Giving a tween a lump sum budget: what to consider?

May 29, 2017 9:30 AM

We're thinking of switching our kid to a lump-sum budget to help her learn about budgeting, needs vs wants and so on. Have you tried this?

My tween kid is sensible and thrifty, so it's not like there's a problem to be solved, it's more that we thought this might be good for her to learn about budgeting and choices and what things cost.

Currently she gets a small allowance for "extras" (including bonuses for doing her chores extra-efficiently and without being harangued, which she earns... sometimes.) She tends to save it for infrequent, special purchases -- frivolities like hair dye or craft supplies. We buy her what she needs in terms of clothes and school supplies, and she is reasonable in her tastes and requests. She gets a few gifts, like for birthdays, or occasionally just because her dad felt like it, throughout the year; these tend to be fun media, projects, stuff like that.

I was thinking that instead of buying her whatever she needs piecemeal, we could try giving her a lump sum (per year? per school year? per quarter?) to help her learn about prioritization, and about what stuff actually costs, and how to budget. It would be up to her to allocate to clothes, to art supplies, to savings, whatever. My concern is that she would skimp on necessary clothes in favor of junk (or even just to save)... plus, clutter is a problem (although she is actually getting pretty good about purging in order to keep things orderly.)

Good idea? Bad? Anyone have experience they want to share?

posted by fingersandtoes to Work & Money (18 answers total)

What are you trying to replicate? I don't imagine that any job your child ends up in is going to pay her quarterly and require her to budget in three-monthchunks exclusively. I could see some value for this system if it came *as well as* her allowance, ie have it resemble a tax refund or a bonus and let her learn about budgeting payments like that in addition to a reliable "income".
posted by hepta at 9:51 AM on May 29, 2017 [3 favorites]

Yes! We did this and it is AMAZING! But you need to change the increments and start it small.

How we did it was working out how much we budgeted for her entertainment, snacks, phone, etc, and then giving her that amount monthly via auto deposit to a youth checking account.

There definitely is a lot of buying on unhealthy junk food, but that kind of slows down. What it did create is a super thrifty shopper. She gets the absolute best deal for stuff, because now it's her money.
posted by corb at 9:59 AM on May 29, 2017 [4 favorites]

My parents did this for me and my brother. We both got a monthly check that was for basically anything my parents would have bought: clothes, books, school lunches and some extra spending money. etc.

The value went up over time as we got to high school. I tended to be very frugal and saved a lot. My brother tended to be not as frugal and would often spend extra money especially on his friends. But both of use had to manage our own checkbooks and debit cards. I would often skimp on clothes to save my money for other things or just pure savings.

I would say this is a good thing, and there will likely be a case or two when money is quickly spent and then a period of time when your tween is "broke". This is a great chance to discuss the importance of saving and planning.
posted by benk at 10:29 AM on May 29, 2017 [4 favorites]

My parents did this. We went from weekly, to monthly, to per academic term in high school. Additionally, we had to prepare and present a budget, and negotiate for the money. Did it work? I'm a saver, one brother is a bit, and one was constantly running through his money. So maybe? My parents also covered clothing necessities: proper running shoes? Covered. High heeled sneakers? I had to save. Basic Gap jeans and appropriate clothes for a wedding? Covered. Belly tops and concert tees? I had to pay.
posted by Valancy Rachel at 11:07 AM on May 29, 2017 [2 favorites]

I think this is a good goal to work toward but "tween" might be a little young to manage her entire budget. Specifically, I would wait on putting her in charge of her entire wardrobe until you're pretty certain she has stopped growing because growth spurts are very hard to plan for (and adolescents (girls especially) get enough negative messaging about their bodies without her having to worry about having money to replace outfits she outgrew).

As you start to put her in charge of more of her budget decisions, engage with her about what you consider to be the bare necessities, price those out, and ensure that you have given her enough money to cover them. School supplies might be a good place to start at the end of the summer. Let her know that you do not want complaints from her teachers about her turning up to tests without a pencil or handing in crumpled papers because she didn't have a folder for them and then give her money at the medium to high range of what a year of school supplies would cost. Then let her decide whether she wants folders with fancy designs on them or the fanciest gel pens or if she wants to pocket as much as possible to go towards her personal art supplies.

If you're worried about her skimping on clothing necessities, you can offer sort of a budget hybrid where you subsidize certain purchases in exchange for making them essentially mandatory. For example, if she's trying to go to gym class in sandals, give her $70/school year that is only to be spent on gym shoes.
posted by martinX's bellbottoms at 11:25 AM on May 29, 2017 [9 favorites]

I never got an allowance, but my dad did a reward system during the school year for my grades, which worked like you describe because it came periodically. This was a reward for good grades -- each "A" was worth $5, per report card (quarterly during the school year). If I made the Honor Roll, my reward was doubled. If I made consecutive Honor Rolls, the multiplier went up by 1 each consecutive Honor Roll.
posted by DoubleLune at 11:26 AM on May 29, 2017 [1 favorite]

My mom did something like this with me beginning in high school. I went from a small allowance to a larger monthly disbursement meant to pay for entertainment, clothes, and food when not at the house.

