Allowances Can Teach the Life Skill of Money Management

by Dr. Jane Nelsen

The Johnson family was about to complete their weekly grocery shopping when five-year-old Jimmy started coaxing for a toy car.

Mom asked politely, “Have you saved enough money from your allowance to buy it?”

Jimmy looked sad and said, “No.”

Mom suggested, “Maybe you would like to save your allowance so you can buy that car when you have enough money.”

Of course Jimmy never saved enough money to buy the car.  He wanted the car bad enough to spend Mom’s money, but not enough to save his own money.

Five-year-old Sally wanted a new bicycle.  Dad worked out a plan with Sally that as soon as she could save $5.00 toward a bicycle, he would pay the rest.  They got a glass jar, pasted a picture of a bicycle on it, and Sally put her whole allowance (four quarters) in the jar the first week.  Since Sally’s allowance was only $1.00 a week, and it was difficult for her to resist the ice cream truck, it took her three months to save $5.00.  This seemed like an eternity to Sally, but every time she brought up the subject of a new bike, her Dad would ask, “How much have you saved?”  They would go to the jar, count the quarters, and figure out how many more quarters she needed to reach her goal of $5.00, and Dad would encourage her that she could do it.