Allowance: Make It Count
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Guest Post: Benjamin Talks
But first, a PSA: Team Benjamin Talks is here to offer some friendly financial literacy advice for your littles. We recognize and value that every family (even every child!) is different and we hope you take these recommendations and adapt them to your family’s individual needs. We are a judgement-free team of moms, so when it comes to your money and your children...we want you, to do you.
Our Two Cents
In the Benjamin Talks family, we believe allowance is the foundation of financial fitness. Just as you cannot possibly learn to swim without water, you can’t learn to responsibly handle money without, well, handling money. Studies show that nearly two-thirds of American families already give their children allowance, and four out of five families link their kid’s cash to the completion of household chores. But are American kids getting any bang for the buck out of Allowance? It seems the stage has been set for teaching children about money - now we just have to make allowance giving a purposeful family practice.
As children grow up in an increasingly digital age, we believe it is essential that they get back to basics when it comes to money. Kids need to physically handle bills and coins, exchange their cash for items they buy and count the change. They need to learn through experience that once cash is spent, it is quite literally gone forever. They need to sort, count and differentiate the money in their banks and wallets. Before our kids become wizzes at everything Apple Pay to Zelle, we believe cash must be king for our mini money mavens.
In our Benjamin Talks family, we prefer to take a “good teammate” attitude towards allowance. Like any successful sports team, each player knows their role, utilizes their skills and pitches in whenever necessary for the good of the team. This holistic approach to allowance means that rather than tying our children’s money to the specific completion of a chore checklist each week (which seems labor-intensive to grown-ups who are already spread thin), we simply expect our children to “pitch in” and do their part to keep the household running smoothly. Many young children inherently want to be helpful, and they gain confidence and competence by being held accountable for various tasks around the house. In our families, our kiddos sort the laundry, set the table and bring out the trash. In yours, perhaps they vacuum the living room and feed the dog.
In short, children should help out when and where it’s needed. Otherwise, when allowance is linked directly to specific and individualized chores, kids might decide at any given moment to forgo their jobs if they don’t immediately need the money. On the other hand, kids (like their overtired parents), are imperfect beings, and inevitably things fall through the cracks every once in a while. As long as they have made an overall effort to be helpful, considerate members of our family team, the BT Moms are happy to hand our budding Benjis their weekly bounty. And those extra special jobs? We give our kids some additional cash for more time-intensive projects: assembling a swing set, cleaning out the garage or even babysitting a younger sibling.
How much should your tiny teammate earn each week? This number is highly variable to each family and depends on age, number of children and your family’s financial situation. Some experts recommend that children are given a weekly allowance that directly correlates to their age. (A five year old, for example, earns five dollars each week.) Other families might give $3 a week to each of their children, while still others dole out $20 or more for older children who are accountable for more of their own expenses. The simple answer: there is no simple answer. Any small amount of cash gives children a powerful tool for spending, saving, and giving, all while the stakes are low and mishaps aren’t too costly.
We recommend that once children receive their weekly allowance, they immediately divide their cash into three transparent containers - SPEND, SAVE & GIVE. In fact, we so strongly believe in this approach that we spent months laboring over the design of a bank that allows for exactly this practice. (See a shameless plug for our new product, the Benji Bank. We hate to say it, but this bank is money.) Each family, along with their allowance-earning child, should decide how they want to allocate the weekly funds to the SPEND, SAVE and GIVE containers. The clear containers allow children to quite literally watch their money multiply, which further incentivizes them to earn and save their weekly dollars. Allowing children to see their cash in these three simple silos sets the stage for a lifetime of financial planning.
Spend
Your child’s SPEND container allows kids to take control of their weekly “wants.” The Pokemon cards he simply can’t live without. A subscription to the Apple Arcade for endless entertainment. The purple glitter nail polish you’d never shell out for. Giving young children a few dollars to spend at their discretion each week offers them powerful ownership over their choices. For example, we recently let our six year old tote $5 of his spending money on one of our regular Target trips. Instead of being a passive, (and likely bored, probably complaining) bystander to the drugergy of a shopping trip, suddenly our Budding Benji was an empowered buyer, examining prices to determine which purchase was the most worthwhile. Though he labored over his Hot Wheel selection for what felt like hours, the ownership he felt over his purchase made those tiny little race cars infinitely more valuable to him. Not only had we warded off an Aisle 9 meltdown, but we’d turned an everyday moment into an effortless learning experience on spending. We’ve seen firsthand how a simple trip to a big box store can become a lesson in financial literacy, all through the weight of a few dollars in our child’s hand.
Save
In an age where Netflix offers thousands of shows at our children’s fingertips, Amazon delivers the latest toy mere hours after it’s been ordered and groceries seem to magically materialize at our doorstep, it is now, more than ever, essential that we teach our kids the power of delayed gratification. This is where the SAVE container comes in. Children should put away a set amount of their allowance every week, without fail, towards a long-term saving goal. Our children’s SAVE container is not necessarily meant to fund their college education or help purchase their first car. Though worthy goals, the SAVE container can also be for the more expensive wants on our child’s wish list that might require weeks or months of careful planning to earn. A Harry Potter lego set. A new pair of soccer cleats. Tickets to Disney on Ice. Your child will treasure these possessions and experiences significantly more if they have planned and saved for them. We even recommend sweetening the deal for your littles with the lure of interest - tell them you’ll compound their savings to an agreed upon amount and watch your budgeter blossom. Saving, like healthy eating, is a habit. If we make it a regular, and indisputable part of our children’s earnings, this skill will become a lifelong practice as our kiddos grow into adulthood. By then, our teenage lifeguard will know that a certain percentage of her earnings goes into savings from each and every paycheck, no questions asked.
Give
Just like spending responsibly and saving wisely, thoughtful giving takes practice. The BT Moms encourage our children to use their GIVE dollars for the frequent opportunities that seem to arise organically in their daily lives. Thanksgiving food drive? We hit the grocery store and let our child use his “giving” dollars to buy his favorite applesauce for a family in need. Holiday gift drive? We cash out our daughter’s “giving” stash and let her choose a gift at our local toy store. Supporting the neighborhood Girls Scout troop? We let our kindergartener count his “giving” dollars and purchase his favorite thin mints (can we talk about a win-win?!). Sure, it takes a tiny bit of planning and a few extra minutes, but allowing children ownership over these moments of giving lets them experience the joy that comes with a generosity of spirit. That joy then sparks the desire to give further and a cycle of kindness and empathy has begun. Through schools, religious organizations and local charities, there are endless options for our children to give. As parents, we simply need to offer our children the chance for meaningful giving, one that sets the stage for a lifetime of compassion and generosity.
When used wisely, allowance may be the most powerful tool for making kids, both young and old, financially fit. As team players pitching in around the house and reaping the rewards of their hard work, kids gain independence, confidence and competence. In making decisions on how to spend, carefully tracking weekly savings, or taking ownership of opportunities to give, children are also quietly building the money-smart habits that will endure far into their futures. Most importantly, by making allowance a regular part of the family routine, parents are sparking a daily dialogue around money that is quite literally, priceless.
Here are two very important questions that grown-ups should discuss with their kids before starting the allowance routine:
“What ways can you regularly ‘pitch in’ to make our family ‘team’ work together? Let’s brainstorm how you can help out to earn your weekly allowance.”
“Since you are seven years old, you will receive seven dollars every Sunday evening (assuming you’ve been a helpful member of the household during the week, of course!). How should we divide up your seven dollars between SPEND, SAVE and GIVE each week?”
Benjamin Talks is on a mission to make all families financially fit through digestible content, purposeful products and impactful giving.