This week’s three family finance picks are all about allowance again: what it’s for (with a short digression to rant about old-school cash-only approaches), how to deal with it when divorced, and when to stop it.
Here they are:
KJ at the New York Times Motherlode Blog follows up with more discussion on what an allowance is for. I love the commentary on how allowance — when used properly — can teach a youngster to delay gratification by resisting impulse purchases while saving for a specific goal. I also love the concept of shifting more and more expense management responsibility to older kids. Kids should learn to manage needs, not just wants.
The one thing I don’t understand is the insistence on using cash-only approaches. It seems so dated. I think the “Did you bring your money?” question should morph into “Did you check your online balance?” I think the concern about leaving a wallet “with weeks of savings behind on the bus” should disappear. Do you walk around with all your assets in your wallet or purse? I hope not. Do you always pay with cash? I doubt it.
Our kids are growing up in an increasingly digital world. They need to learn to manage their money as a number — a summation of balances — and realize that all payment forms, especially digital ones, represent real money that subtracts from their total balance.
Related FamZoo Activity: Teach your kids to manage money as an online balance.
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Allowance can be a sticky topic for spouses. Divorce can make it even stickier. Suzanne offers a collection of allowance tips for divorced parents. A key guideline is to be sure everybody — you, your children, your ex — is on the same page. As Suzanne says, “It’s a good idea to write down what you decide so there’s no confusion later on.”
An online solution like FamZoo can do that automatically. It can help divorced parents keep things consistent, well documented, and easily accessible from both locations — easing just a bit of the friction in this tricky area.
Lynne L. Finch, author of The No-Cash Allowance (an excellent book), makes outstanding points here on the topic of when to stop a child’s allowance. There’s always lots of talk about how and when to wean children off allowance, but rarely much discussion of how to transfer more spending responsibility to them as they mature.
Regardless of where children’s income comes from and what percentage is supplied by parents, Lynne argues that kids need to learn how to incrementally manage more and more real world expenses as they grow through their semi-independent phase. Wise advice. Otherwise, we’re setting them up for a big surprise when they leave the nest. Without practice, they won’t have the skills they need to handle the transition smoothly.
We’re constantly scouring the Internet looking for articles related to family finances and teaching kids good personal finance habits. You can visit our ever growing list of family finance bookmarks here. We’re up to 2,925 now!