Nicole Field
AFC® Candidate, FINRA Military Spouse Fellow

The best thing I ever did for myself when my daughter was four was give her an allowance.  She was at the age when she wanted everything in the store. “Mommy, can I have this? Mommy, will you buy me that?” Shopping with her was one of my least favorite activities.  But when she had an allowance, substantial enough that she could realistically save up for the toys she wanted but not so much that she could have whatever caught her eye at any given moment, shopping became a different experience.  The questions changed from “will you buy me this” to “how many weeks will I have to save up for this?” We talked about the value of money and even at that young age I

could see her weighing her options; which toy would she rather have? Was it worth six weeks of allowance or would she tire of it in less time than it took her to save for it?

Fast forward 12 years.  My daughter recently got her first job.  The glory days of having a paycheck and no bills to pay, no necessities of life to worry about. Clothes, shoes, electronics, books all with the swipe of a debit card . . . .and when the money runs out, another check is just around the corner.  All the things I wouldn’t buy her when she was 15 are now within her reach.

So when she got her first paycheck we sat down and talked again about the value of money, this time with a more adult perspective. She has a comfortable enough life. There is nothing that she needs that she has to buy with her own money.  But in nine months she will graduate from high school. She wants to go away to college. She’s ready to try life on her own terms. And then money will be much more valuable to her than it is now.  So together we made a plan.

·    Fifty percent of her money goes to savings. An easy way to do this would be to have two separate bank accounts, a checking account for spending money and a savings account for savings. She only has one account though and with each deposit she adds half the amount to a ledger that she keeps so that she knows how much money has to stay in her account and she can spend the rest.
·    She can do what she wants with the spending money, but we made a list of things that she would like to have that will be useful or necessary in college, like a new laptop, and things that will help her get there, like art supplies so she can continue to build her portfolio.
·    Any large “frivolous” purchases should be thought about for a few days to determine if they are momentary ideas or true wants.
·    Avoid habitually making little purchases that add up, like snacks from the school vending machine, silly apps for her phone, hot chocolate from the bakery on her way to school.

All this aside, it’s her money. I’d rather see her make foolish decisions with her money now than later, but even more, I love seeing her learn not to make foolish decisions with her money now.

For more information:
Seven Savings Tips for Young Adults
Positive Peer Pressure and the Envelope in the Cupboard
Case of the “I Wantas”
Money As You Grow