Thoughts on daughter's spending

[disneysteve]

Curious to hear your opinions on this.

My daughter is 11. She's gotten an allowance for years and knows that certain things are her responsibility to pay for. We cover all the necessities and the occasional special items. She handles extras, graphic novels, trading cards, jewelry, GameBoy games, etc. I think overall she is pretty responsible and well-educated about money compared to most kids her age. She and I have had numerous lessons on all types of finance issues.

Something that has happened a few times recently, though, is she has bought something and shortly after decided she didn't really want it or wanted something different. Now these are things that she paid for with her money so I guess it is a learning experience for her to give more thought before buying something. I'm just a little concerned that she still doesn't quite grasp the value of the money she has accumulated. She's got over $250 saved up and I think spending $20 or $30 doesn't have much mental impact to her.

She also is a victim of technology. She knows that if she has something she doesn't want anymore, we can sell it on ebay. But I don't want her buying things she doesn't really need or want figuring she'll just ebay it after a few weeks. The other tech problem is she has bought a couple of things online and wasn't thrilled with them when she received them, but returns, especially from ebay, aren't so easy if they're possible at all. Again, I suppose it is a learning experience. I just wonder if there is something different we should be doing with her to get her to think things through better before spending the money.

[PrincessPerky]

Try telling her of a time you bought something then learned better of it. First to share and help her figure out how you now avoid the situation, and second...cause you ain't perfect yourself Parents need reminded of that once in awhile (I sure do!)

Also..does she have more money than she knows what to do with? If so you might try upping her responsibility's (buy your own shampoo, or something)..or getting her interested in stocks Or suggesting that car she will eventually want isn't as far off as she thinks, and help her with a 'long term savings' account.

But first I aught to have said 'great job!' honest, she is doing great, and I am glad you want to tweak the learning, but don't knock yourself down, most 11 year olds spend willy nilly ALL the time.

[disneysteve]

Thanks PrincessPerky. I totally agree with you. We have recently talked about increasing what she is responsible for since she is getting older and getting involved with more things, starting to go out with friends, etc. I hadn't thought about having her pay for a necessity item like shampoo. Perhaps that would be a good idea.

We have talked about investing. In fact, we were just discussing it over the weekend, so we need to follow through and have her pick a stock she'd like to start following and then ultimately have her buy some shares of her own.

[moneybags]

Whenever one of my kids makes a bad purchase, I make sure to point out the mistakes after the fact. For example, if it was a cheap toy, not that interesting after a few days, I point that out. I'm not sure what you can do ahead of the purchase, since the point is for them to be learning, but definitely point out mistakes (and good buys as well).

Do you list the unwanted items for her on Ebay? Maybe you could have her do the work for that. My DD has done listings for me since she was 11. I just have her schedule it for a far out date, then check the listing before it posts.

[disneysteve]

Do you list the unwanted items for her on Ebay? Maybe you could have her do the work for that.

Good idea.

[disneysaver]

Sounds like you're teaching her well. It took my daughter a while to figure out that the toys/games she saw advertised on television weren't nearly as much fun as they make them look! Now she's an advertising major and totally gets it!

It's a lesson we've all learned at some point!

[Broken Arrow]

This is just my personal opinion, but I've tried the allowance route before and what I find troubling is that I don't think they grasp the value of money that way.

The reason why is because I don't think they've had to work hard to earn it. Instead, it is simply given to them; like some kind of passive income that just magically appears on a consistent and regular interval.

My youngest of 3 is 6 years old, and even she knows that if you want something, you have to earn it. Usually, I make them do chores such as cleaning their rooms or help with the dishes or laundry. Whatever it is, I make them work for it. It helps reduce my own chore load too....

Then they get paid, and then they can spend it on whatever they want.

I know some people are just as adamant about having an allowance because of the money managing skill associated with it. My feeling is that making kids work for their money doesn't deny them an allowance. Rather, they simply have to work for it rather than be given to them through no effort of their own.

Ok, I'll get off my soapbox now.

[disneysteve]

BA - I think there are 2 schools of thought on allowance and your's is a perfectly valid one. Others, like me, feel that chores and helping around the house are mandatory for being a member of the household and aren't deserving of pay. You don't want the kid to decide he/she doesn't need any money so he/she won't do the chores this week.

We prefer to give the allowance with no strings attached other than stipulating some things about how it is to be spent.

[LivingAlmostLarge]

No strings attached to an allowance is cool, to me too there is a minimal contribution of the household.

Let her spend the money, but maybe encourage investing in mutual funds, stocks are good, but she could get PO if it goes to zero.

Maybe discuss how you make purchases and definitely let her list her purchases on ebay. Even now I buy some stuff I don't need or use necessarily, but does that make me a horrible person? No (or at least I'd like to think so).

You can't be perfect in everything and overall she sounds like a reasonable kid. Normal. Maybe just dicuss your own sitation and purchases, but don't pressure her too much. She's a good kid (and you don't want her hiding purchases) or one day just spending out of control as a rebellion. That's the thing with parents too tight a rein and anyone can rebel.

