Why? Because I believe strongly that one of the most important lessons we can give kids is how to handle money and budget accordingly. When kids are given money that they are responsible to make last, then they are more likely to look for deals and less likely to worry about brand names. They become savvy consumers. And they learn the hard way what happens when you buy something that’s too expensive.
Perhaps in your house thirteen is too young, but we thought our kids could handle it. Here’s how we did it:
1. Figure Out Clothing Needs
Basically, we sat down and figured out everything she’d have to buy this year (and it’s an expensive year because she needs new EVERYTHING since she’s growing. Even underwear. And socks. Probably the most expensive year she’ll ever have, since nothing will fit soon!). We figured out how much that would cost.
I made a spreadsheet with each item listed, along with how many a person reasonably needs, and how many she has on hand. The remainder is how many she will need to buy over the course of the year. I budgeted what a reasonable amount to spend on each item would be, and then we added it all up. So if she needs five T-shirts, but she only has 2 that fit, and it’s reasonable to spend $10 on each one, she needs $30 for T-shirts. Repeat that for each item of clothing!
2. Open a Bank Account and Hook it up to a Debit Card
Once we had the entire figure (and I gulped when I saw it this year), I opened up a bank account for her and transferred the money for the year in there. We hooked up it up to a debit card, so that she can have access to it when she shops. She now is responsible to make it last until next July. If you don’t have enough money all at once, you could always give it in installments, but we gave the whole thing. If your child has a bank account that he/she is using to save for something big, like college, use a different bank account that is just for expenses. You can usually get ones that are free, or with few fees, if the child is young.
They can then add their own spending money to the account, too. It’s not like they have to keep track of which money is for clothes and which is their own. If they want to spend more, they can. But the key is to not run out before the year does!
It’s now her money. She can spend it any way she wants. But if she spends it foolishly, she won’t have shoes. Or bras.
It also encourages kids to look for sales and shop in thrift stores, because then they keep more of the money.
3. Decrease the Amount Each Year to Encourage Self-Sufficiency.
Every year, we work through the spreadsheet anew, checking out their wardrobe and figuring out what is reasonable for them to need the following year. The key word is need, not want. One needs two pairs of jeans and another pair of pants, perhaps, but one does not need 10 pairs fo jeans.
Once I’ve figured the amount out that her clothes will cost, I decrease the amount we give out every year by about 10%. If the figure next year, for instance, is $450, I’ll give her $405. And the next year I’ll take a little bit more off, so that by the time she’s 18 she’s used to buying her own clothes. I also believe in encouraging children to work in some sort of part-time job, or in doing extra chores, so they actually earn their own money. My 15-year-old, for instance, has eight piano students, and teaches swimming at the Y. My 13-year-old will soon be doing our medical billing. So they have jobs.
Will it work? My older daughter has been buying her own clothes now for 2 1/2 years, and it’s great! I don’t have to worry about it, and she has to worry about budgeting. With the money she earns, she can supplement her clothing allowance. And she realizes that if she needs a new winter jacket or something that’s expensive, she’ll have to ensure the money for it is there when the time comes.
At age 16 we also add all toiletries to the stuff that we ask them to pay for themselves. Now we do give quite a generous allowance for doing chores around the house, so I’m not being mean. I do believe that parents should pay for necessities for kids. But I also believe that we need to teach kids to budget, and this is the way that we’ve chosen to do it!
What do you do? Share with me in the comments, and let’s talk!