We all know that one of the best ways to
teach a child about money is with a weekly allowance. Knowing that is the easy part. What isn’t so easy is figuring out how much
to give your child and for what the allowance should be used. This is a
constant topic of discussion between parents and staff in our school.
To research this post, I did what I always
do – ordered every book I could find on the topic from the library and, while I
waited, trolled websites. What I found on the internet
was a snarl of conflicting and confusing advice. In fact, I found so many different ways
allowance can be handled that I wondered if this post would ever get written.
Then the
books arrived and one in particular caught my eye. It was a small, unassuming book written by
Gail Vaz-Oxlade (you may know her television show Till Debt Do Us Part). I had only to read the first chapter to know
that what Ms. Vaz-Oxlade proposes in Money
Smart Kids meshes beautifully with the Montessori philosophy.
Now, before I get into a condensed version of the book, I’d like to share an activity that many Montessori schools use to introduce the values of coins to students. We call it the Money Game and the rule of thumb is that the students must have a good working knowledge of the decimal system before being introduced to the game. (There is a very good description of the game here.) We have found that playing this game will help a child understand how many coins to give when paying for something and how much –if any- change she will receive.
Back to the book. The
following is a very brief paraphrasing of Ms. Vaz-Oxlade’s advice on how a
child’s allowance could be handled.
However, I STRONGLY suggest you read a copy of her book to get the full
version. She really knows what she’s
talking about.
1. Set expectations.
You and your child need to sit down and
discuss what the money will be used for.
Without a plan, a child will just spend money on whatever she chooses
and that will do nothing to teach her about money. Ms. Vaz-Oxlade suggests the money be divided into three parts: one part to
be saved, one part to be shared (charity), and one part to be spent (this last can
be broken down into mad money and money needed for specific expenses).
2. Use Jars.
Divide the
money into 4 clear jars (clearly labeled Savings, Sharing, Planned Spending
& Mad money) so that your child can really see how quickly the money can be spent or saved.
3. How much?
This depends
on what you can afford and for what you expect the child to pay. It also
will depend on the child’s age because an older child will have more expenses
than a younger one.
4. Make it easy.
Decide, with
your child ,what day of the week is best? My boys wanted their allowance on
Friday afternoon so that they had money for the weekend. Some children might want it on Sunday evening
so they have money for the week. Whatever schedule is chosen, the adult MUST
stick to it. Consistency counts.
5. How much in each jar?
Ms.
Vaz-Oxlade suggests 10% of the allowance go into the Savings jar. The Sharing
jar gets whatever you decide (Vaz-Oxlade’s children did 5%) The amount to go into the
Planned Spending jar depends on what you and your child have decided she will be
purchasing (bus tickets, movies, books, gifts).
As mentioned above, discuss this with your child and decide together how
much is needed.
Into the planned savings jar, goes a portion
of money as savings toward something like University or a trip. If your child also wants to save for a
smaller item (an Ipad, for example) a fifth jar can be set up. Anything left over is Mad Money.
6. Don't tie allowance to chores.
Ms.
Vaz-Oxlade and I agree here. Allowance
should not be tied to chores and should be strings free. Also, it is perfectly fine for a child to get
a part time job to supplement the allowance.
Money for grades? How does that
motivate the child internally? Besides, if your child is in an authentic
Montessori …. there are no grades! Money for chores? Do you get paid for making the beds or
cleaning up the kitchen?
However,
there are some ways that a child can make a bit more money without having to
get a part-time job. There are jobs
around the house that are not done on a regular basis (like washing the car)
that you could pay your child to do. Ms.
Vaz-Oxlade is very clear here that it should be treated like any other job and
that the child can be fired if the job is not well done.
7. Keep your hand out of your pockets.
If you keep bailing out your child or helping
him buy things he should be saving for, he isn’t getting an accurate experience.
There. That is my very-condensed version of the
first chapter of Money Smart Kids. As
mentioned above, I highly recommend this book to everyone and anyone who is
wrestling with the questions surrounding allowance. I hope it helps.
Vaz-Oxlade,
G. (2011). Money Smart Kids. Harper
Collins, Canada
