Let me introduce you to the Arden family. They wanted to teach their two teenage daughters how to really manage money. So they gave them some. A lot, really. A scary thought I know, but their experiment worked better than they ever imagined it would.
Here’s how it worked and the remarkable benefits that came of their experiment. Starting when the children were thirteen, they were given an allowance of ten times their age each month. With that money they had to buy everything they needed and wanted except their most basic essentials of food, shelter and medical care. All clothing, cell phone bills, birthday party gifts, outings with friends, extracurricular activities, gas when they were old enough to drive, etc. was to be paid from this allowance.
Of course, the parents had reservations. Would they go directly to the candy store at the beginning of each month and blow the whole allowance? This was one of dad’s actual fears. Would they come begging for more money when they needed shoes for school or a winter coat? Remarkably, it was just the opposite. Their plan worked better than they ever could have hoped.
When asked if there were any major fails, family members couldn’t recall even one incident. One of the daughters recounts, “It ended up being that I saved just about everything. I bought what I needed and saved everything else. I ended up being able to save enough for all my spending money when I went to Europe when I was 16.” The girls learned that they had a limited amount of money. They had to determine wants from needs and set priorities. They learned that if they needed a new winter coat, they would have to start saving for it in July. And that brand name clothing wasn’t always the best place to invest their limited amount of money.
Now that she’s in her 20s and has met the real world head on, the younger sister admits, “I definitely have more appreciation for working for what you get even though we didn’t have to do chores to get the money. I appreciate and know what I can and cannot afford and know how to strategically save for something that I want.”
The older sister, on the brink of her 30th birthday takes pride in her financial savvy, “I’ve saved almost $35k towards retirement, have a separate investment account, have a 6-month emergency fund, cut my student loan debt almost in half, paid for vacations to Tanzania, Brazil, and Guatemala, and I’ve invested over $10k into my business…. And I’ve never made more than $60k a year.”
Like I said, it really worked. Could this method work in your family? You don’t have to give your teenager $150 every month, especially if that’s not in your budget or you have a large family. But consider how much you would reasonably spend on your child. Could she manage that money herself? What decisions could he begin making and what expenses he could cover?
Maybe it’s 5 times their age or even some other amount. It could be expecting them to pay for certain things with money earned from a part time job. Whatever you do, give your teens the opportunity to learn about managing money while they’re still living under your guidance and protection. There maybe some mistakes made along the way and some lessons learned the hard way, but those are often the lessons that stick with us throughout life. And you just might be surprised by the result!