I recently asked my son how he thought things might be different this Fall, using his AmEx PASS card rather than being given his allowance in cash on a weekly basis. Deadpan, he quipped, “It’s obvious. Cash is virtually untraceable so all of my illicit dealings will now have to be under the table or I'll have to go to the cash machine and pay a fee. I’m just going to have to be more thoughtful about what I do illicitly.”
While staying with my grown daughter during part of our vacation, I noticed that she seemed to have a clear financial plan with regard to spending money on items that she needs as well as on things that she wants, so I asked her how she creates a balance between the two. Interestingly, while I thought there was a clear differentiation between “needs” vs. “wants,” she asked for clarification. I explained that “needs” are things like toilet paper, food, gas money, etc. “Wants” are things like a new pair of shoes if you already have perfectly serviceable ones.
When we gave our son his American Express PASS card, he immediately made a bid for more allowance. My reply: Let's sit down at a family meeting and we'll discuss it. In the meantime, I told him, he should think about what extra financial responsibilities he wants to take on with the additional allowance.
If I had to choose just one financial lesson for teens to learn before they head into young adulthood it would be the lesson of how money works in real life. In my last post, I said that I don’t believe you should pay your teen for doing chores or getting good grades. In fact, I don’t believe your teen should have to “earn” his allowance in any way. How, then, do we reconcile that with the fact that in “real life” money is earned, not just handed to you? I believe this question arises from a misconception about the definition of allowance.
I'm always astonished when I hear a parent proclaim, "I don't believe in giving my child an allowance." Sometimes this is accompanied by, "I'd rather just hand him cash when he asks" and /or "I don't want to spoil him." Either way, I'm puzzled by this attitude.
Our job as parents is to raise our children to be functioning adults some day and adults need to know how to handle money.
This past weekend represented a “first” for my husband and me in the parenting department: we went away and left our son home by himself for two nights. We did not come to this decision easily, mind you. While he’s a “rising senior” in High School and a really reliable kid, he’s only 16. We questioned ourselves: what if there was an emergency? Would he know how to handle it? What if he got ill: who could he call? How would he eat? Would he turn the flame off the burner on the stove if he cooked for himself? How would we know where he was? What if we text him and we don’t hear back?
Nothing is clearer to me than the importance of raising children to become independent adults. And, as a parent, there is nothing more bittersweet.
My daughter just graduated from college, and will turn 22 years old next week. For her graduation, we put together a DVD of photos beginning with her birth and ending with those we had taken right before she graduated. I'll be honest: I wept a lot during the process.