According to Money.com, most kids are spending their allowances. The article states that only 3% of parents say their kids save their allowances, despite the parents paying out around $1,500 a year ($30 a week) on average.
I’ll admit it: I spent mine. But to be fair, I didn’t initially get much.
In the beginning
When I was younger, I got to keep the money we received selling cans and newspaper to the recycling center. That was usually $5-10 (usually closer to $5). But most of my wants were taken care of by my parents, so I didn’t really need an allowance.
Still, I did have to save sometimes. Specifically, if I wanted something big and wasn’t asking for it as a Christmas or birthday present. (I think “big” meant around $30, though a formal amount was never set.) In those cases, I had to save half the cost of the item.
Sometimes that was a tall order. For example, at $100, the Baby Heather doll took me months and months of saving. (And turned out to be a dreadful purchase.)
Point being, my parents definitely taught me the value of a dollar, but without a formal allowance.
An actual allowance
Once I hit junior high and continuing until I got a job at 16, I got $20 every other week. (Though I also got to keep half of any babysitting money I brought in.)
Granted, this was 30 years ago, when a buck went further. Still, that was only four to five school lunches, which is why I generally packed my own.
Instead, the $20 went to small things like a snack from the vending machines after school (during theater practice), a movie out with friends, or the occasional meal or even just French fries with lunch.
I didn’t spend lavishly or crazily. I rarely bought CDs or doodads. But I didn’t save my allowance either. Even as a teen, I didn’t really want anything all that expensive, so there was no need to save up for much besides holiday shopping. (And my babysitting money was where most of my holiday shopping budget came from.)
I’m not saying that I always spent every cent. I must have had some left over from time to time but with just $20, I don’t recall having a ton lying around.
Other routes to saving
Of course, I was saving in other areas. As mentioned before, I only kept half of my babysitting money.
And when I got a job at the movie theater, I only got to keep $40 out of each check. (This also supplanted the $20 allowance I was given.) The rest went in the bank.
I should note that the $40 limit was in place even when I was working full-time. Heck, even when I was working a second, part-time job on the side. I only ever got $40 every other week, no matter how much I earned.
Then there was the Permanent Fund Dividend — the glorious chunk of money that comes to Alaskan residents every year. I got to keep a little out ($40 I think?) but the rest went into savings.
So yeah, my parents made sure that I was saving big time. But they didn’t make me (or even suggest that I) save my allowance. The idea was that the funds were my walking around money, for the occasional indulgence or bit of entertainment.
Then vs now
Of course, back then it was a lot easier to live on $20-$40 every two weeks. Video games weren’t constantly being released (and they weren’t $65 a pop, either). Movies were only $5.50-7 (and then they were free when I worked at the theater). There weren’t in-app purchases or iTunes that could eat up an allowance bit by bit. Clothes weren’t as expensive.
In fact, with inflation, $40 every two weeks in 1994 is now about $69. So if anything, allowances should be a tad higher!
In fact, while $30 a week sounds like a lot at first, it seems like that would just about keep a kid going in this day and age. Especially assuming he or she wanted the occasional video game or new piece of clothing.
The Money.com article points out that a few years of diligently saving the $1,500 could be enough for a used car. Well, that sounds great in theory, but it assumes the kid never goes to the movies, never gets to eat a lunch out, only gets a video game on holidays or birthdays. In short, it’s not much of a childhood.
I’m not saying that you shouldn’t talk to your kids about saving money or that you shouldn’t encourage them to spend wisely. And sure, make them save up on their own if they want the latest video game.
But that’s not the same as telling them to save their whole allowance and never have any fun, which is what this article seems to be driving at.
Why spending was good
I’m glad I spent my allowance because a) it allowed me to have some fun experiences and b) it taught me about tradeoffs.
If I reeeaaally wanted to buy my lunch ($6) in the mall on my work break, that was fine. But. It also cost more than 1/7 of my biweekly money. Sometimes I got the meal, but most of the time I just ate what I’d packed because it was too big a bite (as it were) out of my spending money.
Similarly, if I wanted a shirt from a store, that was generally 50-60% of my weekly funds. Doable, but it had consequences as to what I could then afford to do with my friends. So most of the time I didn’t shop for clothes beyond what Mom bought each year for Back to School season.
Really, spending my allowance taught me the value of a dollar in a way that working didn’t. Sure, working taught me how hard it was to earn a dollar. But it didn’t teach me what a dollar was worth. It wasn’t until I spent the dollar that I figured out which experiences were and weren’t worth the outlays.
So for goodness sake
Let kids be kids. Let them spend their money on a video game or go to see the latest blockbuster. Let them get a meal out with friends every once in a while. Let them have the occasional indulgence for cryin’ out loud!
Don’t get me wrong, you should absolutely teach them to save their babysitting money and/or paychecks. Maybe even save a portion of their allowance if that’s all of the money they have coming in.
Good money habits are important. So yes, teach them not to blow their whole allowance the first day they get it and to save up for things like holiday shopping or some big purchase they know they’ll want.
But don’t deprive them of a childhood with any fun or extraneous spending in it. They’re not striving for FIRE, guys. Let them live a little.
Did you save your allowance? How much do you give your kids (and do they save it)?