything to create. You can help your kids slow down spending by letting them know that for special occasions a handmade letter, card, poem or picture will be more than welcome; it will be cherished.

A final word

Spending wisely and slowing down spending are more than just watching for sales or using coupons. They’re about understanding why you spend. They’re about setting priorities and realizing that sometimes spending must be delayed (as when saving for big-ticket items). The ideas presented in this column will spotlight how your child views money. At the same time, these suggestions will help your child begin to experience delayed gratification—and realize it can feel good.


Susan Beacham is the founder and CEO of Money Savvy Generation, a financial education company that provides innovative products and services to help parents and educators teach children the skills of basic personal finance, E-mail her at

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