Holding the Line on Allowance

Holding the Line on Allowance

Allowance is designed to offer kids practice at handling their own finances. Depending on your family’s strategy, they’re either required or empowered to spend, save, and share. For many, the cash is earned. For others, it’s given with no strings attached. But regardless of initial strategy and source, almost all families face an eventual dilema: when your child’s allowance runs out, then what? Today, we’re discussing the four most common paths parents take.

Path 1

The Tough Stance

The ultimate lesson in cause and effect, this path offers a dose of reality when your child’s pockets turn out empty. That movie outing with friends? That’s too bad. The lunch all your friends are going to? I guess you’ll be eating at home and ordering water at the cafe. The point here isn’t to be mean; it’s to create enough of an impact that spending will be done with more care in the future. As a parent, you need not supplement the practical with attitude. The “punishment” is harsh enough; you can still operate with a cool head and a listening ear while holding the line from a financial perspective.

Path 2

The Bonus Opportunity

The second path introduces an important word to the first lesson in tough love: but. “You’ve run out of money. This expense needs to come out of your own funds but I’ll give you an opportunity to earn more.” Perhaps it’s a certain amount of money for taking on additional routine chores, or one-off activities like organizing the garage or cleaning the pool at summer’s end. If your family can afford the additional funds, but doesn’t want to enable bad money habits, this is a fair compromise.

Path 3

The Loan

The third path is a controversial one. So controversial, in fact, that we recently devoted an entire post to the subject. But the basics are this: loaning money to a child should be infrequent and repaid according to clear expectations set in advance. While the idea of “practicing debt” with a child may sound foolish, some argue that offering your kids a dose of reality (one that includes plenty of opportunities to rack up debt) is better done under your purview than that of a real lender.

Path 4

The Cave

Finally, we’ve come to Path #4. Anyone who’s had open ears at a checkstand has witnessed this one. It’s “the cave.” Usually done with a helping of fruitless frustration in their voice, the parent angrily throws the candy or toy on the conveyor belt. Their frustration is evident, the “exception” is voiced, but the child still gets their way. And the lesson that money doesn’t grow on trees? It isn’t learned at all. Let’s all choose a different path, shall we?


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