It’s a hotly debated topic. Should you GIVE your daughter an allowance? Let her earn it? Or should you wait until they start earning their own money?
I’ll leave the final decision in your hands. But if you are considering an allowance, let me offer a tool that will help her manage money for life.
Heck, it is having a positive effect on how I save since I started this with my daughter.
Give her three jars and show her:
How to spend the money.
One of the big challenges with money is that most of us weren’t educated on how best to spend the money.
For many of us, you get it and you spend it.
As a child, you see a new toy, flashy game or candy bar, and you buy it.
Few people get advice on how much to save, spend and balance the money to make it last. So you get your first paycheck and start spending like crazy. Or you realize the crushing blow of how much is taken out in taxes but don’t get guidance on how to spend the remaining money.
So, I’d like to offer a suggestion that will rethink how to spend the money. This model by the way also works GREAT for entrepreneur, freelancers, or anyone who doesn’t receive a bi-weekly paycheck.
- Jar #1 – 10% for charity/giving back
- Jar #2 – 10% for saving
- Jar #3 – 10% for the house
- Jar #4 – 70% for you
These percentages work whether you give her $1, $5, $20 or even $50 a week.
Use percentages rather than a promise to save a random amount of money
When you get a $1, it’s easy to talk yourself out of saving money.
And when you get $100, it’s even easier to want to spend it all. Hello, new toy or game!!!
However, if you start with the habit of using percentages, it makes the saving process mindless. If you get $1, you save $0.10. If you get $5, you save $0.50.
Repetition is more powerful than one time savings
I do feel blessed that my Mom started my savings account when I was young. I was very surprised in my teen years how much I had saved from birthday and holiday gifts.
But, I’ll admit to not being disciplined to save everytime I earned an allowance.
And that habit has taken years to instill as an adult.
So, start your daughter NOW as a saver. Make it as regular as taking a bath or brushing your teeth.
If you receive money, put 10% in the savings account.
Invite them to add to the household finances
The funniest thing happened after my daughter contributed her first 10% to the house.
She started turning off the light when she left the kitchen.
(Mind you, every other room was fair game. But the kitchen was one of our ongoing battles)
The funny part was that she only gave me $0.10. But, she started to realize that the $0.10 made a difference in the overall operations of the house.
I pray that when she become an adult, she will have an easier transition paying for her household expenses from this one habit.
So I hope these tips give you some ideas about how to better support your daughter spend her allowance!