An 11-year-old’s first budget

Growing up, my parents taught me very little about financial responsibility. It wasn't until college, when my parents expected me to pay my own car insurance, that I was forced to learn the basics of budgeting. It was just one bill, but it was traumatic to me since I'd never paid for anything myself until that point. Looking back, the lesson was introduced too late. It didn't “take”.

Had I understood budgeting earlier in life, some of my financial choices might have been different. Obviously, this isn't the only reason I accumulated a mountain of debt, but it's an example of the lack of financial education I received as a kid. (Fortunately, now thousands of dollars in debt are gone after a lot of planning and sacrifice — and of course, using coupons.) My husband and I want to teach our boys smart financial habits at a much younger age than we learned them.

An 11-Year-Old's View of Money

For Christmas, our 11-year old son, T, wanted wanted a cell phone. Actually, when the new iPhone 4G hit the market, he suggested that he could take my 3G to use so I could get the new 4G. (His generosity knows no bounds!) While his suggestion gave his parents quite a laugh, we seized the opportunity to teach him a financial lesson. Here's a bit of that conversation:

Me: “T, even if you did get an iPhone, the monthly plan is expensive. Who would pay for that?”
T: “You can just add me onto your plan, Mom.”
Me: “You didn't answer my question, who would pay for that?”
T: “Well, you would. It's only a few extra dollars a month. You and Dad work, so that's nothing.”

The last statement set me off a bit! My husband and I do not want our kids to think that just because money is earned means it has to be spent. We also don't want them to think that just because their friends have the newest {fill in the blank} that they need it too. After this conversation with my son, we decided to teach him a financial lesson.

An 11-Year-Old's First Budget

s Christmas rolled around, T kept mentioning the cell phone. He really wanted it. So, we sat down and had a more detailed discussion about budgeting.

Since the cell phone would be T's first and and only bill, we talked about his cash flow. He makes $44 a month for doing his chores (with potential to make more money each month for doing other things). We broke down his current expenses. I know he's only 11 years old, but we really wanted this lesson to impress the importance of budgeting and giving.

I suggested that if he could find a phone plan that cost 50% or less of his monthly income, we'd consider the phone. The only limit to his search was that we needed a monthly payment plan without a contract. If he didn't pay, we didn't want to be bound to a contract we were paying for and not using. No payment means he simply wouldn't have a phone to use (after all, a cell phone is a want and not a necessity).

An 11-year-old's budgetBeing eleven years old and not knowing how to find the information, I came up with a list of websites for him to review (with my guidance for some online safety measures). He browsed the sites, wrote down options, and noted which carriers offered a monthly service plan option.

After his review, he gave me his analysis and recommendation. I wasn't surprised at the suggestion since I'd done some preliminary research myself. The lowest monthly payment plan was $25, and it did offer the monthly payment option that we required. Even though this was $3 over his $22 budget, we decided it was the best financial option meeting the requirements.

As we were going over the numbers again with the $25 cost, we discussed all of T's expenses that his $44 monthly income was expected to cover. During this talk, we reminded him about tithing, and ensuring that 10% of his income is set aside for our church.

T's response to this didn't surprise me: “That's easy. I make $44 and will spend $25 on my phone bill. That leaves me with $19. So 10% of $19 is $2.” While I appreciated his stellar math skills, we also took the time to remind him that the 10% giving was before he paid any bills. For us, that lesson was equally important in his understanding of financial generosity.

Family Financial Responsibility

Going through this budgeting process was eye-opening for all of us. While some parents are worried about having “the talk,” I was equally concerned with having this budgeting talk. This was a great lesson to teach T, but we hope that dad's jacked up car and his first-hand look at poverty also show him reasons why we make the choice to manage our money wise in the first place.

Maybe 2011 is the year you take control of your finances and say good-bye to debt. For our family, 2011 is the year that we, as a family unit, focus on financial responsibility. And it started by teaching an 11-year-old how to budget for a cell phone.

More about...Budgeting

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Pamela
Pamela
9 years ago

Thank you, Andrea. This is a really good example of teaching a lesson in a way that should stick–giving T the job of researching plans and reviewing his expenses. I have no doubt there would be a very different result if you just delivered a lecture. I meet young people all the time who never learned expenses are inexhaustible but income usually isn’t. If they’re lucky, it doesn’t cause them any major problems–until they want to buy a house. I hope you can follow up in a few months to let us know if T has been able to make… Read more »

Wil
Wil
9 years ago

I am curious to know what cell phone plan he picked. I would guess it is the same my wife just went with, Virgin Mobile (as that is the cheapest plan I could find as well).

