Sunday, November 21, 2010

Making Allowances

I have been part of a grand experiment these past few days.  Elli's 4th birthday was on the 14th and she got several gifts of money and a gift certificate as presents and for the first time we felt she was old enough to reasonably choose what to spend her windfall on.  We told her that she could spend that birthday money on whatever she wished and then did our best to help her to understand how much money she had and what her choices were.  The easiest thing was the gift certificate as we simply went to Indigo and I told her she could buy whatever she wanted as long as it wasn't more than what the card had on it.  We got to the kid's section and she walked over to the closest bookshelf and picked a book right at her eye level.  A discerning, savvy shopper she is not, but she insisted that this book was the exact thing she wanted to spend her money on.  Her certificate was for $25 and the book was $8 so I told her she could buy 3 things like that at the store.  The look of delight on her face that she could afford even more things was incredible.  We wandered around some more and she found another book and a Hello Kitty stuffed toy and decided that these 3 things were what she wanted.  They added up to $30 so I informed her that she could get them but only if she also used up the 5 dollar bill she got for her birthday too.  After careful consideration she put one book back and announced that she wanted to save the rest of her certificate and buy just 2 things instead.

I, for one, was very surprised.  Surprised twice, actually, because the totally random book she chose turned out to be a really great set of stories at what seemed like a really low price.  Lucky, I suppose.

I didn't expect a 4 year old to make that decision.  A tantrum, deciding to buy all 3 things or desperate negotiation were all things I was prepared for but calm, rational economic decision making was quite unexpected.  She doesn't even understand what 25 is yet, so clearly she can't have much comprehension of how much she is spending or what she has left, and yet she still latched onto the idea of getting some things now and saving her money to come back again later.  Ability to delay gratification:  YES!  I know that being able to delay gratification as a child is one of the greatest indicators of happiness in later life because that combination of emotional awareness and discipline is valuable in nearly every endeavour.  This makes me very happy indeed, perhaps even more so because it is so much like how I was as a child.  I saved my money up and was very picky about spending it; I even hoarded my Hallowe'en candy, eating one piece a day so that it would last until the night before the next Hallowe'en.

Based on that success we decided to give Elli an allowance of 1 dollar a week.  She can count up to about 18 or so but addition beyond 2+2 is really beyond her yet so I really don't know that she has any idea at all how much money she has.  Regardless she is delighted to have money at all and had a blast counting and recounting her vast wealth this evening.  I took her out today on a walk and we wandered through HMV on the way back; she desperately wanted a video there and was extremely pleased that she had enough money in her piggy bank to pay for it.  We may be starting a bit early on teaching her about money and letting her spend her own on things but it is fascinating to watch someone so small with so little idea of mathematics try to come to terms with what she has to give up to get what she wants.  It is a really engaging little psychology experiment.


  1. It will be especially interesting once she doesn't have a fairly significant amount of birthday money, and instead only has the $1/week.

  2. She's not too young to be getting an allowance and lessons in financial management. What an important life skill. It sounds like she is following your instincts and not her Uncle Matt's.