So I was watching that Orman show today and apparently one of the points that she brought up about money is that allowances for kids are bad as it gives them an entitlement mentality. Therefore, they will grow up not valuing the money they have. That can’t be true I thought as I am living example where I got an allowance as a child and managing money while staying out of debt has always been one of my strong points.
I was then thinking back on why I ended up appreciating the allowance though versus which I guess most people would misuse it. I have an older brother and we both used to get an allowance every two weeks. However, as the younger child my parents decided to give me $10 a week and my brother would receive $20 a week. So obviously I would have liked to get $20 too, but knowing this fact made me think that the only way to ever catch up to my brother is to save.
As the months went by, most of the time my brother would spend his allowance whereas I saved the majority of funds. So even though he was getting twice as much as I was, I always had more in he end as a result and the situation was kind of reversed where he would have to play catch up. By the time I got older and my parents increased my allowance to $20, having that saving habit prepared me where I was so used to spending so little that the extra $10 is like getting an extra $1000/month as an adult.
So all in all I don’t see how allowances are bad as long as the child has something to motivate them to manage their money seriously. It can be even simple as lessons such as if they blow their money one day on an item just to see it on sale the next day.