(formerly Allowances: Dollars
by Paul W. Lermitte
reviewed by Marco den Ouden
Originally published at
About.com - Oct. 14, 1999
This article is also available at
"I like girls who wear Abercrombie
& Fitch..." - popular song
The tween set, particularly girls aged 8-14 now control a
huge amount of disposable income, according to recent news reports. And some
savvy retailers are homing in on this lucrative market. When
Abercrombie & Fitch re-invented itself as a hip, trendy fashion designer for
the younger set rather than as a stodgy British fashion house for the
outdoorsman, the business revitalized. Currently La Senza, the lingerie company,
is establishing a line of La Senza Girl stores coast
to coast geared specifically to the 8-14 market.
The retailers know kids have cash, but have parents
taught those kids how to be smart shoppers? How to control their spending? How
to handle money? Probably not! And that's where Paul Lermitte's new book,
Allowances: Dollars and Sense, comes in.
We live in a consumer driven society where spending
beyond your means is a commonplace. And just as Paul Lermitte, a professional
financial planner, works at helping adults cope with their finances
professionally, his book aims at accomplishing the same with our kids. It's a
The book is straight forward and well laid out with 19
short chapters covering everything from the young child's first allowance
through helping an older teen learn the importance of setting goals and dreaming
Each chapter sets out three major goals and a time frame
in which to accomplish them. It then discusses the subject in some detail
introducing some principles for guidance. And finally it gives you some tools to
help achieve the goals and summarizes the chapter in point form.
For example, the first chapter, The Allowance
Contract, puts forward these three goals:
To introduce your children to the value of money.
To teach your children the basics of good money
To begin a lifelong habit of saving money.
Lermitte suggests drawing up an Allowance Contract with
your child. The contract should emphasize certain principles - a promise to your
child to give them a certain amount of money at specified intervals, and a
promise by your child to save part of it and not to nag you for more after she's
blown the rest. The contract should be followed consistently and firmly. And the
allowance should not be tied to chores. Allowance shouldn't be used as a bribe
or withheld as a punishment. The purpose of an allowance is to teach sound money
To help implement the contract, Lermitte includes one in
the book to photocopy, or you can
download one at his
Making Allowances website.
In fact, Lermitte includes a lot of handy forms to copy
from the book or download from the website. These include a Loan Contract and
Loan Repayment Planner, an Investment Plotter, a Business Planner Form (so your
kid can make that lemonade stand a going concern), a Teen Purchase Plan Form for
older kids, a Cash Flow Form and a Critical Wishes Form.
Sounds like a lot of paperwork to me! And I don't expect
everyone reading the book will implement all of its ideas exactly as shown. But
the book is chock full of good ideas and parents can improve their
children's understanding of money tremendously by using some of them. I know
that I wish I had thought of the contract idea when we first started giving our
The book covers a wide range of topics including
entrepreneurship for young people, investment and the stock market, respect for
other people's property as well as their own, how to borrow wisely and repay
debts promptly, involving children in some major family purchase decisions,
understanding how to separate facts from hype in advertising, and how to set
goals. It even covers contingencies such as how to manage a child's financial
education after a divorce.
The thing I like best about the book is that it credits
the child with enough intelligence to trust him with making decisions on his
own. Allowance should be, to a certain extent, mad money. Money the child can
spend as he wishes without lectures and raised eyebrows from Mom and Dad.
Of course, some limits can be set. Lermitte draws the
line at letting your teens buy cigarettes, alcohol and drugs. And some parents
may want to restrict such things as body piercings and tattoos. But beyond
health hazards and bodily harm, Lermitte believes you should let your child make
his or her own mistakes.
If the child buys a shoddy product, he'll learn to choose
more carefully next time. If he blows his cash on candy the first day and then
sees something he really wants but he's now broke, he'll learn to not give in to
impulse buying. If the child is sheltered from such errors, she won't learn to
The ideas in this book will last your child a lifetime
and may save him or her from some of the traps so many people fall into when
they reach adulthood - failure to save and over-extension of credit. The book
has given us a slew of new ideas to introduce to our children. Read it,
implement it, and your children will profit from it!
I heartily recommend this book.