Should you or shouldn’t you give your children an allowance? According to The American Institute of Certified Public Accountants, about 70% of parents give some form of allowance to their children. However, for some parents, giving an allowance is a debatable topic. Some believe you shouldn’t give children allowance simply for doing the chores they should be doing as part of their household.
The parents that either don’t believe in giving allowance or, at least, don’t believe in tying it with chores believe allowance can lead to potential issues. However, those suggested issues can be avoided. If done correctly, allowance will have lifelong benefits.
Understanding the value of money and hard work with allowance, as a child, will provide your kids the foundation they’ll need to grow up and manage their own households.
Below are the pros and (supposed) cons many parents find with giving allowances. With the cons listed, we give what we believe are easy fixes to turn them around from cons back to pros.
The Pros
Independence
Allowance helps provide a sense of independence. I think adults forget how it can be for kids that even the tiniest want is dependent on a parent giving them money. Even the 25-cent gumball machine. So, a kid with allowance has the independence to be able to purchase things with their own money (with parent approval of course).
Responsibility
Allowance most often connects, at least partially, to chores. Doing work for pay teaches your children the value of hard work. Dave Ramsey points out what we all know, we should teach kids that money comes from work. As parents, we’re supposed to teach our children to grow up and be good adults. Understanding that not only is hard work needed in life but that it also comes with rewards such as monetary payment will help towards that end. Kids shouldn’t grow up expecting something for nothing. That creates entitled adults.
Financial Management and Budgeting
Children learn about money, dollars and cents, at an early age in math class. However, having money to to actually spend on things they want can really cement that knowledge and understanding in place. They’ll learn “the value of a dollar” as they see how much things cost versus how much they have. If they want something that costs more than what they have, they’ll have to learn how to save their money and how to budget. Understanding money and how to save for things you need and want will, of course, help them throughout life.
Much like we’re supposed to instill good eating and exercise habits in our children, we should find ways to instill good financial habits as well. Saving money will help teach delayed gratification, which in today’s world of video games, Internet, and streaming shows, they aren’t learning in many other areas. Mike Falco, president of Falco Wealth Management, suggests having children save one third of their allowance each week to put towards something larger that they may want rather than letting the money immediately “burn a hole in their pockets.”
Consequences
If they spend their money on one thing they want, they can’t buy some other thing they want. Cause and effect. Actions have consequences. This seems a simple enough concept, but it’s one that kids can’t learn often enough.
Jayne A. Pearl, who wrote “Kids, Wealth, and Consequences”, explains that kids will make mistakes with their purchasing choices. When making monetary mistakes in the low-consequence environment of childhood allowance, they’ll learn from those mistakes and not make similar ones when they’re older and more money is involved as well as more dire consequences.
The Cons
Mixed Messages
Kids have to do their chores no matter what. They are part of your family unit and have to pitch in as part of that team. So, paid or not paid, they should be helping out around the house. Paying them to do something they should be doing regardless could be teaching them that they deserve money just for being part of the family. A crafty kid could start angling for money for each and every thing they help do.
Easy fix: Set them straight. Let them know they are getting paid for work, but they’ll still have to help out as needed on anything that comes up. Explain to them that, as a part of your family, they’re contributing to the household, the same as everyone else.
Potential Expectation Without the Work
If you get in the habit of giving your kids their weekly or monthly money even if they haven’t been holding up their chore end of the bargain, you may see them start skating on doing their chores. They could start expecting the money no matter how little they do.
Easy fix: One of the goals of allowance for chores is to teach your children that they don’t get something for nothing. Don’t forget that. If they start slacking on their side of your deal, your “contract” is null and void. Don’t give them allowance for doing nothing! However, experts say you shouldn’t give them nothing as the alternative because you want the money you’re giving them to be a teaching device and not 100% tied to their chores as they should know they have to do chores regardless of allowance.
I feel, if the kids aren’t doing their chores yet parents don’t want to give them nothing so as to not correlate chores and allowance 100%, then the parents should give their kids an extremely small percentage. This way, the kids see what they get when they try, they see what they get when they don’t. Additionally, children should be made to do their chores no matter what. If you have to work to get them do to their work, then that work you’re doing comes out of their total payday as well.
Doing Nothing to Get that Allowance
Some kids are never told to do work to get allowance. Rather, they get allowance just because. While they may still learn lessons of the value of money, they are learning no lessons of responsibility.
Easy fix: You have to work for your money, right? Why shoudln’t they? Give them something to do to earn their money. As stated above, you may not want 100% of their allowance tied to chores, but it would help teach hard work and responsibility if it, at least, a portion of the money was reliant on work.
What Should You Pay?
So now that you have the why’s of allowance, it’s time to decide how much. Many choose to give $1 or $2 a week per the number of the kid’s age. Mean a 5-year-old would get $5 or $10, whereas a 10-year-old would get $10 or $20. However, this depends on you. What you want to give, what you can give. Parents have to budget too, and you don’t want to break your bank giving allowance to children. Remember, we’re those aforementioned adults with more dire consequences, like mortgages and car payments.
You should also factor in your gift giving. In our house, we do a lot for gifts at Christmas and birthdays, so we give less allowance to our twins. Aside from saving part of their money, they essentially go out and buy the same things we give them as gifts, so it balances out in their favor.
However much you choose to pay your kids their allowance, remember inflation. Inflation has changed allowance from when you were a kid. This means you can’t say things like your parents used to say such as, “In my day, we only got a nickel for mowing a yard!”
I doubt that’ll fly with your kids in today’s world.
Be sure to check out our other parenting advice.
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