When my girls turned 13, that meant they got a clothing allowance!

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. They become savvy consumers. And they learn the hard way what happens when you buy something that’s too expensive.

My Ask Sheila video last week featured my daughters and I answering a reader question from a mom who was concerned that her preteen wanted to wear clothes in the Victoria Secret PINK line. We debated the PINK issue for a while, but then I pointed something else out: If you want to avoid fights over brand names, one of the best ways is to give your kids access to the money and make all the choices their own. When my kids had a clothing allowance, they became super thrifty shoppers and began to love second hand stores.

The girls hamming it up at the gift shop in the Grand Canyon when they were 15 and 13.

So let’s break down the steps to creating a clothing allowance for your teens!

1. Choose What Clothes MUST Be in Your Teen’s Wardrobe

Before you can figure out how much money they’ll need, you have to figure out what clothes they’ll need. Giving them a blanket amount of money and figuring “this should do the trick” isn’t wise. First, kids will tend to need more clothing in the years that they’re growing than in the years that they’re not; but second, you don’t want to give them money if they honestly don’t need anything. So rather than just say, “we can spend $300 a year on clothes for you”, sit down and decide what they actually will need.

To do that, you have to first decide the basics. How many pairs of pants does your child actually need (not how many NEW ones, just how many pants, in general, do they need)? How many T-shirts? How many dresses, underwear, bras, swimsuits, etc.?

2. Go Shopping in Your Teen’s Closet

Now that you know how many of these things they will need, check what they already have! Go through their closets and drawers and count how many of each item of clothing they already have.

3. Purge Anything that Won’t Work Anymore

Do they have t-shirts with holes in them? T-shirts that are too small? After all, chances are you’re starting a clothing allowance right as your child is going through puberty, so they’ve likely outgrown some of the things they used to love. Boys shoot up so fast they sometimes need several pairs of pants over the course of just one year. And for girls, tops can get tight awfully quickly, and children aren’t always as quick to see this (they also may not want to admit it to themselves, especially girls with growing busts).

As you’re purging, your child may point out a perfectly functional t-shirt that they just don’t like anymore. They don’t NEED a new t-shirt to replace that one; they WANT a new T-shirt to replace that one. Your son may want multiple different running shoes–but he doesn’t actually NEED more than two. Base your clothing allowance on what a child needs, not what a child wants. You can always bless them at birthdays and Christmases with things they want, but a clothing allowance based on need will turn them into savvy shoppers so that their money will go further, and it will encourage them to earn money in other ways so that they can get their wants met.

4. Prepare Your Clothing Spreadsheet

Now that you know what your child’s basic wardrobe should contain, and what pieces they already have, you can fill in how many of each item they need! I’ve prepared a printable for you to download that you can fill out to help you. Check it out below!

5. Estimate How Much Each Item Will Cost

Time to do your research! Check out some basic online sites where you normally would shop, and see how much the average item costs. Enter this on your spreadsheet, and then multiply the number they need by the cost. So if your daughter 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. Once you’ve done that, total everything up.

6. Decide How Much Their Clothing Allowance Will Be

Take a deep breath; your total may scare you. Our first year of a clothing allowance with Rebecca was super expensive. She needed new EVERYTHING since she was growing. Even underwear. And socks. Probably the most expensive year she ever had. She needed more money that year than I would spend on myself in four years!

Once you have that number, you have a few options. You can:

• Give your child the whole amount
• Give your child a portion of the whole amount, because you want them to work to earn some money, or because your family’s budget won’t allow for the full amount. They can still get the clothing they need by shopping on sales, shopping at second hand stores, or earning some extra money.

For our first year, I calculated what they would need, and then I gave them 75% of it, because I wanted to encourage thriftiness. They ended up buying very high quality clothes in second hand stores, and always looked great. And then they still treated themselves to a few brand names throughout the year.

7. Help Them Get a Debit Card or a Way to Access their Clothing Allowance

Now you want them to go out and shop! A clothing allowance only works if they see it as “their” money. If you say to them, “I’ll give you $400 this year for clothes”, but then you go shopping with them and you hand the clerk your credit card, and in some notebook at home you keep track how much you’ve spent, it won’t have the same effect. If you deposit a big sum for their clothing allowance into a bank account, though, and then they see their balance going lower as they buy things, then your teens will learn how to handle money much more effectively!

They need to have the money, and they need to spend the money.

You can either give one lump sum payment (I suggest using their birthday as an annual reminder), or give it every 4 or 6 months if your budget won’t allow for a lump sum.

Now they’ll need a debit card to shop.  An awesome resource for this is FamZoo, which allows you to get debit cards that you can link with your own bank account. You can then transfer money to them for regular allowances, extra jobs, their clothing allowance, and more. Check it out here!

8. Once You’ve Given Them Their Clothing Allowance, Keep Your Wallet Closed

For a clothing allowance to do its job, you must now keep your wallet closed. If they spend all their allowance on an expensive pair of sneakers, and they have nothing left for underwear, don’t bail them out. Have them work for more money. Show them how to make their money last–and what happens when it doesn’t.

9. Require Them to Actually Shop

One of the potential pitfalls is that yo may have a teen who couldn’t care less what clothes they wear–but who really likes money. For boys, especially, you may find that they’re perfectly content with just one pair of jeans and 3 t-shirts if it means they keep more money in the bank to spend on other things. If you find your teen isn’t spending the money, you can require them to buy the things on your checklist, and even take them to the mall one Saturday until it gets done!

(However, if they would honestly choose to forgo some clothes, and they still have enough to look presentable and not stink, then that is their choice. Some give and take may have to happen here.)

10. Work Them Towards Independence By Changing their Clothing Allowance as They Mature

Don’t just give them the same amount of money every year, because their needs may change (and some years they may need very little!). You don’t want them spending money for the sake of spending money; you want them to buy things because they need them.

As they grew, too, I decided that I would spend less on their clothes. I decreased the amount we gave out every year by about 10%. If the figure next year, for instance, was $450, I’d give them $405. And the next year I’d take a little bit more off, so that by the time my girls were 18 they would be used to earning the money for their own clothes. I also encouraged them to work in some sort of part-time job. When Rebecca was 15, for instance, she had eight piano students, and both my girls taught swimming at the Y.

Now, we did give quite a generous allowance for doing chores around the house, so I wasn’t 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 chose to do it.

We also added things to their allowance as they grew. When they were 15, we started giving them money for toiletries as well. By the time they left home, they were used to shopping for everything, and knew how to get good deals.

But did it work? Here’s Rebecca:

In one word: YES! I remember how excited I was when I first got a little debit card for my clothing allowance money. I felt I had more freedom in choosing what I wore, I learned to bargain shop, and I even got creative with the budget. I had a small jewelry-making business in high school, and one year I decided to use the clothing allowance funds to invest in all the supplies we would need for that year’s round of craft fairs. I put in $300 and came out with $3,500 of profits. So it’s not just about clothing, either–it’s about letting your kids experience what it is like to make financial decisions when it’s your own money that’s on the line. That’s a huge lesson I had to learn–and one that I remember wishing more of my friends in high school had learned, too (it seriously bothered me to hear them complaining how their parents wouldn’t buy them this or that!).

There are obviously tons of ways to teach your kids financial responsibility. But this really helped me. And it’s such a simple, foolproof tool that can really help your kids, as well.

Have you ever used a clothing allowance with your teens? Or did you have one growing up? Share with me in the comments, and let’s talk!