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Allowances: Life Skill Building · Talking FACS

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  Welcome to Talking FACS, what you need to know about family,
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  food, finance, and fitness.
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  This nationally recognized, award-winning podcast is hosted by the University
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  of Kentucky Family and Consumer Sciences Extension Program.
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  Our educators share research knowledge with individuals, families,
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  and communities to improve quality of life.
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  Hello, and welcome to Talking FACS, what you need to know about family,
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  food, finance, and fitness.
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  I am your host, Mindy McCulley, Extension Specialist for Instructional Support
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  with Family and Consumer Sciences Extension at the University of Kentucky.
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  We are housed in the Martin Gatton College of Agriculture, Food, and Environment.
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  Many of us have memories of getting our weekly allowance and putting it in our
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  piggy banks or renting out and spending it all at once. My guest today is Dr.
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  David Weisenhorn, who is going to share with us why allowance is a life skill builder.
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  So welcome, David. Thank you, Mindy.
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  I love this topic, first of all, because I really loved giving my children an allowance
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  because it was fun to watch their different skills in money management.
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  So let's talk about allowances and what are the skills that we're going to learn
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  as we share allowances with our children?
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  Sure. You know what? I get excited about that, too.
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  When you were talking about remembering putting money in a bank, I, too, remember that.
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  And there is so much value.
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  Allowance plays a crucial role in shaping a child's development,
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  especially because it fosters a lot of these important life skills, such as balance.
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  Financial responsibility. It promotes financial literacy.
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  And when I talk about financial literacy, just the terms and the language around
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  finance, and it really does.
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  Just like you said, it is a powerful tool that teaches a lot of life lessons.
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  So when I think about the top things I want to talk about today,
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  I want to talk about five or six, just the responsibility, financial responsibility,
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  work ethic, goal setting, decision
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  making, empathy, and maybe some of that financial literacy in the end.
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  Sounds like a great plan for where we're heading with this.
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  So financial responsibility is one of those skills that definitely is learned.
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  If we don't practice the habits of saving and putting away our money for a rainy
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  day, as my mom always called it, then we miss the opportunity to foster this
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  financial responsibility.
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  Well, you bring up a good point. I just saw this morning a statistic that said
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  that Gen Zers, which are our 19 to 25-year-old age range,
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  that they carry $2,854 worth of credit card debt On average.
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  When I was that age, I'm not sure that I was even bringing...
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  $2,800 a month. Oh, I was dreaming of a job, right? Probably still cutting grass for $10 a lawn.
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  That kind of debt scares me. And perhaps their situations are unique.
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  And I don't want to lean too much into that as I'm not the financial guy.
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  But what I do know is the importance of what you began talking about,
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  that financial responsibility, that when we provide a small sum of money and
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  it could be whatever the discretion of the family is.
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  For me growing up, I remember getting $2 a week.
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  Now, granted, I grew up in a family that didn't have a lot. I had a lot of brothers
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  and sisters, but my parents didn't have a lot of finances.
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  And so $2, as you can imagine, now I could still buy something with a dollar
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  then, but $2 wasn't an overwhelming amount amount of money.
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  And so what that teaches a child, just as any sum does today,
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  is that we need to learn to manage a little bit. Do I save?
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  Do I need to budget, right? How do I budget?
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  When you don't have income on a regular basis, it becomes hard to learn those skills.
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  And so the first time, like driving, we don't want to learn how to begin to
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  manage our money when we get our first job.
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  What would be nice is that we had some small amount of money that you can begin
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  to learn some of those very important skills, such as saving for the desired
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  toy or spending on a daily need, such as lunch, or maybe even giving to charitable causes.
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  So all of those things help with financial decision making and eventually lays
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  the foundation for responsible money management later in life.
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  And I remember trying to learn negotiation skills because I thought,
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  now, if I can negotiate an advance on my allowance, then I can go ahead and
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  get this way or whatever it was that I wanted.
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  But my parents were very wise and made
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  me delay gratification so that
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  i could learn the value of actually
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  buying something with my own money as opposed to something
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  with their money that yes i
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  would have had to pay back but it wouldn't have had the same meaning for me
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  if i had been paying off something as opposed to saving up for some that's absolutely
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  true i mean and what you're talking about is kind of a goal setting and the
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  opportunity for a child to begin to set goals.
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  One of the things that's difficult when you're young is that you don't have
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  that source of income, right?
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  Because of labor laws, children don't early get into this making money bit.
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  And so what happens a lot of times is that when a child asks for something, mom and dad just buy it.
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  And the assumption becomes, that's all I need to do is ask and then I can get that.
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  They don't understand a lot of times, at least my children didn't,
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  that, hey, wait a minute, this
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  takes dad a long time to get this kind of money that I can give to you.
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  And so you need to begin to learn that. And so when you talk about goal setting,
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  that's what happens is we begin to get a small amount of money and then you
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  determine what it is you want with that.
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  And then you have to learn to save. And that does a couple of things.
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  One, it teaches you that it's going to take a little time to get there,
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  but two, it allows you to think about, do I really want whatever that is,
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  that toy, that baseball card, that game I want to play, that pair of shoes, whatever.
