Dear Miriam,
I recently discovered that my 12-year-old has been hanging onto her allowance, earnings from watering neighbors’ plants and years of birthday cash and just has it all sitting in her room. Do we make her start buying her own clothes? Paying for other necessities or extras? Besides putting some into a bank account (for college? “savings?”)? How should she spend her money?
Signed,
Cash Under the Mattress
Dear Cash,
I applaud your daughter for being thrifty and responsible with her money, but it does sound like a bit much to keep in her room. Your best approach here will be to involve her in financial decisions, including what to do with the situation at hand.
Start by helping her do a thorough accounting of how much she actually has. If she already has a bank account, include in her total what’s already in the bank. If she doesn’t have an account, now is definitely the time to open one. If she has regular gigs with neighbors in addition to the allowance you’re giving her, help her figure out how much she brings in each week, month and year. All of this will give her a valuable perspective for the next part of the conversation.
Next, tell her how much things cost in her life, such as clothes, shoes, piano lessons, weekly grocery shopping for your family, a visit to the ice cream truck, etc. — whatever things you are paying for that may mean more in relation to the amount of money she has to her own name. Then ask her what things she wishes she had that you’ve either said no to in the past or she hasn’t even asked about. Help her look up the costs.
If you’re up for it, help her make a budget. Some to save, some to spend, some to donate is a good rule of thumb that a lot of parents use for allowance. Those three can be in whatever proportions you decide together, but she will benefit from knowing that those are often the key uses of money for adults. Help her research local charities that might be meaningful. Even a week’s worth of allowance as a first donation sets the right tone for incorporating tzedakah (charity) into her mindset.
Then, for saving, you can certainly talk about college, but since no amount of scrimping now is likely to make a real dent in that expense, you may want to frame this part of the discussion in terms of “things you’ll want when you’re older.” In terms of spending, revisit that list of how much you spend on things for her and come up with some ideas about how much seems fair for her to contribute.
One option here is to say that, beyond her allowance, you have X amount budgeted for these extras, and anything she wants beyond that amount comes from her own money. Those parameters will likely help her 1) appreciate how much she’s saved, 2) appreciate how much you spend on her beyond the allowance she receives and 3) how much things actually cost in the world.
Hopefully, through open and honest conversations about money, and her money in particular, she’ll gain a better awareness of spending, saving and giving, and you’ll be setting her on a path for her financial future. A little lofty for a 12-year-old? Sure, but these goals are at the root of giving allowance in the first place, so you may as well put it out in the open.
Be well,
Miriam