Nicole
Nicole
9 years ago

Cute!

Does tithing have to go to your church or can it go to any charity?

Jade
Jade
9 years ago

I guess it’s the same as those people who make their kids save/invest/give/spend with their allowance, but I just can’t imagine *making* my child tithe. It’s their money. I think a lot of people have difficulty with this — once a paycheque (or here, an allowance) is given, that allowance no longer belongs to you. You can’t (or shouldn’t) dictate where it goes.

I guess I feel like giving should ‘come from the heart,’ corny as that sounds. Not because Mom and Dad make you.

Bruce
Bruce
5 years ago
Reply to  Jade

An earlier poster was concerned about “making” your child tithe, rather than having giving come from the heart. The reason cited was that once an allowance is given, the money no longer belongs to the parent, but now belongs to the child. In the case of tithing, it is important to remember that no money actually belongs to any of us, and so the tithe is actually giving back some of the money that God has blessed us with, so that the church is appropriately supported financially. So, its a mindset. The money was never yours to give, nor your… Read more »

sandycheeks
sandycheeks
9 years ago

Budgeting is such an important skill and thankfully schools are starting to add it to their curriculum. Just yesterday my 1st grader came home with a worksheet about budgeting called “Making Family Choices”.

lostAnnfound
lostAnnfound
9 years ago

We did the same with our daughters. Personally, I did not want them to get a cell phone until they were old enough to sign a contract, but I relented when they turned 13. Same deal, but we added them onto our family plan and they pay for their add-on amount plus taxes, fees, etc. Each of them pays about $20.00 per month for their phone, some months a bit more for extras. They budget that every month from money they earn babysitting. The older one grasps the concept of budgeting for expenses and saving for larger items (currently saving… Read more »

brokeprofessionals
brokeprofessionals
9 years ago

My parents taught me a similar lesson when I was a kid. I earned $1.00 per week for allowance. I did not have to do any chores, it was just so I could get an idea of the concept of money, I suppose. I was in the 8-10 range and I am now in my late twenties, so that dollar was basically nothing. I really wanted a specific Nintendo game, so I waited and waited, for almost a year to buy it. When I finally got the $50.00 I needed (After $50.00 weeks), I bought the game. And it wasn’t… Read more »

Jeadly
Jeadly
9 years ago

Did you budget for the real cost of the service, not just the advertised price? We pay an extra 10% on the services we receive for taxes and “surcharges”.

Danielle
Danielle
9 years ago

I think there’s an even cheaper way to go with it, particularly if the child won’t use it all that much. We went to Sam’s Club and bought a phone for $14.95. Cooler ones are available, but I figured there was a high potential she would lose it. Then, you just load it up $10 at a time for a block of minutes that are good for 90 days. We’ve done it this way for 2 years, and it’s cost less than $50/year. If a child only needs it for emergencies (or is only allowed to use it for that),… Read more »

Slackerjo
Slackerjo
9 years ago

I laughed at “Well, you would. It’s only a few extra dollars a month. You and Dad work, so that’s nothing.” I know a few 21 and 31 year olds who think the same way!

Anonymous
Anonymous
9 years ago

This article is offensive. If I wanted to read about Christianity, I would’ve gone to a religious website. Please keep that off the site.

smirktastic
smirktastic
9 years ago

Excellent, excellent, excellent! What a great way to drive home the point that any and all additional expenses, no matter how inconsequential they may seem, do have an impact and deserve careful consideration. I too received little in the way of financial education, so it’s good to see that parents and schools are starting to correct this.

Raghu Bilhana
Raghu Bilhana
9 years ago

`

Why does a 11 year old kid need an iphone?

I didnt get what you were trying to point out from this article.

You are letting your kid spend 60% of his money on a want. How is that teaching financial budgeting.

Debra
Debra
9 years ago

Please remember in your conversations that kids also might need an “emergency” fund. We had long talks with our son, now fifteen about monthly plans, budgeting etc… He did everything right finally getting his iphone about twelve days ago. Yesterday, it was stolen from his backpack while he was at gym. So we are onto the next teaching moment. He saved and waited for more than a year and also waited for Verizon all to have it vanish after a few days of nirvana. So now we are discussing the pros/cons of insurance, mobile me and replacement costs. Please remember… Read more »

peggy
peggy
9 years ago

I congratulate you for sitting your son down and having a discussion (not a lecture!) about budgeting for a phone. I especially like how it appears you taught him not to fall into the trap of signing up for a yearly plan.

