Controlling allowance      

Syndicated column from The Parent Institute

[MARCH 15, 2006]  Q: My 10-year-old daughter misuses her allowance. It bothers me to see her throw money away on CDs at the mall or junky stuff that immediately goes out of style. How much control should I exercise over her spending money?

A: We all have a natural desire to protect our children from making mistakes. However, consider the real purpose of an allowance -- to teach responsible money management skills.

Your daughter's spending money is hers. She can spend it as wisely or as foolishly as she wishes. Controlling your daughter's use of her money might keep her from making a mistake today. But this will also prevent her from learning the management skills that she needs for the future. And forcing your daughter to save teaches her to follow orders, not to develop money management skills.

Let your daughter learn from disappointments. Her own experience is a powerful teacher. She may have to give up a special activity she's been looking forward to, because she spent all her money on the latest music video. Don't spoil the lesson by paying for the activity yourself. Don't scold or reprimand her that it was her fault that she spent all her money. Let her know you understand how miserable she feels staying home. Express hope that another week she might decide to spend her money differently.

Throughout life, your daughter will have to make important decisions about money. Here are some ways you can help her now:

• Discuss the difference between needs and wants. Make sure her allowance adequately covers necessary items and agreed-upon activities. Include a little extra for savings.

• Help her open a bank account and deposit money for short- and long-term goals.

• Teach budgeting skills. Make a chart. List days of the week down the left column. For each day, insert amounts for planned and actual spending. Subtract spending from planned spending to see if she's under or over her budget.

• Encourage saving money. Let her have the experience of wanting something without having the money to have or do it. She'll learn she needs to save to fulfill her wishes.

• Involve your daughter in family financial decisions, such as choosing a restaurant that gives the best value for the money. Include her in long-range budgeting too.

• Talk with your daughter about sharing. She can donate money to a cause that is important to your family.

Don't make threats or withhold allowance money for not doing a chore. Use another consequence for the behavior. It has been said, "Good judgment is based on experience. Experience is based on bad judgment." Your daughter will soon discover how to make wise spending choices by living with the results of foolish choices.

[The Parent Institute]

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Copyright 2005, The Parent Institute

"Ask the Learning Advisor -- Ideas for Raising Successful Children" is a free, syndicated column from the Parent Institute.