Allowances vs. part-time jobs

We all want our kids to learn the value of money. But unfortunately there is no text book that can teach this (not that they’d read it anyway!). The understanding comes through practical experience of managing and earning their own money.

So should you be giving them an allowance?

How much should they get? Should they help out with chores to earn it? Should they get a part-time job in the local café? These are all important decisions in navigating a smooth passage towards financial independence, especially for those teens who think money grows on trees. So, here’s some tips to help decide on the right approach for your young spenders.

Giving an allowance does pay off

Your teenager has reached the time in their life where they must make decisions and think for themselves. Having an allowance will let them think more about how they spend their money, what their priorities are, and learn from their own mistakes.

In the years to come, the ability to weigh up costs independently will be crucial for your teens - they've got to start learning sometime! Giving your teens an allowance rather than money as and when they need it means they will learn the responsibility of managing their own money early on. This will be a necessity for early adulthood - you’re never too young to end up in serious debt! Instilling good habits at this age will have a lasting effect.

These days there are many effective ways to help teach our teens good habits. You could use a digital app which allows you to setup regular allowances for your child, and gives them the freedom to budget and manage their money in a safe environment.

How much is enough?

Ideally, enough that they can hang out with their friends or buy some new clothes, but not so much that we are spoiling them. An overly generous allowance might lead to laziness, whilst not giving enough could lead to frustration. Ron Lieber (author of The Opposite of Spoiled) suggests giving enough so that they can get some of what they want - but not so much that they don’t have to make difficult trade-offs.  All good theory, but how do you put a number on that!?

Research from the ONS shows that the average fifteen-year-old spends £25.00 a week – so that’s probably not a bad starting point. But when deciding how much allowance is enough, many families can overlook the importance of conversation. Sitting down for an open discussion about how much our teens spend and what they buy is an important part of setting an allowance (and could teach them some good negotiating skills too!).

Also, don’t forget that if you’re monitoring your teenager’s spending through an app, or just through open conversations, you’ll get a sense of whether the allowance amount is working well or needs to be adjusted over time.

Part-time jobs

Once your children become officially a teenager they are old enough to work part-time. Having a Saturday job used to be a rite of passage - however their popularity is falling.

A part-time job is valuable for teenagers - not just for the money that they earn. As we become young adults, employment teaches us that there’s no such thing as a free lunch! You can only spend as much as you earn.

Not only that - a Saturday job in a cafe or coffee shop can help your teens with confidence and maturity. Serving customers and handling money both require punctuality, dedication, time management skills and being able to deal with people.

A balancing act

Working part-time can be an excellent way of encouraging youngsters to be savvy with their time and money - but it is crucial to remember that setting aside time to study is a financial investment in itself. It’s also important for your kids to have some down-time, to just be a teenager and hang out with their friends!

Perhaps increasing pressure to get good GCSEs and A-levels is one reason for the decline in part-time work among teenagers.

How to decide

Before deciding what allowance or part-time job is suitable you should consider the outgoings of your teen. If you’ve decided to go for an allowance, will it cover their social life and shopping habits or just the essentials (such as phone contracts or bus fares)? Is a Saturday job appropriate for them or will it interfere with studying and sports activities?

We can’t overstate the importance of having open conversations about money with your teenagers – it’s an important way for you to understand their spending habits, and learn about any advice or support they might need. Whether it’s for a cool new pair of trainers, or their future university fees, it’s never too late to encourage them to save.