Then again, if it were my kid, I would have made him/her write a memo or essay about what business an 11 year old has for such an expensive, busy phone. Also, $44/month allowance? Whew! That sounds like much…but I was that age decades ago so times must have changed.

David
David
9 years ago

I have an 11 year old boy so this story was near and dear to me. It was refreshing to see a family who teaches the concept of tithing to their children. Keep up the good work!

D. Evans
D. Evans
9 years ago

I love that you are teaching the tithing concept at such a critical age. Thanks for sharing your ideas. I’m not sure I want my 11 year old to have a cell phone, and I don’t agree with paying children for chores that they should be expected to do as a contributing member of the family. However, I haven’t figured out the best way to introduce “real-life” budgeting to my kids yet, and this might be a great way to do it.

Aaron
Aaron
9 years ago

“Even though this was $3 over his $22 budget, we decided it was the best financial option meeting the requirements.” I’m not sure going over budget was in the requirements 🙂 What’s going to happen when an emergency comes along and he’s spent that extra $3 a month that could have gone to another bill or saving for another goal? Maybe baseball season starts and he needs a new glove? A better lesson might have been having him find a way to make more $ (ask for a raise, offer to do something else around the house for more $)… Read more »

Chickybeth
Chickybeth
9 years ago

My comment is almost identical to Aaron’s #11. If none of the plans fit within the predetermined budget and your son was allowed to do it anyway, what you are actually teaching is not budgeting. You are teaching the same lesson my parents taught me (by example) that if you really want something in life, go ahead and get it, even if you can’t really afford it. It is a bad cycle that starts with the first bill and ends with mountains of credit card debt. I do commend you on wanting to teach your children a better way to… Read more »

Sonja
Sonja
9 years ago

I’m surprised he didn’t go with the Tracfone $10/month plan, plus the telephones they have are very cheap too. I only spent $10 on mine and my husband $15 (with double minutes).

Grace
Grace
9 years ago

This seems logically inconsistent to me–you expect financial maturity (budgeting) but don’t allow financial decision making (how much/where to give). Will the decision on how and where to tithe be up to your 11 year old at any point, or will it always be an enforced rule?

barnetto
barnetto
9 years ago

hmmmm…

I do the opposite of what your son tried to do. An amount equal to 10% of my yearly expense budget goes to charity, and the rest gets socked away into my retirement accounts/investments.

I figure when I’m dead whatever is left over from my retirement costs can go to charity at that point, minus what I deem a prudent amount to any future offspring I might have (if they are spendthrifts, then they won’t handle it well, if they are careful with money, then they won’t need much).

Megan
Megan
9 years ago

A good idea. Two things bothered me. One, as others mentioned, you gave him the ability to go over budget – that’s not a good skill to learn. Two, you want him to tithe but not save? I’d say tell him to also save 10% before buying, since that builds a good skill later ( save before looking at what you can spend).
But still I’m glad you are trying to teach him money skills now, it’s a great thing to start earlier in life.

Maureen
Maureen
9 years ago

I’m afraid I have to agree with Rhagu (#10). I didn’t allow my children to have phones (just basic phones – not an iPhone either) till they were in highschool. It would be hard for me to justify the expense for a younger child.

Jennifer
Jennifer
9 years ago

If you read his list he has $11 going towards “savings”.

I’m only 30 but this makes me feel old. Are 11 year olds really getting $44/month for allowance these days?

Jen
Jen
9 years ago

This is a great idea & I think a good age to do this. Your son’s first comment about you working so you could pay for it is a good opportunity to teach how money is also time. When our son was around five we did this. If he begged for something he thought he had to have I would show him how much it cost & how many hours dad would have to work to pay for it. Of course that can backfire when they realize dad only has to work 5 minutes for some things & that’s when… Read more »

Nick
Nick
9 years ago

The tithing thing seems a bit weird to me. Allotting 10% to charity (which he should be able to select since it’s his money) makes fine sense, but saying that you’re giving him responsibility but then forcing him to pay for something that’s your priority isn’t exactly fair in my opinion.

I mention this because I know kids who went through a similar thing and it usually has an adverse affect on their relationship with the church because it’s not something they chose.

This is an awesome idea though in general. Thanks for the post!

Laura in Cancun
Laura in Cancun
9 years ago

Great lesson! Personally I’d have a hard time giving a cell phone that expensive to an 11-year-old, but I think it’s so cool that he’s paying for the monthly plan!

I also love how he’s putting away savings and 10% offering money!!

