Teaching money lessons doesn’t have to cost money—even when it comes to an allowance. When you break it down, an allowance is two things: 1) a resource you give your child that they then decide how to use; and 2) a tool to help teach healthy financial habits and skills. But it doesn’t have to be money. Kids can use cash, yes, but they are motivated by other similarly restricted resources, or “currencies,” at least as much. Other than your own money, what resources can you use for an allowance?
Sure, you can’t give your kids *actual* time, but you can let them *spend* their time in ways they might not otherwise get to. If you have limits set on things like daily TV or video game usage, add a preset, extra amount that your child can ration how she pleases. Give your kid an extra 30 minutes of special treat time each week and allow them to choose when to “spend” it. You can also give your child the option to use this time for a slightly later bedtime. Make sure to define specific restrictions on these, so your child doesn’t end up staying up too late all in one night, or demanding TV time when homework needs to get done.
*The $ Lesson: Deciding how many minutes to use in each category is a great lesson in budgeting, and if you give an allotment per week, it’s also a lesson in delayed gratification… double-win for you!*
**2. Decision Power**
There aren’t all that many times when a kid has the power to make “important” decisions: getting to choose the family’s Friday night movie, the special treat on the weekly grocery trip, which pizza place to order from. Every week, give your kid a set number of choices that they have “decision power” over. If you have more than one child, you’ll avoid conflicts by making each kid’s choice-of-the-day/week distinct, and rotating which decisions go to which kid. Make sure these are specific, structured decisions with limitations laid out in advance.
*The $ Lesson: Dedicate time to discussing the pros and cons of each possible choice. This helps teach decision-making and the practical skill of weighing pros and cons. If any of the choices affect others (like the family movie night), be sure to talk about why it makes sense to take others’ preferences into account.*
**3. Money—but not from you**
If you want your child to experience earning, spending, and saving actual money, but don’t have room in your budget, consider helping her make a connection to somebody that needs a chore done. Do you have family friends or neighbors that need extra help around the home? Maybe your kid could help with household cleaning, gardening, or car washing. There are downsides to the pay-per-chore model of allowance in the home, but there’s no risk that your child’s own bed will go unmade if the paid chores don’t affect your family.
*The $ Lesson: With this option, not only will your child learn how to make decisions about how to use resources, she will also gain an appreciation for how money comes from hard work.*
\* Similarly, an allowance—chores-based or not—could be subsidized or sponsored by grandparents or family members looking to give a financially-minded gift.
You can give out these “currencies” in points on a fixed sum on a fixed schedule, or, if your family believes in compensating for chores, you can create a system of “earning” points and their equivalent non-monetary “currency.” Decide the points-equivalent “costs” for the time- or decision- rewards in advance. Set an upper limit on how much your child can earn or spend at once so that he or she doesn’t end up eating ice cream for every meal or living in front of a screen! And make sure your child knows the typical ground rules still apply (for example, homework first).
An allowance can be an effective teaching tool, but those money lessons don’t have to come at a high financial cost. Try one of these free alternatives to the typical model—and be sure to let us know how it goes.
*Do you use an alternative model of allowance? Share with us how in the comments!*