The Abridged version:
- Parents may grapple with when to give their kids an allowance, but Sacramento-area financial experts say it’s not always about how much or when so much as fostering an open dialogue about money.
- A Sacramento mom shares the important lesson her young daughter learned when her debit card got denied at the register.
- One dad shares his advice about how to teach your kids about money even without an allowance.
Folsom mom Alexis Fitzpatrick has two kids — a 13-year-old son and an 11-year-old daughter — each of whom has a different relationship with money. As chief financial officer for SAFE Credit Union, which serves Sacramento and surrounding counties, she’s in a different boat than other parents who grapple with when to start an allowance and how to properly introduce their children to one of the most inevitable aspects of life: finances.
Fitzpatrick said parents need to understand the importance of talking to their kids about money at a young age but points out that the right approach may vary by family.
“Studies do show that children actually start figuring out financial habits from their parents around the age of 7 — pretty young, so the earlier is better,” she said. It’s important to have “healthy conversations about needs versus wants. There’s such a huge difference. How do you save for the things that aren’t a necessity, and how do you really prioritize spending on the things that you need? Food, clothes, gas in the car, things like that.”
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Fitzpatrick says parents should consider starting an allowance for their children when they’re in first or second grade. Another consideration parents can contemplate, she advises, is whether to give a regular weekly allowance or tie the payments to chores or good grades. But her advice always comes with caution.
“I think the biggest mistake is bribing kids’ behavior with money. I think there’s a difference between bribing and rewarding,” she noted. “The parents’ responsibility is to teach. It’s about teaching the importance of finances. It’s about teaching the importance of saving, when it’s appropriate to spend, and if you do spend, what does that mean in the future that you can’t have.”
Similarly, she says, there’s no exact right amount to start with. Fitzpatrick says the dollar amount has to work with the family budget and should give kids an appropriate balance between spending power and savings.
Fitzpatrick’s daughter, she says, is a spender. Her son is a saver, and so she and her husband speak to each of their kids a little differently about money — a familiar situation for other families, too.
Helping with financial literacy
Natomas resident Jillian Thomas Polyak, 41, also has a son and daughter. Oliver is 11, and Penelope is 9. She and her husband introduced the concept of an allowance to their kids a couple of years ago. Thomas Polyak says there was essentially one reason they did.
“I didn’t grow up with a lot of financial literacy,” she said. “My parents didn’t involve me in a lot of discussions around money, or how to balance a checkbook, or how to budget. And when I went to college, I took out some credit cards and got in trouble with them, and it took me a long time to rebuild my credit as an adult. So I wanted to set my kids up on a different foot.”
Oliver and Penelope each receive $15 a week: five bucks for savings and the rest for more casual spending.
“I have to catch myself from trying not to be too controlling over it,” she admitted. “Because I want them to learn, and they’re not going to learn very much if I don’t give them the opportunity. I have to remind myself there isn’t actually failure here; they’re not going to go into debt, they’re not making a late payment.”
The importance of money management
Thomas Polyak shared a story about how her daughter once learned money matters the hard way, often buying bakery snacks for her friends between dance classes. “She came up to me and said, ‘Mommy, my debit card got rejected.’ And I said, ‘OK, let’s pull up your account and see where your money’s gone.’ And we looked at it and added it up, and she had spent nearly $200 on pastries in two months.”
Hector Madueno is a colleague of Fitzpatrick’s, serving as SAFE’s financial wellness and community development manager. His job is to help customers understand how money works and how to manage it. He also supports the idea of introducing an allowance at a young age, if feasible, but says it’s not the only tool families have.
“Not every household can give an allowance, but every household can be transparent,” he suggested. “Like, when they’re grocery shopping, I’ve had parents help kids clip coupons with them and show how they save at the grocery store. Every family shops for food.”
Madueno also said it’s never too late.
“We run into teens or young adults that still struggle with certain credit concepts,” he said. “There’s a bit of a stigma that the older you get, the less questions you can ask. I would encourage anyone, regardless of their age, to reach out to their financial institution, their bank, anything they can to have these conversations.”
Fitzpatrick agrees. “It doesn’t matter the wealth of the individual; money is really stressful,” she pointed out. “When you’re demonstrating anxiety over money in front of your children, it will be passed on to them and that is something for parents to be aware of. An allowance is a great way for kids to be able to have those conversations with their parents and start learning at a young age.”
No matter what approach to allowance parents land on, or whether they include chores or good grades as part of the package, Thomas Polyak recommends fellow parents keep the long-term goal in mind: setting them up for future success.
“I don’t want money to be a leverage point either, so it’s a weird middle ground where I do see it as a tool, a skill set of money management that I want them to have,” she said. “I want it to be a carrot and not a stick.”
Carolyn Becker is a regular contributor covering youth sports for Abridged in her feature Beyond the Bleachers. She’s lived in Northern California most of her life and worked in journalism and communications in Sacramento for more than 25 years. She and her husband are raising two boys, both of whom play competitive baseball.