Wow!  Teaching our children to manage money is not very easy, is it?  My girls are 11 and 13 and have definitely awoken to the extras that a few dollars in their pockets can buy.  While it is true that since they were able to talk, they have asked for things that their folks didn’t think were needed. Now, at this age, they talk to their friends, envy their things, and have personal interests that cost quite a bit (imagine my surprise when my daughter wanted to buy a lego modular building for $225.00!). They can also check out websites for things they fancy. One of my girls desires a membership at the gym to play games, learn karate, or get better at racquet sports.  And, big surprise, they all cost money and not just a bit.  It adds up quickly!

Over the years my husband and I have tried various ways to teach our girls about money and to live within their means (well, really, our means).  We have “hired” them for chores, encouraged them to take on little jobs to earn some extra money (like delivering our local Metroland paper, shoveling snow for neighbours, etc.), and given them an allowance for special things that they wanted.

For whatever reason though, we always seemed to pull away from our approach. None of them really worked. Determining what amount of money is reasonable for an 11 or a 13 year-old to manage is not that easy (especially when their clothes and shoes of choice now come in women’s sizes and, more annoyingly, have higher price tags).  What do you do when a friend’s birthday is coming up?  What about holiday gifts?  Should the girls put aside some of their own money for education after high school?  Should I pay for the lip balm that isn’t really needed but that has a “really nice smell?”

Well, for the past few months, we have finally hit an end to the “Can I have…?” and seem to have found a solution that works.  My real intention was to cut out the requests and the anger when the answer was “no” and along the way, teach our girls to live within their means (which is not a concept that is easily understood, even for many of us adults who pay the bills).

In a nutshell, here’s what we did, we:

1. Looked back over the past six months of spending on children. “Which of the items were needs and which ones were wants?” and “How much was spent on personal-choice items like clothes, shoes, hairbrushes, etc.?”
2. Decided how much could be spent within the family budget so that there was equity for the girls, the bills were paid, and there would still be some fun money left over.
3. Determined how much money there was to support fitness/arts-related activities like music lessons, soccer or swimming lessons, dance, gym membership, etc. and still leave room for each child to have one or two activities with a reasonably equitable dollar amount assigned.
4. Figured out how much was a fair basic amount that was truly needed to purchase required personal items.
5. Added a few dollars to this basic needed amount (totally personal decision, if there is no money left, then you can’t do this; however, if you have been purchasing little items here and there, there should be something left over) so that they can buy a few small wished-for things.
6. Decided what the rules would be. For our girls, the rule was if the item was something they wanted, it had to come out of their personal pot. In our particular scenarios, the folks buy all food, personal hygiene items and the girls’ friends’ birthday and holiday gifts. In the summer we top up their budget as they will have a bit of a shopping burst for school but all of it will have to come out of their own personal pot. Lastly, and what was the big sell for our girls, whatever they don’t spend, they can keep.

At first, the girls were very delighted with our proposal and latched onto it like they had wanted it for years.  Now, they are used to it and the demands for things from us has really fallen off, although our oldest will sometimes say she wants to forget about the monthly limit (because she has to work to stay within it).  I’ve been consistent in applying it too and asking them if they have the money to purchase the item they are considering.  Truth be told, they can live within a clearly defined box and adjust their purchasing based on this.  It has been a pleasure to watch it play out and fun to watch them shop and determine if they have enough to buy something new.

Have you struggled with how to teach your children manage spending?  Tell us how you have addressed this challenge.  There are a number of ways you can reach us:

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About this guest blogger:

Bonnie Hewitt, RN is a supervisor with the Early Years Health Program. Although she has 27 years of experience working with families of young children, she turns to colleagues for parenting advice. She has 2 lovely girls who are tweens.