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Teaching children to set priorities for spending

August 27th, 2009 / 3 Comments

As I mentioned in the last post, I don’t give my children allowances. There’s no right or wrong about allowances. We just chose not to.

However, I started this year to give my 13-year-old daughter a small budget. She keeps track of the credits and debits in a check book register that I got from the bank (free). Each month she is credited $20 which she records in the credit column. When she spends some of that, she writes down what it’s for, puts the amount in the debit column and calculates her new balance.

Note that I don’t give her the actual cash. It’s all on paper only. I give her the cash when she needs to spend it. She doesn’t have to risk losing the money or having to keep change. It also allows me to see how she is spending her money and to teach her to keep a running balance like a check book. For those of you who are more creative, you could even have your children write a real check when they decide to spend the money.

When does she get to dip into that account?

The rule is, anything that she wants to buy that I do not agree to pay for can be purchased with money from that budget.  If my daughter wants to go out to a movie with her friends, I give her money for the movie ticket, and a little extra for snacks. If she wants to play those arcade games at the theaters at 50 cents a pop , she’ll have to dip into her account.

More examples:  When we go shopping for clothes, I will pay for what is necessary. If my daughter wants a cute sweater that is not practical nor on sale, she’ll have to check her balance in the register to see if she has money to buy it. If she wants to goes out to lunch with her friends, I give her a reasonable amount of about $5-$10. If she orders the most expensive meal with an appetizer and dessert, she’ll have to pay for it out of her account.

If she doesn’t have money in the account, she can’t get what she wants. That’s life!

With the price of clothes and entertainment nowadays, $20 a month doesn’t go very far. But remember, I still pay for just about everything. This $20 a month is meant to teach my daughter to prioritize her wants.

Is the $30 sweater really important enough to her that she would forego other purchases in order to save up for it?

If she spends everything in her account in one month, what will happen if something comes up next month that she really wants?

Are there special occasions with extra expenses that she is anticipating and need to save up for?

These are some of the prioritizing and budgeting issues that she is learning as she logs in $20 each month in her bank register.

Note here that I do allow for some flexibility. I’ll give her an advance up to 2 months (that’s $40) if she wants something that is time sensitive, such as going out with friends for a birthday that requires extra money. For the next 2 months, she will be paying off the debt. Hey, I am not even charging interest…

What about the idea of paying our children to do chores so they can earn extra money? I’ll talk about that in a later post Should We Pay Our Children to Do Chores?


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  1. […] post on teaching children about money: Teaching Children to Set Priorities for Spending. […]

  2. […] (Read previous posts in this series: Teaching Children About Money, and Teaching Children to Set Priorities for Spending.) […]

  3. […] Teaching Children to Set Priorities for Spending […]


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