Living with Children: Teaching your teen to manage money


QUESTION: My two young teens are constantly begging me to buy them clothes. It’s become highly annoying. After reading your book on teenagers, I’ve decided to stop buying them any clothing and give them each an $750 annual clothing allowance. Should I give them the whole amount at once or give it to them on a monthly basis?

ANSWER: Great idea! However, I don’t think an annual clothing allowance of $750 is a realistic amount for children who are outgrowing their clothes every six months to a year. If their clothing allowance is insufficient, then the whining is only going to get worse, and your plan is likely to blow up in your face.

Give each of your kids a monthly clothing stipend that is sufficient to purchase a certain amount of discretionary clothing. I generally recommend between $75 and $100. Under the plan, you would continue to purchase necessary clothes (e.g., to replace items that no longer fit), but you would spend only a minimum amount in each case.

For example, if one of them requires a new winter jacket, that is your responsibility. If she doesn’t like the jacket you’re willing to buy, then you would give him that same amount in cash and he would use his allowance to make up the difference in price. If he simply wanted an article of clothing that is nice but unnecessary, that would be his responsibility entirely.

The most efficient way to do this is to set up a checking account for each child at your bank. As long as you have good credit, the account doesn’t have overdraft protection, and you are willing to back it, most banks are willing to do this.

You deposit the child’s monthly allowance in her account at the beginning of the month and he manages the account from there. In the event of a bounced check, the bank and merchant fines as well as what the merchant is owed come off the top of the following month’s allowance.

This plan teaches teens how to budget money and manage a checking account. Better still, it also teaches them to curtail their spending impulses, plan ahead, and save for the proverbial rainy day. It’s a great way to prepare a youngster for the larger fiscal responsibilities of adulthood.

[Family psychologist John Rosemond:, Copyright 2021, John K. Rosemond]