Kids and Their Money :: Allow Them to Spend or Force Them To Save?

Let me preface this by acknowledging that I am aware this is a true first-world problem and the fact my children even have money to burn is a privilege I do not take lightly. Their access to money to spend is a gift and with any privilege comes responsibility. If you find yourself in a similar position where your children have extra funds to spend and still want to cultivate a sense of responsibility, I hope this helps.

should you allow kids to spend their allowance or force them to save?The holidays may be over but as for my family, the desire to spend and purchase is far from over. Let me explain: my children are at the age where they request and receive gift cards as presents from friends and family. No sooner than the envelopes are opened are they ready to spend every last cent on more stuff. It honestly makes me cringe because they also receive physical gifts in abundance this time of year. It feels excessive and indulgent. I know many parents want to give their children more than they perceive they received in childhood, myself included.

But in this world of instant gratification, I find it a struggle in trying to raise children who are financially conscientious.

Several years ago, we started to give our children a weekly allowance in exchange for certain household chores above and beyond cleaning up after themselves. I know there are mixed opinions on financial incentives for household chores. Although in theory, I understand both sides, we landed on the side of compensation in hopes to foster financial responsibility and understanding. But like everything in parenting, there is no right way. Initially, they were given a small amount ($2/week) with the expectation that they helped around the house. As they aged (mine are 5, 9, and 11), we added more to their chores. Now, they all wash, dry, fold and put away their laundry, unload the dishwasher, take out the trash, wash the dog, and give her food & water. Additionally, the older two cut the grass and help clean the house (bathrooms, vacuuming, and dusting). As such, we have increased the “allowance” of the older two to $22/week. If they don’t complete these chores, they don’t receive the additional allowance. It is that simple. Often, if they complain too much about said chores, they likewise don’t receive the allowance but are expected to complete the chores without pay. We are raising 3 boys; I try to run a tight ship around here.

With that said, even when it is not the holidays, my children have funds that they want to spend as soon as the money hits their palms. The begging to buy things, especially on gaming apps, was out of control. The creators of these free games are geniuses: the games are free but all the extras, which are updated weekly, require funds. Born out of my frustration with the notion of spending real money on fake money, I devised a plan. When my kids receive their allowance, 75% goes into savings and can only be used for purchasing a big ticket item that they want for months. For example, my son saved for months and purchased a skimboard at our local surf shop. The idea being that they are saving toward something they really want instead of an impulse purchase. 20% can be used for fake money or spent immediately and 5% is set aside for a charitable organization of their choosing. Do they love it? Nope Do they complain? Sure. But we have been steadfast in this plan.

So what about holiday money? We walked into this holiday season without a real plan that we quickly had to devise when they were begging to cash in their gift cards on December 26th. Here is what we chose: Any cash received went immediately into a college savings account. I allowed them to redeem a few gift cards immediately. The remaining gift cards can be spent at a later date. I explained that they already received enough new stuff, to enjoy the new stuff for some time and perhaps in the Spring we can spend some of the other gift cards.

What say you? Do you have a plan for your kid’s spending?


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