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I have been giving my kids monthly allowance to buy their food (lunch) and other school materials.

However, recently, I noticed they are spending their allowance on those "gundam cards"

So, how do I educate them that their allowance is for food and school materials - not other things?

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____COOL____!! –  bobobobo Aug 31 '12 at 16:30
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IMHO, lunch and school supplies are kind of the parent's responsibility...not not sure I'd put those expenses in the 'allowance' budget. –  DA01 Aug 31 '12 at 17:21
    
Well, "buying lunch" is a treat. Usually a hot lunch will be preferred to a packed sandwich, so it's preferred, but of course it's more expensive. –  bobobobo Aug 31 '12 at 17:53
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7 Answers

up vote 6 down vote accepted

Is the money you are giving them a monthly allowance, or explicitly for food and other school materials?

The reason why I ask is that the terminology can be important.

Where I grew up, "allowance" meant "your parents give you money that you can spend as you want".

If that is what you intend, then you can't say "no, you can't buy this with your money". As bobobobo mentioned, your perspective on what is important will differ from your kids', and setting (from their perspective) arbitrary rules on what they can and cannot spend their money on will be confusing and frustrating to them.

If you truly want it to be a generic allowance, then you should focus on educating them on budgeting, possibly by offering to help them plan a budget for how they spend their money, and assisting by reminding them of their planned budget when it looks like they may be straying; just remember, though: it is their budget, and they should have final approval on it (and they should also have to deal fully with the consequences should they overspend their budget, or plan poorly).

On the other hand, if you really just want to give them money explicitly for lunch and school supplies, then you need to make that clear. Furthermore, since you know that they are already violating that rule, it would be appropriate to put some new restrictions in place. Namely, I'd suggest figuring out how much of the money you give them that you expect to go to school supplies, and deduct that from what you give them. Moving forward, if they need school supplies, they need to ask you, or go with you to buy them, and you get veto power on anything that you don't think they need (i.e. the plain 3-ring binder instead of the more expensive binder that features Gundam units on the cover).

For lunch, you can either give them enough to cover food, with the understanding that if they use the money on other stuff they don't eat, or you can start packing lunches.

However, there will likely be resentment that they can no longer buy the stuff they want. You can either discuss possibilities for making money around the house (I agree with the blog Torben cited, and don't believe household chores should be rewarded with money, but by agreeing to take on chores that aren't normally their responsibility, perhaps a financial arrangement might be appropriate), or let them deal with the restrictions for a suitable period of time (a month or more, depending on how well they adjust, or how much they complain) and then consider giving them some money for them to use at their discretion.

Giving them money to use at their discretion creates a lot more opportunities to learn about budgeting and responsible spending.

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Yes, I like your last sentence as that is my objectives for them. I want them to grow up and know how to do budgeting and spend responsible. –  Jack Sep 3 '12 at 2:19
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Don't give them more allowance when they run out of money. Show them that it is a finite resource. If they don't buy food with the money, then let them taste hunger.

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Yes, I always give them the same allowance per month. However, nowadays, the inflation is creeping up and the price has gone up too. I don't wish to see such situation where they can't even buy their food and also I do not want to go to the extreme of having myself going to their school to help them buy the food and the school materials each day. –  Jack Aug 30 '12 at 6:02
    
Inflation is one thing. But what message are you sending if they spend their money on junk and you come and bring more money? –  Dave Clarke Aug 30 '12 at 6:52
    
Then in that case, I think I rather pack the food at home and tell them to bring to school. Then, there is no need to give them any allowance. –  Jack Aug 30 '12 at 7:16
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My parents had a very strict regimen for money:

  • You get no base allowance. All money is earned through chores. Lunch money is different (see below).
  • Doing a chore will get you a daily payment. Clearing the table was $1 per time (the exact chore and monetary amount will change from house to house, of course).
  • All payments are noted on a calendar, so there's no argument about whether or not a chore was done or not.
  • Kids rotate chores according to a 'chore wheel,' which was posted on the fridge. It was rotated once allowances were paid out.
  • Here's the important bit: deciding not to do a chore would cost you $5. So a kid could decide to skip doing the dishes, or whatever, but that would cost the entire week's worth of chore money for that chore.
  • Cursing, breaking the rules, ignoring parental requests, etc, would all result in a predetermined penalty, once a kid ignored a warning that they were headed towards a punishment. Minor infractions (cursing): $5, Major infractions (stream of cursing that doesn't stop when interrupted by a parent): $10, serious infractions (hitting a sibling, etc): $20.
  • Kids can end the week with negative balances, especially if they have huge tantrums. In that case, they definitely don't get an allowance, and may have cost themselves allowances for weeks to come.
  • Kids with negative balances can do extra chores (weeding, which we all hated) to get back towards zero. There are always chores to be done around the house, like laundry, etc.

These rules could only be used once the kids understood money and do the math necessary to understand negative numbers and debt (age 10 or so). My mom instituted these rules when she realized she could no longer physically restrain us or pick us up and remove us from misbehavior like she could when we were toddlers.

This approach had a lot of consequences on how I think about money. First, I've earned it when I get it, so if I want to blow it on Gundam cards or whatever, that's my own fault. I have a huge collection of moldy Magic cards to show or this attitude. Second, if I ever want to be independent from the relatively arbitrary rules of my parents, I have to get another source of money. Third, sometimes the person giving you money will decide that you've been bad. You can argue with them, but they're the one with the money, so either you get humble to that fact or you get another source of money.