Looking back I'm really glad for it, and I plan to do the same with my kids. I think it had a positive effect on my understanding of money. My mom, however, considered it a failed experiment and didn't do it with my younger brother. She felt that I gamed the system by clothing myself almost entirely in thrift-store pants and band t-shirts and then spending way too much on CDs and movies.

She's told me in the years since that she was embarrassed by my presentation, that she thought I looked poor. But I think those clothing choices helped me to develop a considered personal style as an adult, whereas my brother, for whom our mom chose and bought all his clothes up through when he went off to college, never did. (Ironically, and as much as I love him, he is now the son of hers who tends to look shabby.)

So I would argue that even if some of your fears about your daughter "skimping on necessary clothes" are realized in the short term, in the longer term you'll be doing her a favor. The question for you is whether in the mean time you'll be able to stomach being seen together with her in the grocery store.
posted by The Minotaur at 11:49 AM on May 29, 2017 [3 favorites]

Best answer: A friend of mine who does this does lump sums (each semester and then summer) but ALSO does a separate lump sum at the start of the school year for clothes. They together discuss what she needs for that year, set a budget, and go shopping together for school clothes. It helps her learn about another kind of budgeting (larger one-time purchases to last for the school year, instead of smaller ongoing expenses -- like how you might budget for a car or home improvements or vacations or something as an adult) and gives mom a little more input on school clothes and prevents either extreme clothing frugality in favor of entertainment, or inappropriate clothes she can't wear to school. (It also means when she has a growth spurt, it doesn't bust her budget ... Mom pays for it, they set a budget, and go shopping together.) If she does manage to come in under budget (with clothes that meet mom's minimum threshold of quality), she gets the extra cash as a "bonus." Sometimes she uses her "bonus" to take Mom out to lunch after shopping to celebrate their shopping excursion success.

Fun clothes come out of her regular budget.
posted by Eyebrows McGee at 1:06 PM on May 29, 2017 [5 favorites]

You can offer her a suggested budget framework.

$X for clothes, $Y for crafting, $Z for savings, and so forth. Let her figure out the details and whether she wants to follow that framework.
posted by aniola at 1:19 PM on May 29, 2017

I do this with my kids. They have a twice annual clothing budget, excluding school uniforms, socks and underwear which I buy. The older one recently switched to a monthly budget that includes a travel costs alliance, and the younger teen has a weekly budget because he can't yet resist splurging. But using a monthly budget with their older sisters made them both pretty frugal savers and able to budget reasonably well. It helps to get them their own bank accounts and set up automatic debit savings and talk often to them about budgets, your own approach and other people's, in a positive future oriented way.

And don't extend credit more than once! Let your kid learn to go without things they want because of mistakes.
posted by dorothyisunderwood at 1:20 PM on May 29, 2017

My parents did this. $100 per month for clothes, books, going out, school supplies, school lunches if I didn't make my own, etc.

It sucked. Especially for books. I was so jealous of my friends whose parents bought them whichever books they wanted. I did not have a lot of new clothes.

Please make an honest assessment of how much you're currently spending on these categories with your kid, and have the amount reflect that.

I think my parents wanted to do this as both a way to teach budgeting/financial responsibility and to use as a cost-savings measure. The first reason is fine, but if you want to save money on your kid's expenses, please don't foist that additional stress onto your kid.
posted by homodachi at 3:21 PM on May 29, 2017 [6 favorites]

My parents did something like this when I was in middle school and high school, and like homodachi, I absolutely loathed it. My parents were, in my opinion, completely unrealistic about actual costs of things (probably because they themselves bought all their clothes from the thrift store and typically keep the same clothes for decades - no joke, my mom is literally wearing shirts that she had in the 1970s and 1980s). I got $30/month (in the late 1990s through early/mid-2000s). This was supposed to cover all clothing (including winter coat, school shoes, running shoes, etc.), as well as any other discretionary spending (public transport, food while not at my house, birthday presents for friends, etc.). My parents were pretty anxious about money, and I know they meant to inculcate healthy saving and spending habits on me, but what it actually did was that it foisted huge financial anxiety on me in my mid-teens. It basically meant that I didn't participate in most social events with my friends, which I think contributed to me feeling fairly isolated at school (I also didn't have car access, which didn't help). I also ended up not having enough clothes and not having any clothes I felt comfortable or reasonably attractive in. $360 total is really not much to try to clothe and shoe yourself for a whole year, especially when your body is changing. I also felt really stressed about money a lot of the time, in addition to the huge academic stress I already felt. Like with many other things, my parents loosened things up a lot for my younger sibling, who basically got the $30/month as an allowance on top of having lots of other things provided (clothing, car access and gasoline, food money, birthday presents for friends). I do think that some of the money anxiety that I currently experience as a young adult came as a result of that experiment.

