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Managing Your Allowance

Nobody is saying that you should take your whole allowance and stow it away in the bank every week- quite the opposite.  The best way to learn about budgeting and saving is to experiment.  Everyone is going to make mistakes with their money sometimes, finances are hard.  The question to keep in mind is, how can you get the most enjoyment (short term AND long term) from your allowance.  Here are some tips to help you discover the best way to budget your money: 

Negotiate Specifics with Your Parents:
Allowances are a two-way street.  Your parents are expecting you to use the money they give you responsibly and you can reasonably expect your parents to stay consistent with the amount and method that they pay you.  When the subject of allowances is brought up (either by you or by them) the details should be worked out ahead of time.  Here are some questions to ask:

  • Will the allowance be dependant on my doing chores or work around the house?
  • How much can I expect?
  • When will I get my allowance (every week, month, etc.)?
  • What am I expected to pay for myself with this allowance? (For instance- lunches at school, clothes, bus fare, gas for the car, school supplies)
  • The last question is particularly important and should be made very clear.  If you are using your allowance for things like school lunches, gas, or school supplies you should already have a reasonable idea of how much these things will cost you.  If you know the amount that your parents are suggesting won't cover your needs- don't be afraid to speak up.  Having your weekly expenses written out ahead of time will show them that you are not just complaining but taking this seriously. 

    If the money is purely for your own entertainment and fun extras you may have less leeway on the bargaining but you can still try.  Have a list of activities you are likely to spend the money on or purchases you like to make and how much each thing costs (For instance- Movie = $10, CD = $14, Book = $16).  Sometimes a parent might not realize how expensive things are these days and when they see what you are talking about, they can be sure you aren't being excessive and frivolous, just realistic.   

    Most importantly remember that an allowance is a privilege and a learning tool- not a right.  There are plenty of people out there who are not getting any allowance and at the end of the day, you need to be very grateful for what you do have.  Spending a lot of time fighting with your parents over the amount of an allowance just is not worth it.  Instead, use it as an opportunity to learn how to stretch the money you do have further.   

    Prioritize:
    Everyone has different priorities (how much importance you place on each item), which is why everyone is going to spend their money differently.  Before you go spending, decide what things are important to you.  For some people, saving their money so they can buy the big items in their future (cars, college, trips, etc) is really important and they are willing to give up other things to get there.  For other people, spending money on the little things that make every day life fun (CDs, eating out, movies, etc) are more important than saving for something in the future.  Most likely, you will fall in between the two extremes but it's good to know where you stand. 

    Trial and Error:
    For a week, spend your money freely.  When you run out of money look back and assess what happened.  How quickly did you run out?  What purchases are you regretting?  What things were you hoping to use the money for that you didn't have enough left for?  This can be a great way to set your budget for the future.  If, during this test week, you spent WAY more money on take out food than you thought you were going to, you can be wary of that in the future and remember to say "no" to the next trip to McDonald's.  If you didn't have enough left over to go see a movie on Saturday night you can remember to put some aside for that right on Monday. 

    Avoid Asking for More:
    It can be SOOO tempting to try and get your parents to give you just a dollar or two here and there when you've run short (especially if you have sweet parents who are willing to give it to you), but really you are doing yourself a disservice.  When you are out on your own, your parents won't be there to lend you that extra dollar.  If you are able to get your spending under control and eventually save up for that iPod you've been wanting all on your own, the feeling will be oh so much sweeter.  Trust us. 

    Always Set Some Aside:
    We know you've heard it before, but saving even a dollar every time you get your allowance really is one of the best things you can do for yourself.  Think about it, if you set aside a dollar every week for all four years of high school, that's over $200 right there that you will have waiting in reserve upon graduation.  Even if you aren't saving for anything, having some money in the bank is a smart way to start out in life.  

    Don't Panic:
    You will make spending mistakes, it happens to everyone.  When it happens, don't panic.  Remember that your allowance is a tool to help you learn.  It's better to be making these mistakes now than later in life when a bad budget or poor spending plan can really be trouble.  Don't be afraid to admit your mistakes to your parents and ask for help when you really need it. 

    Scenario
    Oops…you, uh, maybe overspent a little too much this week and now you're stuck with no money left. What would you do?

    To see how this Allowance Scenario plays out:  Click Here To Enter

     
     
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