Give Kids More Say Over Their Money

In her July “5 Things To Try This Month” newsletter, Gretchin Rubin writes:

“A Happier with Gretchen Rubin podcast listener wrote in with a parenting hack: Offer a choice to children, even if it’s a small choice, such as going to bed at 7:30 or 7:34. Like everyone, kids want to feel some amount of control over their daily lives.”

That tiny bedtime choice may seem silly, but it taps into something profound: kids crave a sense of control.

Not only does a stronger sense of control make kids happier, I believe it leads to better learning outcomes and more effective habit formation as well.

With that in mind, what are some financial choices we can give our kids while still setting appropriate boundaries?

Here are seven examples:

1. Let kids choose what they buy with their money. Making an unfortunate purchase — like a cheaply made or seldom used item — can be a powerful and unforgettable lesson.

   Appropriate boundaries include:

   • Insufficient funds. Not enough money saved up? No dice. Wait.
   • Forbidden category. Certain purchases are categorically off limits in most families for health, safety, legal, or moral reasons. You’ll know it when you see it.
   • Grey area category. Certain purchases are debatable. Perhaps too extravagant. Perhaps age inappropriate.

     For grey cases, I like the written proposal technique: have your child submit a written rationale for why they should be permitted to make the purchase. Take their proposal under advisement before issuing your ruling. You’ll be surprised at some of the compelling arguments kids can conjure!

   

2. Let kids choose how to split their allowance, chore, job, or gift money percentage-wise between spending, saving, and giving. Parents typically dictate these percentages, but you’ll be surprised how thoughtful and generous kids can be with their split decisions after a little discussion. They can also tune their choices over time as they mature and circumstances change.

   Appropriate boundaries include:

   • Minimum split guidelines. An example: “The savings split must be at least 5%.”

   

3. Let kids choose which version or brand of a necessity (like clothing) you buy for them: bargain, basic, or premium.
   • You fund the basic price.
   • Anything over the basic amount comes out of their pocket.
   • Anything under, they get to keep as a bonus.

   

4. Let kids choose between delivery versus pickup.
   • If Doordash, Uber, you, or someone else hand delivers an item, your kid pays a delivery fee.
   • If your kid goes to pick it up and it’s something for the family, let them earn a modest delivery tip.

   

5. Let kids choose their odd jobs and how much they get paid. Instead of listing out the odd jobs available around the house and setting the prices, tell your child to:
   • Choose whatever odd job looks like it needs to be done around the house and proactively do it.
   • Negotiate their price with you when completed.

   It’s more of an entrepreneurial approach than the standard parent provided job chart.

   Appropriate boundaries include:

   • No price gouging: You have veto power on absurd prices! It’s a negotiation.
   • No slipshod work: You’re the inspector. You set the standards.

   

6. Let kids choose whether to make lunch or buy lunch. Lunch made at home is much cheaper than eating out. Sit down with your kid and your favorite AI chat bot and calculate the average cost of each.
   • If your child chooses to make lunch, give them a “brown bag bonus” — a modest portion of the cost savings calculated above.
   • If your child chooses to buy lunch, only cover the cost of an average homemade lunch. They have to pay any amount over that themselves.

   

7. Let kids choose their own budget. Spending requests can be a big source of friction between parents and kids. You’ll be amazed at how much that friction dissipates when kids feel they have a real say in how their money is allocated. To keep it simple, pick a single category that your kid really cares about — like clothing or gaming.

   Appropriate boundaries include:

   • They must show their work. Have your kid fill out a budget worksheet with all of their line items and assumptions — like N pairs of jeans a year at an average price of $X.
   • You must approve it. Review the worksheet. Have them refine any misguided or unreasonable assumptions until you arrive at a mutually agreeable figure. Note: It’s OK to fine tune the budget down the line if you both realize you missed something or circumstances change.
   • No spending over the budget. Purchases that exceed the budget will just have to wait.

   

As in the examples above, try loosening your grip on the money reins a bit. See how your kid responds. It just might be a major money mentoring unlock.