If I were to do something similar with my future children, I would definitely cover their necessities (shoes, coats, basic clothing, transportation) so that they didn't have to worry about potentially not having a winter coat to wear to school. I would also come up with a *realistic* allowance for discretionary spending that looked at actual current prices of things at actual retail stores (not, you know, the prices of things at thrift stores 20 years ago). I would also check in regularly with my children about how they felt the project was going, whether they were enjoying it or would rather go back to me covering things sans allowance, etc.
posted by ClaireBear at 3:51 PM on May 29, 2017 [8 favorites]

My parents transitioned each of us (three girls) from a weekly allowance for incidentals to a monthly clothing-plus allowance at age 13. Our parents still bought our shoes and coats, reasoning that these were especially large expenditures. But everything else we figured out for ourselves. In exchange, we were given broader latitude about what we chose to wear. I was thrilled with the arrangement.

So, you're probably wondering how it all turned out, right? We're all over 60 now, all homeowners and all quite self-sufficient financially. We all have very different, and very personal, relationships with money but none of us ever went bankrupt. And having gone through disbursing our parents' estate among the three of us, I can state categorically that none of us are particularly squirrelly about money either. So all in all, pretty good.
posted by DrGail at 4:07 PM on May 29, 2017

Best answer: I did this with my kids but only for discretionary spending - this that I felt comfortable letting them make their trade-offs, especially at the tween age. So, basic clothes and food from the pantry were paid for by parents. Fun or special clothes came from the allowance as did any food outside the home including school lunches.

This way, they had a solid safety net - even if they literally lost their allowance (it happened a lot when my daughter first got hers in kindergarten), their basic needs were taken care of.

You have to set the allowance to be proportional to the expense. If you expect them to save up for a big end laptop or sleep away summer camp or marching band fees, you need to give them enough money to get there. To help with that, if the kids were saving something I approved of, I would often offer to pay for part - sometime even the majority of it but they still had to do some savings of their own.

You can also create a separate budget for things that you want to control and fund separately - like basic clothing or after- school and summer programs. I would not want my kids giving up music lessons to buy a gaming system so I paid for music lessons.
posted by metahawk at 4:18 PM on May 29, 2017

My parents did this when I was a tween, and I loved it. We received a monthly allowance, and it covered clothes, entertainment etc. In addition, I supplemented it with babysitting and other odd jobs. It's been awhile and I can't remember all the details, but I think I paid for everything non-essential and discretionary. They paid for school/music tuition and school-related expenses (and anything that would be deemed extra curricular), and everything we did together as a family. I paid for literally everything else, and chose what to do with that money.

I remember buying season's tickets to theater festivals, and other cultural events, going out for coffee with friends, buying my own clothes, haircuts, makeup etc....I would say that it was the beginning of my adulthood, in a certain way, it surely was the start of defining my own tastes and what I thought was valuable vis-a-vis money.

I can't recommend it enough.
posted by nanook at 4:40 PM on May 29, 2017

Best answer: My parents did a version of this for me and my siblings. I think it was at least in part an effort to contain costs - certainly, the amount we got wasn't huge, even for someone like me who wasn't a big spender to begin with. In hindsight I wish they'd been a bit more explicit about the purpose of doing it, if that was indeed the case - at the time it felt mean, though that might just be because I was a teenager. I think it did help me understand tradeoffs around e.g. bringing lunch from home vs buying it. I ended up doing some mildly dumb stuff like riding public transport without a ticket to free up money for other things - you may or may not want to set firmer boundaries around such things.

Neither my sibling or I are huge spenders now; I'm a better saver but I also earn more to begin with so it's hard to compare too much.
posted by une_heure_pleine at 5:04 PM on May 29, 2017

Best answer: [background: we were a fairly middle-class family; my parents didn't make a large salary but their job provided room, board, and health care]
My parents did this with our clothes once we got to junior high/high school age. They added up everything they'd spent the previous year on clothes (and I think added a bit extra). They didn't actually give us the money, but they kept a ledger of our spending and we had to stay within the budget. I really liked it since I felt like I had more freedom to choose what I wanted.
Allowance for other stuff was separate, and they had various ways of doing that over the years--usually they would give us a baseline amount that was sort of a "family dividend" for our normal chores and responsibilities, and then we'd have the opportunity to earn extra by doing other jobs around the house. (This was before we got real jobs as teenagers.)
They also would sometimes do a matching funds sort of thing for bigger purchases, i.e. if we could save half the money they would pay the rest.
I think it definitely helped me learn to manage my money better, and made me feel more in control instead of always having to ask for things.
Both my brother and I were homeowners in our 30s.
posted by exceptinsects at 11:01 AM on May 30, 2017

One thing that I'm planning to do once my kid is older (she's 11mo right now, so a wee bit too young) is to pay an exorbitant interest rate on her savings. When we first start around 7 or 8 it'll be about 10% per month, then scale down as she gets older. The idea is to teach the magic of compound interest in a really visceral, understandable way. A savings account throwing off 1% per year is not fast enough to demonstrate the concept for kids, whereas if her $100 savings doubles in eight months she'll actually get it.
posted by zrail at 12:14 PM on June 3, 2017 [1 favorite]