How “Hands Off” Should Parents Be In How Their Kids Spend Their Allowance?

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How “Hands Off” Should Parents Be In How Their Kids Spend Their Allowance?

By JLP | July 23, 2007

The other night we went as a family to Best Buy to look at a laptop for my wife. My boys were excited to go because they were hoping that the newest Guitar Hero game, Rocks the 80s, would be out. My boys are NUTS for Guitar Hero. Anyway, once we got to the store, our boys headed straight for the games section of the store while my wife, daughter, and I headed for the computer section. A few minutes later my boys come up to me each with a Nintendo DS game.

I asked them what happened to the Guitar Hero game and they said that it wasn’t out yet (it won’t be out until July 24th). I told them that they barely had enough money to get the game as it was, so why would they want to spend their money on the DS games (they were $30 each). I could tell that my oldest son was really thinking about it. My youngest son, however, didn’t care. I then told them that they couldn’t buy the DS games and that’s when my youngest reminded me that it was HIS money and that he should be able to spend HIS money however he wanted.

He was right. However, I just couldn’t bring myself to let them blow their money on something silly just so they could leave the store with something new. Not once did I ever think about or remember the “cooling-off period,” which is a length of time (up to two weeks) that must pass before a kid can spend their money on a large purchase. I first wrote about the cooling-off period in a post titled Wise Spending Habits for Kids. I like this idea and next time I’m gonna use it (that is IF I remember it!).

Regardless, what do you guys think? Should I have let them spend their money and then reminded them later why they weren’t able to buy Guitar Hero? A part of me says yes, and a part says no. What do you think?

Topics: Kids and Money |

Comments to “How “Hands Off” Should Parents Be In How Their Kids Spend Their Allowance?”

sam Says:
July 23rd, 2007 at 2:34 pm

My take on this is that one way children learn to make wise purchase decisions is to make poor purchase decisions. I did that many times as a kid, and eventually learned not to waste my money (as much.) As long as they aren’t spending their money on something illegal or immoral.

M Says:
July 23rd, 2007 at 2:35 pm

I say let them. I regret a lot of the decisions I made at that age, but for all its negatives, regret is a pretty good teacher. There are worse things to regret later on than buying a video game.

Andy Says:
July 23rd, 2007 at 3:23 pm

IMO, they will learn better if they realize that it is their fault they can’t buy the game.

Chris Says:
July 23rd, 2007 at 3:40 pm

I would have offered to let him buy it if he went home first. If he still wanted it the next day, he could buy it. Of course, this means no Guitar Hero. He may have changed his mind once he got out of the store atmosphere.

So I guess I fall in the middle. It’s his money, so he should spend it how he wants, but as the parent I would make him wait to think it over before bringing him back for the sale.

Brian Says:
July 23rd, 2007 at 3:58 pm

Mistakes are valuable lessons. If he ends up not regretting the purchase, then he will be better off. If he ends up regretting the purchase and learns from it, he will be better off.

How have you handled similar situations in the past?

NCN Says:
July 23rd, 2007 at 4:14 pm

I think a kid needs to know that he can trust his dad… You had an obligation to look out for his true, best interest. I think you did the right thing. This is not a “can I manage my money” lesson… this is a “wow, my Dad looked out for me when I was about to do something silly” lesson…
Think about how he’ll feel when he finally gets to buy the new game. He’ll be happy he waited, sure, but, deep down, he’ll be learning that he can really, truly, trust his Dad.
NCN

Miguel Says:
July 23rd, 2007 at 4:46 pm

I think the best thing to do would have been to invoke a 24 hour cooling off period. Basically, if he wanted the game after going home and thinking about it, he should be permitted to buy the game, since its “his money”. It would have been cruel to teach him a lesson by letting him make the instant gratification mistake.

While it’s convenient to think that letting them make their own mistakes is a good teacher, I think that behavior modeling is a much stronger and more lasting teacher. But making him wait, you were in essence showing him the behavior you’d like to instill in him - the right way to go about making a decision.

Unfortunately, my parents never taught me these lessons in a constructive way. But, as an adult, I often invoke the cooling off period. It’s saved me a lot of money over the years on big ticket purchases. Basically, I don’t buy many big ticket items because by the time I get home, I’ve forgotten all about the new gadget I found so attractive in the store.

P.S. I think it may have been a mistake to let them loose in the store unattended. Sure, they have to learn how to handle the temptations, but only one step at a time.

used vans girl Says:
July 24th, 2007 at 6:41 am

If you had let them buy the game’s it would have been a good idea to take them back to the store on the 24th just to see other kids buying the game they wanted (which they couldn’t have). Hopefully they would learn a lesson so that next time they will wait for what’s most important. I don’t necessarily think you made the wrong decision, but in life I think we learn more from our mistakes than from getting it right the first time. It’s better to make those wrong decisions as a child and possibly sit down and discuss what would have been a better way of managing your money. The alternative is being told what to do and being resentful then making the mistakes later in life that you should have been allowed to make as a child.

plonkee Says:
July 24th, 2007 at 7:02 am

Whether you should have let them buy the game probably depends on how old they are, and whether you (or someone else) would give into them when Guitar Hero comes out. If someone is going to give in, then it would teach them nothing. The older they are, the more they are able to learn about delayed gratification for themselves.