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  It allows you to determine, do I need to set a goal?
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  In setting that goal and accruing that money, am I really sure that this is what I want?
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  Well, and I don't know about you, but as I got older, my allowance increased,
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  but also my responsibility for what I had to do with that allowance increased.
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  And so I learned that I needed to work really hard if I wanted to enhance my allowance.
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  And so I was a babysitter and a lawnmower, as you said, and I did all of those
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  things that I could to enhance my income. then.
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  I love that because I think a lot of times allowance, a lot of families and
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  parents decide we want to tie this allowance to a set of chores.
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  Now I had chores that were required of me weekly and I received an allowance.
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  And so in my mind, in my parents said, this is what you get for the work that you do here in the house.
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  And so it really creates that work ethic, which is what I hear you also talking about is this.
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  And so the ability that money doesn't come without some sort of labor,
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  without some sort of responsibility and dedication that I've got to show up.
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  I've got to do the same thing. I've got to do what's required of me every week
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  in order to get what I want.
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  And if I don't do that, then that money doesn't come.
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  And so the importance of that is learning that, hey, guess what?
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  That's called work in America.
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  That's what our life is forever, right? Again, what a neat skill to be teaching
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  a child early in life that, hey, this is what's going to be expected of you
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  as you continue and as you advance.
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  And like you said, sometimes that money then becomes more.
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  Maybe I find that I can do more chores in order to accrue more money.
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  And what you're understanding is that it's going to take more work to get more of what I want.
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  That's right. So as we are giving children an allowance, how do we help them
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  prioritize or decide how they're going to use that?
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  I love that. You know, a lot of times what I would encourage parents to do is
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  kind of allow them to do that.
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  Once we've gotten to the decision that we're going to give you this money,
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  now it becomes their responsibility.
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  And this is all part of that learning process.
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  You know, sometimes they're going to learn that, hey, I've earned this money
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  and I might go spend it really quick.
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  And then they're going to say, hey, mom, can I have money to go to the movies
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  with my friend? And you say, well, what happened to your allowance?
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  Oh, I already spent that. Well, that's what that allowance is for.
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  And so sometimes what happens is what I would encourage parents to do is put
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  some guidelines around, hey, so you're earning this allowance.
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  This is what allowance is for. It's for those extracurricular things you want.
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  It's for those times with your friends when you go to the ball games and you
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  want snacks at the vending machine, I don't want you to come ask dad,
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  you got allowance for that, right?
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  So, and it helps them with the decision-making skill, right? How do I decide?
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  Do I go to the ball game and take
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  my $5 this week and go spend it at the concession stand? Or do I wait?
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  Do I forego that snack at the ball game so that I can save it for three weeks
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  and get that V-Bucks card that I've been wanting to use and use on my video games?
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  And so this decision now becomes the child's. And they begin a lot of times
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  through process and error.
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  And you find out, hey, maybe that wasn't a good way to spend my money.
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  So then the decision becomes theirs. And children must evaluate their priorities.
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  They have to figure out what the trade-offs are and consider the consequences
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  of their choices. And that is the beauty of decision-making.
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  Well, I think you also pointed out that giving an allowance can help children
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  develop their empathy skills.
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  That's a new concept for me because I recognize how it can happen in practice,
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  but I never really have seen them tied together.
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  So share with us a little bit about that.
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  Sure. I mean, some parents can encourage children to give for some of their
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  money, a portion of their money to charity. And what it really does is that
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  practice expands a child's understanding of what others' needs are in their community.
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  Perhaps that's through a religious affiliation. Maybe that's through a charitable
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  donation that you go and you understand that you're going to provide this money.
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  This is actually going to go to help a family. Maybe that's through Salvation
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  Army or through the Red Cross or whatever.
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  There's a plethora of those out there. But learning those early lessons of generosity
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  and compassion, it causes and
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  creates the mindfulness of the needs of others. I think that's perfect.
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  And then, of course, let's just touch very quickly on financial literacy,
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  because I know that if we can help our children understand the concepts of financial
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  literacy when they're young,
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  they're going to reap great benefits as they age.
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  Absolutely. So understanding the basics of budgeting, saving,
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  and making informed financial decisions is crucial to make those wise decisions later in life.
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  And so when you have this idea of allowing a child to get an allowance,
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  they're exposed to these concepts, right?
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  They understand that allowance is better equipped to manage my money now that
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  I have it, now that I know that I can save, that I can, oh, that's also called
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  budgeting if I've got things that I want to put a certain way each month, right?
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  And then finally, I get to make a final decision and spend the money the way that I want to.
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  Those are those small pieces of financial literacy that then get built into
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  that child that will help them exponentially in the future.
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  Thanks, David. I really appreciate how you've shown that That giving children
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  an allowance helps them not only develop money management skills,
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  which are so important, but also gives them the life skills that are so necessary
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  for their development as they move through life.
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  And I do hope that our listeners would use this information in ways that will
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  benefit their families.
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  Well, me too. I really appreciate you having me on today, Mindy.
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