I made about the same ($10/wk) as a kid, and I remember always putting in $1 or $2 in the collection plate.

Good for you 🙂

Naomi
Naomi
9 years ago

Why not let him pay $9.99 and add a line to your family plan?

Heidi Nelle
Heidi Nelle
8 years ago
Reply to  Naomi

Um, adding an iPhone to a FT plan is not $9.99. It never has been. If they add him to their FT plan, they have to add on a data plan. I know plenty of parents who add on the lowest data plan possible for $20 and then wind up with $200 of overages because their kid doesn’t recognise that all the $20 overages keep adding up. Not just that, but even if they provide that iPhone themselves as an added on line and are not under contract, it’s still a bitch to cancel. I work for AT&T and I… Read more »

Em
Em
9 years ago

Good article, overall. I remember wanting all sorts of absurd gadgets at that age. That being said, I’m going to echo whoever it was that asked if the 10% tithe is really a tithe or just a general charity fund. Because it seems awfully constraining to be giving a child their “own” money to teach them management and then force them to donate the money to a group or your choice rather than of theirs. I understand that you want to teach charity, but forcing them to give any amount specifically to the church that they might prefer to give… Read more »

LauraElle
LauraElle
9 years ago

To Anonmyous: I fail to see how this post is offensive. She did not try to convert you, merely shared where her family’s financial priorities are. Some people tithe, some do not, regardless of whether one attends church or not. We do not attend church but do donate 10% of our pre-bill income to local charities.

Sara
Sara
9 years ago

I am also kind of surprised that you allowed him to go over budget, but I think that in general, I love the idea of using this want as a way to teach budgeting. So many ideas on teaching kids how to manage money only involve saving up for a one time expense – and this allows you child to actually figure and plan for recurring expenses. And to comment #11 – I don’t tithe, I’m definitely NOT Christian – but offensive? I really don’t see how the inclusion of a tithe in the article is offensive. No, it’s not… Read more »

Annie
Annie
9 years ago

I disagree with the poster who are against the tithing requirement. I grew up with the example of extraordinarily generous parents (not to the point of irresponsibility). They were generous with charities, with their friends, with strangers, with the people who worked for my father (more than once, he gave up his bonus– in his field, nearly 50% of his yearly salary– when he found out the people working under him were not going to get bonuses that year. He wrote everyone a personal check. We were well off, but not to the point where that money wasn’t important. My… Read more »

Jen
Jen
9 years ago

I was going to ask what Nicole asked — it looks like he’s giving away 20% to me; World Vision is a charity, right? Not that there’s anything wrong with that. But I’d encourage giving away x% and saving x% and then figuring out how to make expenses come out of the rest. But then, my children are even cheaper than their parents! As both of my older sons have remarked, “Oh, I only want that if you’ll buy it, I wouldn’t spend my money on it!” I will say that we didn’t ever put limits on their wee tiny… Read more »

Derek
Derek
9 years ago

Here’s a new lesson. Don’t force your kid/tax your kid 10% for church. Giving 10% should be voluntary. There is nothing virtuous about being forced to give a tithing. He himself should feel moved and compelled to give what he wants to church. Forcing him disconnects him from the generosity. There is nothilng generous if you’re forced to do it.

barnetto
barnetto
9 years ago

When you look at the math, more than 10% (very slightly more as to be basically negligible?) has been tithed. Because the $44 the 11 year gets is already from the post-tithing pile of money that the parents earned. Its double tithe-ation! =)

Mike
Mike
9 years ago

I believe the gov’t has already required us to tithe with all the social programs that are tax supported.

Maria
Maria
9 years ago

I’m with #25 Jennifer – $44/month allowance?! Makes me (also 30) feel old. I do like the story though. Good excuse to talk about financial planning with your son. I also agree with Annie – even if down the road her son doesn’t tithe to the church, he’s learning about giving and philanthropy. Odds are, if he’s not giving to his church in the future, he’ll be giving to another worthy cause.