If you’re going to implement the cooling off period rule, be sure to tell them in advance (now would be a good time) and set an amount that is considered large (e.g all purchases over $20 or whatever).

JOhn BoB Says:
July 24th, 2007 at 8:07 am

I let my 15 year-old waste his money however he wants, he’ll learn from his mistakes. I will usually let 10 year-old make small mistakes, under $20. I make my 4 year-old carry the toy around the store for a while, but if I really think it is a bad decision I will veto his decision but explain it to him.

In general, as they mature I exercise less control. However, I think the most important think is that they see me and their mom make the same wise decisions. There is nothing better than a good example.

Hammer Says:
July 24th, 2007 at 9:17 am

What about the situation where your kids want to spend their allowance on candy? This is a constant issue that arises with my children. They would nickel and dime every penny of their allowance on sweets if we don’t intervene. But at the same time I want them to feel like they can spend their money how they want. The best solution I can come up with is, “You can buy it but you can’t eat it.” If anyone has a better idea I’m all ears.

JLP Says:
July 24th, 2007 at 9:24 am

Hammer,

I think that’s a perfect example of when a parent should intervene for the well-being of the kid since their decision could eventually affect your finances (filling cavities).

fivecentnickel.com Says:
July 24th, 2007 at 10:39 am

We don’t allow impulse purchases of this sort. Our kids can spend their money on whatever they want (within reason, of course) but they have to go to the store with the intention of buying it. So if they’re in the store for some other reason and see something cool, they can buy it *next time* we’re they’re if they actually remember it, still want it, and bring money along next time we’re there.

When you go back n the 24th to get the game they really wanted, you can remind them (nicely, of course, not “I told you so”) of how it wouldn’t have been possible if they had bought the DS games.

Donny Says:
July 24th, 2007 at 11:22 am

Another idea might be to get your kids a Gamefly account and have them split the cost or share a portion of it. It eliminates the impulse purchase scenario completely and teaches your kids some financial responsibility as they actually have a bill to pay each month.

Gamefly works the same way Netflix does and they carry video games across all platforms so your kids can rent whatever they want and send it back when they’re done. No late fees, no time limits. If they really like something they can opt to keep it and get it at a significant discount from Gamefly who will also send them all the packaging and manuals so they’re getting everything they would if they bought it new. They just get to actually play it before they own it.

With what games cost these days it’s the only way to stay on top of all the hot new stuff without going bankrupt. Not to mention avoid $40+ impulse purchases that more often than not end up gathering dust after a few days. Another nice feature is that you can set up the account with parental controls so your kids can’t get their hands on the mature stuff. It’s a money saver, totally eliminates the scenario in the store you described and you can effortlessly monitor what your kids are playing by setting up your account with limits.

Esmo Says:
July 25th, 2007 at 4:33 pm

Make sure you don’t relent after letting him buy the DS game - he needs to realize that there is finite money and he has to make decisions on what to buy. Otherwise, he’s going to grow up spending willy-nilly, and no parent wants that.

ScottC Says:
July 26th, 2007 at 8:47 pm

The responsibility of the parent here would be to make sure that the kid is aware of the options.

As teenagers, they have to start learning to look out for themselves and make their own choices. You can help them do this without violating parental trust.

There are several times as a kid that my parents let me make my own screwed-up choices. I’ve thanked them numerous times for that.

ScottC Says:
July 27th, 2007 at 1:33 am

Speaking of kids and allowances, here’s an amusing comic showing how many of us (kids and otherwise) think of our priorities:

http://beingfive.blogspot.com/2007/07/saving.html

Jack Says:
July 30th, 2007 at 10:47 pm

donny. you’re right about gamefly. our family uses them and we’d never go back to buying where the kids just grabbed games without any thought for how much it cost or how much they really wanted it. we pay for the account but they manage it mostly. we set the parental controls to limit them the games rated for their age group and away they go.

my wife and i play too but we usually just play whatever they get. they’ve learned to manage the queue and work together to fill it with games they want to play. and now have to actually pick the game up off the floor when they’re done with it and put it in the mail if they expect to get another. so great!

thanks for bring them up. here’s their url if anyone is interested in trying them out. as head of a gaming family, i highly recommend them. http://www.gamefly.com.

Chicago Financial Advisors » Blog Archive » 6 Ways to Increase Your Kids’ Financial Intelligence Says:
December 12th, 2008 at 10:14 am

[...] idea comes from a post I read at AllFinancialMatters.com asking how hands off parents should be. If you think your child is making a mistake with the discretionary portion of his allowance, [...]

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How “Hands Off” Should Parents Be In How Their Kids Spend Their Allowance?