This money was decoupled from school lunches and school materials. For materials, my parents would go with us to buy things from the office supply store. For food, they contacted the school and determined how much, exactly, lunch costs (not relying on us to tell them, probably a smart move), and then giving us that amount x5 at the beginning of each week. And as @Dave_Clark pointed out, if we chose to spend that on something other than lunch, then we got to taste starvation.

This decoupling actually taught me about budgeting-- that there's a basic amount of money that you need to survive that is sacrosanct, that cannot be touched when you're trying to do something fun. I also learned to plan out this basic amount in advance of when I was going to need it.

I think your approach of a single weekly payout that isn't coupled to performance will come as a bit a of a shock when they suddenly need to produce work for food. I realize that this scheme is complex, but it really helped me understand what it meant to earn money, as well as what it meant to afford something.

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Interesting method. How many kids were there in your family? –  bobobobo Aug 31 '12 at 16:31
    
3. I'm not sure how well it scales to more or fewer. –  mmr Aug 31 '12 at 17:04
    
+1. Your points are interesting. But I was wondering if a kid get sick during his/her chores week, does it mean either the kid do the chores or he/she end up with nothing? –  Jack Sep 3 '12 at 2:16
    
@Jack-- sick days were comped :) Also, if someone has a school trip, they can get out of chores that way. Kind of encourages school trips and group participation, come to think of it... I think my parents were wilier than I gave them credit for... –  mmr Sep 3 '12 at 2:39
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Give your kids opportunities to learn that money is a privilege that must be earned, and that money is a finite resource -- when it's gone, there isn't any more.

Trent has several blog posts about children and money:

  • In short, we don’t believe in compensating our children for regular household tasks. We aren’t compensated for those tasks, so neither should our children be. Also, compensating them sets up a precedent where they expect compensation for those tasks, which stretches out for as long as they live here and perhaps into their adult life.
    http://www.thesimpledollar.com/2012/02/21/chores-allowance-and-above-and-beyond-tasks/
  • For us, the rule of thumb is simple: the parents take care of basic needs, period. Basic needs means food, water, clothing, housing, school and field trip fees, and so forth. [...] Expenses for “wants” either come out of their allowance or are earned in some fashion.
    http://www.thesimpledollar.com/2010/10/13/what-does-an-allowance-pay-for/
  • .. and more. It's a really useful blog about personal finance!
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I disagree with that first point. Just because the parents aren't compensated for a task does not mean that someone can't be-- I don't want my kids thinking that they should do work for free (internships), nor do I want them thinking that certain kinds of work aren't worth paying for (ie, that a maid/gardener/nanny is somehow a 'bad profession' because the people who hire such professionals should be doing those tasks for themselves). There's too much personal angst and negative judgement in "well, I don't get paid for this, so no one should be!" –  mmr Aug 31 '12 at 17:08
    
@mmr: I don't necessarily agree either, but I find the idea interesting and it is a good starting ground for making up one's own mind. I feel that your view might be a bit more definite than mine. No harm in that. –  Torben Gundtofte-Bruun Aug 31 '12 at 19:27
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You don't need to teach them how not to waste money. Implicit in your statement is what these kids like, that, that's a total waste of time.

Wrong attitude.

They like the Gundam cards, they're toys. They're fun to play with.

What you really need to teach them is accounting. If I have $10, and I spend all of it on Gundam toys, then I have nothing left for food. This is bad. I can spend $1 on Gundam and $9 on food, that's pretty good.

Follow what they buy. At the end of the day or week (depending on how much they are spending), ask, "What did you buy?" Have them show you. If it's too many Gundam cards then reprimand but don't overreact. Overreacting will make them hide it.

Don't guilt trip.

Take interest in their interests and don't belittle.

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+1 I agree-- there are too many opportunities to teach and learn by participating in their activities rather than saying that the activities are worthless. It would have been awesome to play these kinds of games with my dad or mom. –  mmr Aug 31 '12 at 17:10
    
+1 I do agree with that. Maybe I will set aside a 'Toy' expenses for them. –  Jack Sep 3 '12 at 2:10
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Perhaps it might help if you label the money. I don't mean literally putting stickers on it, but when you talk about allowance it's not clear what it can and can't be used on.

When you talk about money with your children, be very specific. You may give them:

  1. Lunch money. Determine how much they actually need, and give them exactly that.
  2. School money. Determine what basic supplies cost, and give them exactly that.
  3. Pocket money (or allowance). This is the only part that they can spend any way they like. They can use some of their pocket money to upgrade their lunch/school purchases, like a Gundam-covered notebook. You can encourage saving and budgeting by paying them some interest on the pocket money that they save instead of spend.

If they spend lunch and/or school money on other things (because they overspent their allowance), then deduct that amount from the next allowance.

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+1 Yes, I think labeling the money will do help too. –  Jack Sep 3 '12 at 2:17
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Let them choose,

Send them to school with a few items (so they don't go hungry) that are fairly healthy, but not particularly exciting. If they'd prefer to spend their money on the cards but then don't have it for lets say, pizza day and are bummed that they don't have the money to buy their favorite lunch the natural consequence of not getting to join in with friends for this special lunch will be a lesson all its own. Just don't save them and give in when they say, "its pizza day and I don't have the money." Instead say, "well, next time you'll have to save your money instead of spending it all on other stuff." These are the choices life offers us.

My sister and I first started getting an allowance so we could buy juice from the juice machine at school. However, when we realized that mom and dad provided us with a water bottle for free and we could use the money for other things, we quickly learned how to save our quarters. My sister's first purchase - a nintendo (the very first system) - mine, a horse. They'll figure it out if you let them.

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