My parents decided a few years ago that the best way to teach me and my older sister how to manage money was to allow us to look after our own fiances. They started giving us a living allowance every week that we are expected to budget all of our expenses with. Aside from food and things that we use from the household like internet, electricity and water, etc. we take care of whatever we need to buy for ourselves.
We each get a weekly allowance that we have to buy our own clothing from, as well as things for school, entertainment, etc. My parents reevaluate our allowances every three months to adjust for the cost of living and school needs. For example, when my sister went into senior high school, they raised her allowance to accommodate a student bus pass for the school year because her school was over 5 km away.
I know that my parents have tried to be reasonable about what we get for an allowance to cover the things we need, but it’s always a challenge to make sure I have enough money for things I want. For sure, my allowance doesn’t include anything extra like money for entertainment or expensive cool clothes. If I want stuff like that, it’s up to me to supplement my income with a paying job.
Although my parents make sure we are getting enough money to cover the things they would ordinarily buy for us, it is up to us how we spend that money. I get a certain number of dollars per year as a clothing budget, but I don’t have to spend it on clothing. My sister also gets a transportation budget, but if she chooses to walk or ride her bike to use the money for something else, she can. The only rules are that we have to figure it out for ourselves if we run short on money.
If it’s something really important that I forgot to account for, like maybe a school project, I can normally get a loan but the terms of how I am going to pay it back are set before I get a penny. My Dad may make me do some extra grunt work that falls outside of my normal chores, and usually it’s something that he really hates doing, so it’s not fun for me either.
When we are negotiating our allowances for the year, we have to bring in our budget of what we anticipate our expenses to be. Not everything we put on our budget is approved, but we sure don’t want to miss anything either, so we spend a lot of time thinking about what things we are going to need to buy during the year. Once the amount has been set, it’s divided up by 13 weeks and that is what our weekly allowance is for that quarter.
If we have to pay for something big up front when our new budget has been allocated, like school books, we are allowed to draw our allowance in advance to pay for those things if we have to. After that though, we have to wait for the number of weeks to pass to catch up before we get paid again. Neither of us likes to go entirely without an allowance, so we try to remember to save something from each payday to have enough money to pay for what we need when it comes up.
I have also devoted my life to learning how to make my money stretch as far as I can. Coincidently, most of the things that I’m doing to make the most of my money involve the 3R’s principals that my whole family have been practicing.