When New York resident Joann Perahia was young, her parents let her spend her allowance money on anything she wanted, a practice which she insists led to poor spending habits as an adult. But this mother of two wants to make sure he own kids don’t follow in her footsteps and so she enforces an allowance policy that is very different from the one she enjoyed.
“I give them an allowance that covers their lunch money with a few extra dollars,” she tells MainStreet, explaining that the kids, identical twin boys, now 15, can spend these funds in the school cafeteria or brown bag their lunch and save for something on their wish list. The trade-off is intended to teach them how to budget their dollars.
“Allowance is the first way children learn about finances,” Perahia explains.
According to a recent American Express survey, eight in 10 parents say that their children learn the most about money from them, a sentiment that 83% of their children, age 13-17, echo. Unfortunately, these families also copped to being apprehensive about financial discussions. One in three parents felt that talking to their teen about an allowance is comparable or more difficult than the stressful experience of negotiating the purchase of a car. And teens don’t like having the conversation either. Almost half of those surveyed said that asking their parents for money is a hassle.
How can you streamline these awkward, but necessary teen talks? Start younger, experts say.
“Your child is ready for an allowance when they start asking for wants as opposed to needs,” Youthologist Vanessa Van Petten says, adding that this can start as early as 4 or 5 years old. A youthologist is essentially a certified and trained life coach for kids.