Allowance, Character and Teens

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In the last few months, the topic of allowance for teens and minor children has come up quite a bit. It’s certainly not an unimportant topic. Frankly, it is a major opportunity for parents to interact with their children in a very direct way regarding money. But allowance is often dispensed without thoughtfully tying the process to the recipient’s character development. So let’s explore a few concepts to make allowance a more productive experience in families.

First, I’d suggest that allowance not be simply a dispensing of spending money for a child. Every regular dispensation or meaningful amount of money that a parent gives to a child should carry with it some sense of stewardship. That’s not to say that a few bucks here and there to go to the movies with friends, etc., requires a dissertation on wealth management — but even unearned monies should properly carry with it stewardship responsibility and personal accountability.

Second, and perhaps this is just a personal bias, but I’d suggest you have more opportunity to develop character by not tying allowance to the performance of chores or certain other tasks. While even young children should contribute to the family in some fashion, in families of wealth there will be a passing of wealth downstream that is unearned. Allowance is a small way to give a child stewardship and accountability over a small amount of unearned, family wealth.

Third, give your child the opportunity to succeed or fail with their allowance. Trust them to learn their lessons and to discern when to come to you for advice. In our family, we have established monthly amounts our children are responsible for upon entering high school. The funds they receive are also delivered with a corresponding responsibility for them to take care of certain expenses — clothes, athletic fees and equipment, personal entertainment, etc. How they spend it is up to them, with the understanding there is no “bail out” for costs that they didn’t properly budget and plan for. In addition, the next month’s amount is not dispensed automatically. Rather, we require our child to provide a report as to how they spent the previous month’s amount (i.e., no report, no money). The report carries with it no judgment or commentary, unless our child solicits it from my wife or me. In this way, we feel we are re-affirming our belief that our children are capable of managing the funds and the corresponding responsibilities.

Lastly, whenever possible, believe in your child to meet the challenges you’re putting in front of them. Children (and probably of whatever age) will generally rise to the level of expectations placed on them — as long as they aren’t unreasonable expectations. In my experience, there are many families of wealth — particularly first generation wealth — that do not have high expectations of the next generation. These low expectations can cause heartache and self- and wealth-destructive behaviors. A recalibration of expectations can lead to better experiences. Note: this is a topic that has a lot more depth to it, and will be explored much further in the future.

There are, of course, a great many ways that people approach the topic — and there are other good ways to manage allowance beyond what’s covered above. I’d love to hear your ideas, too.

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About Author

Mark initiated this blog due to his passion in assisting and equipping families to manage their wealth and their families well.

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