Rewards & Consequences

Spending and Saving Basics For an I-Want-It-Now Child

An allowance is a great teaching tool for a child with ADHD — if parents don’t make the common mistake of using it as a reward for completing everyday chores.

Don't spend money impulsively. Resist the lure of the claw machine
Don't spend money impulsively. Resist the lure of the claw machine

All children need to be taught how to manage their money — especially children who have attention-deficit disorder.

Money skills simply don’t come naturally to kids who are impulsive, disorganized, or distractible. Fortunately, a weekly allowance is a great way to teach a child how to live on a budget and how to be a smart shopper. It’s also a great tool for showing the vital importance of saving. And there’s a bonus: A child who receives an allowance is less likely to nag his parents for spending money.

Working Hard for Their Money

In lieu of a conventional allowance, some parents prefer that the child earn money for doing chores, babysitting, and so on. Often, the best solution is to use a combination of these approaches. For example, the child might receive a set amount of cash with no strings attached and be given opportunities to earn additional money by doing special chores.

I’m talking about cleaning the garage, waxing the car, and other tasks that lie above and beyond the child’s everyday responsibilities. Cleaning his room, feeding the dog, and completing homework assignments are routine chores that your child should complete without any financial incentive.

Whatever approach you take, it’s essential that you view the allowance as a teaching tool. Never make the allowance a reward for good behavior. Never withhold it as a form of punishment.

When to Start Giving

At what age should a child start receiving an allowance? There is no hard and fast rule, especially when ADHD is in the picture. In my experience, a child who has reached first grade is probably old enough to understand the numerical concepts that underlie money, and thus to benefit from an allowance.

Some parents give $1 a week for each year of the child’s age — for instance, $8 for an eight-year-old. But these days, it may be better to take a realistic look at the kinds of things your child is likely to spend money on during a typical week, and to calculate an allowance based upon the costs of those items.

Smart Consumers are Made, Not Born

Money savvy involves more than knowing how to open a savings account and how to make deposits and withdrawals. It involves being able to recognize and resist marketing hype and misleading advertisements. It means resisting impulse buying and taking the time to do the research required to comparison-shop.

As a parent, you can help by walking your child through basic banking procedures, as well as by pointing out misleading ads and discussing the “buy” messages to which we are all subjected on a daily, if not an hourly, basis. Show your child how comparison-shopping can help him avoid paying too much. And explain the fine points of discount coupons and rebates.

Generally speaking, children should be allowed to decide how to spend their allowance money (and how much to save). That’s the fastest way to teach them the consequences of spending decisions, good and bad. Still, young kids need guidance in deciding what to buy and how much to spend. Pre-adolescents can handle more freedom, as they’re old enough to understand that reaching long-term financial goals requires an organized approach to saving money.

Should Teens Have Credit Cards?

There are three good reasons for giving your adolescent son or daughter a credit card. First, it comes in handy in an emergency. Second, using a credit card provides experience in using and managing credit. Third, using a card enables an adolescent to establish a credit history.

Of course, there is a powerful argument against giving your child a credit card: Nothing says SPEND like easy access to credit. ADHD compounds the potential for overspending. People with ADHD tend to spend on impulse and to be bad at monitoring their credit card balances. What’s more, they may have trouble paying bills on time.

Given the pros and cons, what’s to be done? I urge parents to view credit cards, debit cards, and other forms of “plastic money” the way good doctors consider X rays: avoid them if possible, but if absolutely necessary, use as few as you can to get the job done.

When to Consider a Credit Card

A prepaid credit card makes sense if you want to give your child the use of a card but don’t yet trust her to use it wisely. With a prepaid card, the spending limit is the amount that has already been deposited into the account — there’s no risk of wild spending.

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