“Big Allowance” – Phase II

Last year we began a system with our oldest child called “Big Allowance” (that’s our catchy name for it).  The idea was that we gave him a monthly stipend equal to the cost of having him in our home (not counting utilities, groceries, or transportation).  It did include expenses related directly to him such as dining, clothing, cellphone, school fees, fun and entertainment, charitable giving, music lessons and instrument costs, and so forth.

We found a credit union (DayAir) that allowed him to open an account and provided a debit card.  Each month we wrote him a check which he deposited into his account.  He was then responsible for his expenses.  That was the theory.

Last year was a marginal success.  He learned that money is a necessity, that decisions have consequences, and that he spends too much on Otis Spunkmeyer cookies.  Unfortunately, like the government, we engaged in bailouts and exceptions.

This year we are adopting “Big Allowance Phase II.”  Here are the changes:

• The monthly allotment has increased (call it a cost-of-living adjustment).
• We now pay him in cash each month and he puts the cash into appropriately titled envelopes for his specific areas of expenses.
• We have said there will be no more bailouts or exceptions.  One example, if he had ordered his yearbook by today he would have saved $5, but since he does not have enough cash in his School Supplies envelope, he will save his money until he has enough and that means he will pay $5 more as a result.
• The envelopes have been marked as either RED or GREEN. Red means the category is non-discretionary and he may not take money from that envelope to spend on another area.  Green means the category is discretionary and can be redistributed.

We’ll let you know about Phase III next year.  The good news, he’s still a high school junior and has some time to sort this out before he gets to college and faces the salesperson in the student union determined to sign him up for a credit card.

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