by Ron Lieber
The Lands’ End Line
Clothing is, indeed, a challenging arena when it comes to defining the line between a want and a need. Peer influence and brand names begin to affect kids’ thinking early on and often become more important to them as they become teenagers. Adults, meanwhile, may have their own flexible definitions of need, justifying more expensive clothing with the presumption that it will last longer or wear better.
As children get older, the easiest way to avoid whining and arguing while also giving them some say in the matter is to do two things: First, create a Want/Need continuum—literally, a horizontal line drawn on a piece of paper for the kids to see—with Needs at one end and Wants at the other. Let’s say the request is for rain boots. Most kids need them, but the rubber doesn’t get better when the price quadruples. At the left end of the continuum are the discount or used boots that may cost up to $25 or so. Label that end Need. On the right end are the Hunter or other brand-name boots that can cost well over $100. Label that end of the continuum Want.
Now, the big decision: We have to draw a vertical line that crosses that horizontal continuum somewhere between the low extreme and the $100-plus one. It’s a sort of proverbial line in the sand that represents what we’re willing to pay for a child’s need (anything to the left of the line) and what we won’t (anything to the right, up to and including Hunter boots). My wife and I are still debating exactly where we’ll put this line and whether it will move to the left or the right, depending on the item. I’m making the case for a broad-based “Lands’ End Line.” If we adopt it, that means we’d pay whatever Lands’ End (my definition of a suitably mid-priced merchant that sells quality clothing) would charge for any clothing needs, even if an item comes from some other designer or shop. Anything with a price to the right of the Lands’ End Line would be a want. And if our daughter craved that item, she could pay, out of her Spend or Save containers, the difference between its price and the price of a similar item at Lands’ End. We’ve found that grandparents will gleefully disrupt this attempt at standard-setting with spontaneous bursts of generosity. Still, as long as that doesn’t happen too often the continuum will hold if we parents apply it consistently.
After a few years’ experience with this continuum, middle school children can take over their entire clothing budget themselves. First, try figuring out everything they might need in the coming year and what the total budget will be, given where you draw your own Want/Need line. Then, hand that money over in a lump sum, perhaps as a separate prepaid debit card for them to use just on clothes. This may seem risky, given how many opportunities there are to make bad choices, but it’s a powerful experience.
Cheryl Holland, a financial planner in Columbia, South Carolina, did this with her daughter once she was in high school. While she had fears of her daughter wearing flip-flops all winter after spending the warm-shoe money for a party dress, she let her make her own decisions. They made a list of the items she needed to buy but laid down no rules about what came from where. Sure enough, a lot of the money landed in the cash registers at PINK Victoria’s Secret. She also outgrew the pricey jeans she had bought early in the year, and her parents declined to bail her out when her budget didn’t allow for any new ones. Most kids will mess this sort of thing up, sometimes spectacularly, but they learn very quickly. That’s doubly true if you let them keep any money they have left in the clothing budget at the end of the year, or roll it over into the following year’s budget.
The real surprise for the Hollands was how quickly their daughter became savvy. “She has become an excellent shopper, thinking through what she needs, watching for sales, and earning extra money for what she wants that her budget doesn’t cover,” Holland said. In fact, she’s probably saving her parents money, because Cheryl has a tendency to spend a bit more in the interest of expediency when they’re in the store together. “My recommendation would be that if a child is asking for responsibility around money, give it to them.”
New Rules: Essay Tests, Push-Up Bras, and Inconvenience Taxes
So how far can we push these allowance principles? Some parents decide early on that anything and everything their child wants—as opposed to needs—is going to come out of their allowance. Parents who do this generally make exceptions for birthday and holiday presents and occasional vacation souvenirs but are strict with most other purchases. For instance, if the parents choose to take the family out for dinner, it might be up the kids to pay for beverages they want other than water. With this system, kids often get more dollars each week so that they can afford at least some of the things they want. This may sound harsh or cheap, but it all depends on the size of the allowance. What it actually does is give kids a lot more power and control and presents many more opportunities to learn.
Inevitably, disputes will arise about the precise definition of need, especially when entirely new requests come about. Bill Dwight, founder of the virtual family bank, FamZoo, has an elaborate exercise he’s used with his kids over the years to settle these questions. Say they’re interested in some new video games. They have to write a short essay explaining why. Meanwhile, with items like laptops, he sits down with them and figures out what a basic model would cost that fulfills their needs. When they almost inevitably want something more expensive, he’ll agree to advance them the money for the difference and then dock their allowance for the next several months until they’ve paid back the advance. He charges no interest, as he believes that the pain of having bits of money drained from their allowance each week for a while is lesson enough.
Older children will eventually end up with money that does not come from their allowance, say from a job or a birthday or holiday gift. Once that happens, set some sort of policy on how much of it they can spend. Perhaps the rules are loose for gifts, and kids can spend most or all of that money on whatever they want. Some parents may want earnings from part-time jobs to replace allowance in the teen years or cover new expenses, for a car perhaps. Others may want their kids to set all that money aside for college. There are no right answers here, as long as there’s a clear policy that you apply consistently and revise if the family’s needs change.