Andrea @ Savings Lifestyle
Andrea @ Savings Lifestyle
9 years ago

@Wil – we purchased a monthly plan through iwirelesshome.com. I’m not sure if they offer plans in every state but it’s worth a check. The other nice thing is that he can get additional minutes when I tie my grocery shopping card. @Nicole, the tithes goes to our church. @Jade, I understand where you’re coming from. However, this is an important lesson that we believe needs learned at his age so he doesn’t think that when he’s in a financial bind the offering isn’t as important. We are also teach all of our boys the heart in giving not just… Read more »

elena
elena
9 years ago

I think this is an excellent next step for an 11 year old and gave very reasonable expectations for the situation. If he doesn’t pay,the consequences are clear and the parents are not on the hook. I especially liked that he had to do research and then really got to make a real CHOICE about something important to him. A little flexibility on the 50% rule works here for the lesson you’re teaching. Budgeting is about adjusting to get what you need and want with what you have. Understanding the responsibility of having a monthly bill, a recurring expense is… Read more »

Stephanie
Stephanie
9 years ago

It is refreshing to read a financial article about taking your 10% out for your tithe before doing anything else. What a great way to teach your child! I am curious, though, are you giving your child the allowance or making him earn through chores, etc. (maybe I just missed that part)? We are currently going through the Dave Ramsey plan and this is right on track! If he is earning his $ and this is what he chooses to buy with it, then it will definitely teach him about responsibility as well as saving for something he wants but… Read more »

Jane
Jane
9 years ago

There is nothing wrong with the author’s approach, but I don’t think it is one we will emulate. I’m not sure teaching your child about money has to be this deliberate. I grew up in an extremely frugal family that also tithed. My parents were never this deliberate with allowance or anything related to my money. In fact, I rarely if ever received my allowance, since it was tied to a chore and I just chose not to do the chore. In that respect, you could say my parents “failed” at teaching me proper financial and personal responsibility. But you… Read more »

Des
Des
9 years ago

FWIW – I googled “average allowance amount by age” and it looks like average for 11 years olds is $8. So, less than the author, but still WAY more than the $2 a week I got when I was 11 (I’m 27 now).

Suba
Suba
9 years ago

I don’t find the article offensive at all. Church was their charity of choice. Personally we don’t give to church but we give over 15% of gross to various charity as long as they are not in the business of converting people. This is our choice and if you think paying taxes is enough charity, that is, again, your choice. What is wrong with any of these choices? It is a great article about teaching about budgeting, researching before buying and not getting into a long term contract, all in one. Great job, Andrea. But I still can’t get around… Read more »

Tom
Tom
9 years ago

@42 “I’m not saying that discipline isn’t important and teaching them values isn’t important. They are! But there is only so much we can do, and I worry that certain decisions, like forcing your child to tithe, could backfire in the long run. Like others, I think you are sending a mixed message if you say they are responsible enough to have money yet don’t give them control over how they allocate it.” It’s not a mixed message. You can give your kid the keys to the car the day they turn 16, but you don’t automatically let them go… Read more »

Ryan
Ryan
9 years ago

I fully admit I’m biased since I’m not religious (although I was raised in a Protestant church, which my parents still attend), but I’m not a fan of parents requiring their children tithe. It just doesn’t sit well with me.

That said, I found nothing offensive about a passing mention to your family’s beliefs.

Ian
Ian
9 years ago

I think the lesson of having to pay for something yourself, and deciding what to spend your money on is a much more important lesson than budgeting to an 11 year old. The mom made up the 50% rule, so I think she should be allowed to bend it a little. He’s an 11 year old with no actual expenses. I personally think after he’s tithed and saved, he should be allowed to spend however much he wants on a cell phone plan. Most kids probably never get any type of coaching or instruction for their parents (I didn’t). Does… Read more »

Pete
Pete
9 years ago

Give the family a break. Go teach your kids your own lessons and applaud these for teaching theirs. Anyone saving less than 25% of their net income (as T does) should be the last one giving grief to this family for teaching their morals and budgeting lessons with their kids. Why do people friek out these days whenever their hear the word Church or Christian but celebrate any and all other religions and sects. It’s so ridiculous. Take it easy people. It’s just the foundation of our nation… No one’s slamming crosses down anyone’s throats.

Tyler Karaszewski
Tyler Karaszewski
9 years ago

@LauraElle
The post is offensive in the same way that someone else might find it offensive if it had mentioned forcing the kid to donate 10% of his money to Planned Parenthood or the Richard Dawkins Foundation. You don’t have to insist that someone else duplicate an offensive behavior before it becomes offensive.

I wasn’t going to say anything about it except that other people brought it up first, and so I have to say that I can see where Anonymous is coming from.

Kelly
Kelly
9 years ago

As a kid, I was never forced to help out around the house and until middle school, I didn’t even know what an allowance was. My parents provided me all of my needs and most of my wants. That being said, I didn’t ask for a ton of stuff, but was rarely told no. Though my parents talked about saving money and helping me budget birthday and Christmas money, they never enforced it. I think that has a lot to do with why I didn’t hesitate to get two credit cards my first year of college. I didn’t think twice… Read more »

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