My parents did a very unusual thing when I was 12. They decided they were going to give me an allowance, but it was a different kind of allowance. Instead of giving me a certain amount of money to buy what I liked with, they sat down and worked out exactly how much money they were currently spending on me, and then gave me that money on the first of each month. This didn’t include groceries or family meals out, school clothes or textbooks, but it did include other clothing, recreational books, magazines, movies, art materials, school lunch money and school bus fare.
Amazingly, as a 12 year old I took to this idea straightaway and began to budget. I never had a month in which I ran out of money, probably because I took my parents totally at face value. It was implied that the allowance would be taken from me if I failed to buy the essentials with it. I didn’t want that to happen, because I knew that if I could get that stuff cheaper than my parents could, I would have more money to spend on what I really wanted.
One reason this worked so well was that my parents were quite inefficient with money. Before they gave me an allowance they used to buy my non-school clothes quickly on a busy Saturday, without shopping around. They were also hooked consumerists, and insisted on replacing things more often than I thought necessary. With a bit of thought, it would be easy to get things cheaper, and spend the extra money on sweets.
The first thing I did was shop around for clothes. I was amazed to find that a t-shirt in M&S cost the same as a Red Dwarf T-shirt mail ordered from leaflet in the back of the video. No contest! I bought a few of those (too big so I wouldn’t grow out of them) and wore them to death. I refused to replace them when they got holey from tree climbing. This bothered my mother but she kept quiet. I used the cash saved to buy books, magazines and art materials. An instant winner – now I had clothes I really loved, and money left over for entertainment!
Soon it became like a game – the more aspects of my spending I could cut down on, the more I’d have left for what was important to me. False economy quickly showed itself too. My first t-shirt purchase had taught me that buying something that lasted two years instead of one, meant I could spend twice as much on pens. It also meant I took really good care of my stuff to make it last longer.
A few years later I had discovered charity shops, and was making my own clothes with my mother’s sewing machine. I suspected that my parents would cut the allowance if they noticed me skipping lunch to save money, so I never tried that. Instead I started secretly cycling an old beat-up bike to school, leaving the house after my parents so they wouldn’t notice. Yet I was still being given bus fare!
I used some of the extra money to maintain the bike, but now I was saving up for musical instruments. In retrospect, I my parents must have realised I was ripping them off at this point, but kept quiet. Why? Because it was a win-win situation. They were giving me bus fare even though I cycled to school, but at least I wasn’t pestering them to buy me musical instruments, or in fact, to buy me anything at all. Overall, they were still making a saving, whilst teaching me important lessons about budgeting. My parents showed restraint by never making a judgement on what I bought, even when at times, I wasted money on tat. They just let me learn the lessons.
I still got Christmas and birthday presents of course, but because of this scheme, for my entire teenage-hood, my parents and I didn’t argue about money. Not only that – my allowance never raised and I never asked for it to be. By the time I finished school it was the same as it had been when I was 12, even though by that time I was also using it to buy school clothes, and for days out to Oxford and London.
Over the years I have hugely underestimated the value of this leap of faith my parents took, letting a 12year old handle money in this way. By the time I left home I was excellent with money. During university I watched my friends splurge on nights out and then struggle to pay bills. But I’d having already had 6 years of practice taking care of the essentials before buying the fun stuff.
I’ve often wondered what made me conceive of the £0 Challenge which I took in 2014, and hugely added value to my life. In a sense, I was refreshing and deepening the ideas that I learned about as a teenager. My parents hadn’t needed to be good with money to teach me about it – their allowance idea was all the teaching I’d needed. I’m not saying every parent should try this – maybe I was an unusual kid… but it’s worth a thought…