We’ll also need a list of banned items, which will change over time as kids develop new interests and companies invent ever more inappropriate ways to satisfy them. These are things that we won’t let our children buy, even if they’re using Spend money from their allowance or funds they earn from a job. Parents who follow my Facebook conversations shared their own lists of banned items with me, in case you’re looking for ideas. They include, in alphabetical order: Airsoft guns, Barbie dolls, candy, the Claw machine at the arcade that fishes out stuffed toys (or tries to), dogs, hamsters, Heelys shoes, in-app purchases, iPhones, Legos (additional), motorcycles, Nike Elite socks, Oakley sunglasses, pocket knives, push-up bras, anything with a skull and crossbones, skydiving, tattoos, trampolines, and violent video games. If your child has you looking for evidence that at least one other mean parent won’t let their kids spend their own money on one of these things, now you have it.
As for things you bought that they genuinely needed but subsequently were lost or broken, some ground rules are in order too. One way to reinforce responsibility is to ask children to contribute to the cost of repairing or replacing these items. With younger kids who don’t have much money and are still learning to keep track of their belongings, a nominal contribution of a month’s worth of Spend money toward replacements makes sense. Older kids can make a case for how much fault they bear in each situation and pay for all or part of replacements or repairs based on whatever judgment we render.
Aimee Sims, of Alexandria, Virginia, takes an additional measure with her 10-year-old son, which became necessary when he stopped worrying about losing things that he could replace out of his allowance. He didn’t seem to miss the funds, so a more painful penalty seemed to be in order.
When he repeatedly misplaced lunchboxes, thermoses, and drink bottles, he simply borrowed h
is sister’s. “Which was all well and good, until he started forgetting her thermos at school too,” Sims recalled. “Now there’s a tax. If you inconvenience someone else by being irresponsible, you pay $5 if you forget it, and $20 plus the cost of a new item if you lose it.” The beneficiary of the tax is the person who was inconvenienced. And for whatever reason, it drives the boy bananas to hand money over to his sister, even though he doesn’t mind paying to replace lost items. After he had to pay for about five thermoses, this seems to have done the trick.
Smartphones: Usually Not a Need
With these rules in place and some experience setting and adjusting them along the way, it will get easier to make tougher calls around more expensive items like phones and cars. Let’s take them in order.
We’ll begin with a few phone stipulations. Kids need a basic cell phone, but smartphones are a want. And because smartphones are a want, they should pay for such phones and whatever extra data they use each month. Why do they need basic phones? Less for calling than for texting, which seems to be the default form of communication for everyone from kids to sports coaches. But nobody needs a phone that can handle apps, though there are a few exceptions. A school may insist that app access is necessary to complete class assignments, or a parent may have anxiety about not being able to follow the dot of a child’s phone around a virtual map as the kid travels solo. I also know of at least one parent who justifies the smartphone for a boy with ADHD; the theory is that the more he uses his phone on the city bus the less likely he is to lose it, something he’d be likely to do with a phone that he used only occasionally for voice calls.
Everyone else, however, should consider the approach that Mary Kay Russell, the mother of four boys in Naperville, Illinois, has taken. The boys are welcome to have any smartphone they want whenever they have enough money to buy it. They also have to write a $360 check to their parents to cover the first year’s data charges and continue paying for the service after that advance money has run out. The oldest boy waited until he was 21 to get a smartphone. A few strategies can help keep the cost low for first-time smartphone buyers paying out of a child-size budget. Consider used or refurbished phones. Check out a service like Ting, which can lower the monthly charges significantly by precisely itemizing the minutes and the data. And encourage the kids to try to access the Internet only via Wi-Fi, which is almost always available in many of the places where they spend time.
The Car: Whose Need, Really?
The smartphone judgment call is a mere warm-up for consideration of the automobile. Given the high price for even the least costly of vehicles, any discussion of the subject should begin with a handful of framing questions and policies. First comes the weighing of wants versus needs, but this time there’s a twist: Sometimes it’s the parent who feels the need for the child to have a car. If a newly licensed teenager is allowed, by law, to ferry younger siblings around, this end to parental chauffeuring can free an adult to work more hours, care for others, or enjoy some down time. In this case, it makes sense for the parents to pay. Kids who work in a family business may be able to help a whole lot more if they have a car to drive too.
If a car is merely a want, then three issues arise: If a child is paying for all or part of it through a part-time job, there need to be some limits on the number of work hours, lest schoolwork suffer. Aside from the cost of the car itself, families have to decide who will pay for insurance, gas, and maintenance. Finally, it’s a fine idea to have the kids research the vehicle options themselves, but minimum standards for safety equipment must apply.
