Kids and Allowance: To Give or Not To Give
Do you give your child an allowance? How about your childhood, did you receive an allowance? Or maybe you're in the “no allowance” camp?
No matter where you are on the issue of allowance, I'm sure you will agree that teaching children about managing finances is an essential part of parenting. And now it's easier than ever with so much help at our fingertips.
So today, on A Healthy Bite, we get some fantastic tips from a financial advisor who has written a book with so many ways to teach our children about finances.
Beyond Piggy Banks and Lemonade Stands
Liz Frazier is the author of Beyond Piggy Banks and Lemonade Stands. Liz is a certified financial planner specializing in financial planning for families and working professionals. Her goal is to alleviate the anxiety that surrounds finances and provide painless and straightforward advice for all of life's stages and changes.
Playing with Money
I wanted to share details about an idea that I presented to Liz in this episode (around minute 13:00). Snack Shop was my idea to teach my children how to count money and limit the number of snacks they asked for, but it turned into much more.
I set this up with my first four children when they were between the ages of 6 and 12. Here's how it worked.
- First, I took a poster board and made a sign for my new “Snack Shop” and placed it prominently in our laundry room above a shelf stocked with snacks. Just like what you'd see in a grocery store.
- Each week, while shopping, I would buy various snacks that the children would enjoy. I placed these snacks on the shelves with prices written on a little dot sticker. My goal was to price everything in a range that they could “afford” to buy a couple of things every day for seven days. With the pricing, they could purchase several small items or one bigger snack, like a bar.
- At the beginning of the week, I would give each child a certain amount of money for the snack shop. Let's say $5.00. The cash was in all denominations from pennies to one-dollar bills, so they could learn to count it to make sure that I gave them the proper amount. (And sometimes I tried giving them too little to teach them to count the money accurately.)
- Every day at a specific time, I'd announce “Snack Shop!” and they'd come running with their money. Each item had a price; for example, trail mix would be fifty-seven cents, and a pack of gum would be thirty-two cents. The child would choose the items they wished to enjoy that day and count out how much to “pay” me for their snack. They would sometimes have the right change, other times they'd get change back. I required them to do the counting completely and taught them as we played along.
- The money would go into the snack shop jar, which I would later use to purchase more snacks and replenish their snack shop funds. If the child were trying to save up for something, perhaps they would choose not to spend money at the snack shop until they saved up enough money to make the purchase. It was an option to skip “snack shop” and opt to keep the money for their own purposes.
Learning about Money and Building Memories
I have such good memories of our “Snack Shop” as the kids would all gather around me, and we'd have so much fun. They were always excited and came running when I would announce “Snack Shop!”
“Snack Shop” was my way of teaching my children how to manage a fixed income! This type of play taught my children how to budget because they wanted to have a little snack every day, so if they ran out of money on Thursday, they'd have nothing left for the last three days of the week. It also taught them how to save, especially during those times they had something in mind they wanted to buy.
They especially learned how to count money because I often pretended to be a dishonest shopkeeper who gave them back the wrong change.
In the end, it taught them much more. For example, if one child ran out of funds, a sibling might choose to buy a snack for them. So we were building character qualities as well. Most of all, we had fun while learning!
You can watch this podcast episode here:
Other articles written by Liz on teaching kids money matters:
- How to turn errands with your child into a budgeting lesson
- Top 10 summer jobs for kids of all ages
- How to Introduce the Concept of Charity to Your Kids
Show Notes & Questions
Parents have a lot on their plates, why teach finance to young kids?
Can you give us some pointers on allowance?
Can you give us a brief overview of the building blocks for piggy banks?
Minute 18:00 The Empty Cup – Adoption Fundraising
How about charity?
In what ways can we teach our children to share and also to be thankful?
How much should parents share about the family's finances?
Minute 32:00 Video Liz mentioned about Lemonade Stands.
Get in touch with the author at: LizFrazier.com