[disneysteve]

You can't be perfect in everything and overall she sounds like a reasonable kid. Normal. Maybe just dicuss your own sitation and purchases, but don't pressure her too much. She's a good kid (and you don't want her hiding purchases) or one day just spending out of control as a rebellion.

Agreed. I think just leaving things as they are might be best. Part of the point of the allowance is for her to learn, and making mistakes is part of learning. We'll just keep discussing things and reviewing purchases that she later regrets to talk about how she can avoid things like that in the future.

Thanks for all the input.

[lgslgs]

I got my first CDs when I was 13, using baby sitting money.

By all means, give her a little introduction to mutual funds, stocks, CDs and the like and help her pick an investment. Even let her be part of a meeting with your financial planner.

Does she know how to earn money as well as how to spend/save and allowance? There's nothing like learning how you need to spend your own time and energy to get a $ to help you get a better picture of worth. That's a nice lesson to run in parallel with learning about passive $ growth and compounding.

Lynda

[Coleroo]

Im only 24 myself, but i think 11 is too young to be an "ebayer" unless she is a child computer genius and does it all herself. How does she have such easy access to it that she is already forming the thought that it can be sold on ebay if she doesnt want it? Take away the easiness of it. Make her do the listings, calculate the cost in fees, pack up the items, go to the mailbox with you, etc. Dont do any of the work for her, and she wont develope that attitude. Unless she is a big-little entrepreneur, I bet she wont want to be tied to an ebay "job" just to get rid of her "oops" purchases - especially if she sees all her money being wasted in fees and she not getting anything out of it in the end. On the flip side, she may enjoy so much she will want to start herself a little business and do it on the side - either way you'll come out ahead.

Also, besides of a few stipulations, why not develope a good / better / best ranking list as a teaching tool. Develop a list of what a good purchase might be, better purchase, and then best purchase - for instance... "good" list might include name brand things for a good price she found herself (a hollister shirt she saved for and waited till it was on sale)... "better" may include some gameboy games at the flea market for a dollar each.... "best" may include a trip to the thrift store where she found a working version of the latest electronic gadget (or her choice of favorite kid item) for a few bucks. Have her write down purchases for a while and classify them as what she thinks they are "good, better, vs. best" (that way she has freedom with spending, but is also learning to view choices in a different manner).

You can also do a "matching" list to teach about what her future will hold with companies - her money goes further if she puts certain percentages towards savings (i.e. match her 25 cent on the dollar if she puts it in a piggy bank to rest for more than a few weeks.... 50 cent on the dollar if she sends it into a bank savings account.... 100% on the dollar if she becomes interested in stock). Dont teach her as if this is a "demand" from her mom and dad... but as a tool as to how companies work in the real world and get her ready for potential company matches and 401ks. When you match, hand her the matching cash before its put into savings so she can see concretely that its more money.

As for not knowing the value of money, i think it comes with the generation and prices of goods nowadays. To the younger generation, 20-30 bucks truly isn't anything and I dont think thats going to get too much better. Its a mindset.... kinda like a 20 buck light bill was "a fortune" in the mind of my 85 year old granny (even in the late 90s) while with me - 200 bucks is too much.

I think she deserves a lot of credit too - $250 saved up is terrific for a little girl her age!! I have never known another 11 year old to do it.

Also, I dont think money ever has much mental impact on someone if its all geared for personal spending.... true learning comes from buying (and HAVING to buy) necessities. Why should spending 20-30 dollars out of her saved up money have an impact on her when she knows its all for personal pleasure anyway?

[Coleroo]

Oh ....another thing, she's almost a teenager... another year or two. Why not work up a schedule of slowly adding in small necessities for her to purchase? You can also add in a schedule of allowance raises, but to loosely quote a proverb - "to whom much is given, much is required". That way you will still be providing necessities for her (in the form of your money) but she has to use her brain to start figuring out where to put it, what to buy, and why sometimes, for instance, the cheaper shampoo has to be bought instead of the hyped up overpriced smelly type.

I think a lot of children could use that type of budget training nowadays - I run into too many adults who do not understand that money must go to necessities first and luxuries last. too many of them seem to have the mindset that money from their job is an "allowance" to do with as they please and someone else should pick up the tab for the necessities (food, transportation, clothing, etc).

[SnoopyCool]

Others, like me, feel that chores and helping around the house are mandatory for being a member of the household and aren't deserving of pay. You don't want the kid to decide he/she doesn't need any money so he/she won't do the chores this week.

We prefer to give the allowance with no strings attached other than stipulating some things about how it is to be spent.

I agree, but I think that the money has to be earned somehow (over and above regular chores). I think there has to be a feel-good feeling of earning the money because she put forth the effort. But I can't say. My kids are preK and younger and we've yet to establish how we want to do an allowance.

The only other thought is this - does she have any goals for her money? Does she understand budgeting and cash flow? Again, I'm not offering from experience, just thinking that we raise our children to be responsible adults and so how does that affect your situation?

Good luck!

[Daylily]

I'd say just mark it up as part of the learning experience. With at least seven more years in the house with your frugal self and your frugal wife she'll figure it out. Besides, it's probably better to make these mistakes now at the $20-30 level than later at the $200-300 level or even the $2000-3000 level.