Very quickly, it becomes clear how difficult it is for teenagers to pay all the costs associated with a car without spending every spare moment working to cover them. This probably isn’t the result that most of us are seeking, so we’re faced with three choices: Paying for a big chunk of this giant want, giving kids our old cars, or sharing our cars with them. One way to help make sure they contribute to the cost is by starting the car conversation at age 13 or so. If a child seems committed to car ownership, divert birthday and holiday gift budgets to a savings account for the vehicle. Consider matching the money teenagers are willing to save, which will give them all sorts of second thoughts about spending a cent of any money they make from part-time jobs. The money can always go toward college or other things later if they change their mind. Grandparents can help here too.
Hand-me-down cars may seem like elegant solutions. If there isn’t any outstanding loan on the vehicle and plans are afoot to replace it anyway, it feels almost free for any family that manages to conveniently forget the lost trade-in value. Still, this is a big gift. If it’s a want and not a need, consider assigning the child at least some financial responsibility for the ongoing maintenance, gas, or insurance costs.
The Fong family, who live outside Chicago, came up with an ingenious solution for their second car. Their son can use it almost any time, but they treat it like a Zipcar. He pays a monthly fee to help cover insurance. The rest is pay-as-you-go. That way, he has to think twice about the wisdom of driving to school when he can walk instead. Turns out he’s not fond of having the car sit in the school lot racking up hourly fees all day.
Some of you are going to buy a new car for your child no matter what, and spring for gas and insurance as well. You can afford to splurge and do not see it as an indulgence if a child shows no emerging signs of entitlement. If that’s the case, try at least to keep some of the allowance principles in mind. A child can certainly wait on the new automobile until several accident-free months have gone by in an older family car. An essay requirement might be in order, explaining what constitutes responsible use of the vehicle. And in that piece of writing, it might be wise to add a parental addendum explaining exactly what chores are mandatory for the gasoline to continue flowing.
Chores, Allowance, and Creative Kids
Many parents don’t buy the idea that an allowance is practice money and that children should do chores for free. The American Institute of Certified Public Accountants ran a survey in 2012 that found that 89 percent of parents tied allowance to work around the house. The mutual fund company T. Rowe Price ran its own survey that same year and put the pay-for-chores figure at 86 percent. These parents believe that paying for work in the home is good training for the real world, where your compensation will depend on the timely and competent performance of assigned tasks. They also worry that if they simply hand out an allowance without asking anything in return, their kids will become lazy and entitled.
It’s rare that anyone asks what the kids think about this question, but when they do, the replies are illuminating. The best example I could find is more than 100 years old, which just goes to show that the pay-for-chores debate is one that has vexed families for generations. In a collection of essays published in 1904, Blanche Dismorr used data she drew from essays written by British children of varying ages to write her own essay, “Ought Children to Be Paid for Domestic Services?” Among the 9-year-olds, 66 percent thought they deserved compensation for the work they do around the house. But just 36 percent of the 13-year-old children felt the same way. What changed in those four years of development? Dismorr pointed to two things—a growing awareness that everyone in the family ought to pitch in and a concern that demanding payment would make them selfish or mercenary.
While this study is practically ancient, the two rationales are timeless, and the kids are correct. If parents don’t get paid for the regular work they do around the house, why should the kids? Chores are just something that everyone does to keep a household running. It’s a fine idea for children to learn a proper work ethic, but parents can teach it by paying for larger, once-in-a-while tasks that they might otherwise hire someone else to do. And while we want our kids to know what it means to have a boss who evaluates their efforts, they are probably not going to end up working for their parents. So let them learn this from a real boss when they get jobs as teenagers, which they should definitely do.
As for the
13-year-olds who we fear will become mercenaries, think about how it could play out in our own homes. We may think we have some pull over our kids if chores are tied to an allowance. If they don’t do the chores, after all, they won’t get the money. But what happens if they decide they don’t want or need the money? Chances are, we’ll make them do the chores anyway. So why pay for them in the first place if these chores are ultimately mandatory in any event? There are plenty of other privileges we can withhold if kids aren’t getting their chores done in a timely fashion. (Driving that new car, for instance.) Taking away money, which is a tool for learning, need not be one of them.
The only convincing counterargument I’ve heard on this topic comes from a San Francisco parent named Sotha Saing. Saing came to the United States as a Cambodian refugee in 1980 and started working in restaurants at the age of 12, earning money under the table. She spent any spare moments helping care for her autistic brother. After a brief period of homelessness, she eventually married and had four kids of her own. Today, they all live with her mother in a rental apartment in San Francisco, and Saing has a fledgling bookkeeping business.
Saing and her four children all save money through an organization called EARN, which matches the savings of low-income workers and their families in an attempt to help them improve their financial lot in life. When I tried my no-pay-for-chores logic out on her, she dismissed it as a rich person’s conceit. “Give them allowance?” she said, raising her voice enough that the other Starbucks patrons may have wondered if we were quarreling. “Why would you give them allowance? Because they’re your child? That’s an entitlement issue there. Have they earned it? Shown respect for it? Well, where does your money come from? You and I both work for money, so why are my kids entitled to my money? If I have to work, then they should feel like they have to earn it too.”