Allowance Wizardry

Written by Jesse Mecham  |  on


Jeremy here. This week I had the honor of taking my twelve-year-old daughter to buy her first guitar. We followed up with our first jam session and worked on “Two of Us” by the Beatles. We’ve been singing about “going nowhere, spending someone’s hard earned pay” ever since, and my daddy heart is full.

It was extra sweet since she used her own money to buy it.

A while back, Jesse wrote an article about how he’s using YNAB to handle allowance. That guy’s a flipping genius. If you missed it, you should check it out here.

Within a short time, we’d replaced our clunky allowance bins, written ledgers, and loose cash with YNAB. Our six-year-old was the toughest to convert because he really likes to see and hold the money.

However, one Sunday afternoon at a restaurant he was enticed by a cheesecake churro. I checked his allowance on my phone and he was able to buy it for himself. Since then, he’s been quite satisfied with the arrangement.

It’s been a smooth transition. What I hadn’t expected was the growth I’ve seen in our daughter. With some guidance, she has developed and maintains her own budget, separate from the household budget. She has a cash account, a bank account, and an A-LOC.

A-LOC stands for “allowance line of credit” and represents money her mom or I hold for her (I know, I know–it’s a debit account, but A-LOD doesnt’ sound as cool). When we spend money on her behalf, it comes out of her A-LOC. If it’s empty, she transfers funds to our checking account, gives us cash, does optional chores, or waits until allowance comes in.

She tinkers with her budget by creating and combining categories, and dreaming up new savings goals for herself. Spending categories like “movies with friends” and “junk food” stay mostly static while savings categories like “east coast trip,” “hedgehog,” and “car” have been slowly growing. I’m biased, but it’s irresistibly adorable.

“Guitar” was one of the savings categories until recently, when she reallocated money from other categories to take advantage of a great deal on a used instrument.

I love how she’s thinking differently about money. She wants a lot of things, but understands that money is finite. She talks about getting what she wants in terms of arranging her priorities. She proposes jobs she could do to get to her goals more quickly. And she’s generous.

Our middle child is starting to notice his big sister getting things she wants and wondering aloud, “How come she gets that?” Sounds like he may be getting ready for a budget of his own. Plus, if he keeps it up on piano, our jam sessions will be all the better.

Your Next Step

Budgeting is not restrictive. You won’t be spending less, you’ll be spending right. So what do you have to lose? Except all that debt and stress?