Through the years, any variety of theories have been put forth and argued regarding financial allowances for children. But two approaches seem to have emerged and become the “norms” over the past decade or so. Although many parents do not carry and trade in cash today, children are still very aware that something is “traded” for every purchase that the family makes. So whether it’s cash, a debit or credit card, or a loan of some sort, it becomes obvious to kids that an exchange of resources takes place to get the things the family wants and needs. And to best assure that children understand the seriousness of spending and how that exchange of money resources works, it’s arguable that allowances can be a good way to teach these lessons from an early age.
So if your household determines that allowances will be given to children, it’s best to have that discussion before children enter the picture. Parents have to be on the same page when it comes to money (as well as other family practices and values). Otherwise, kids will pick up on differences of thought very quickly and then can manipulate situations, never having the opportunity to learn valuable lessons for life. Having an agreed upon and specific plan of action before children come along is the wisest way for couples to proceed.
One way that families decide to handle children’s allowances is to give an allowance “just because.” In this plan, all children receive money weekly usually once they reach a certain age. Children aren’t given “work” to receive money. Some advisors suggest between $.50 and $1.00 per week based on the child’s age. In this theory, children are to be taught that every member of the household has “work” or “chores” simply by virtue of the fact that they are part of the family. This allows a terrific opportunity for children to simply learn how to receive and use their own money. The allowance isn’t tagged for the child’s needs; in other words, the child is not required to supply their own food or clothing. The money received is simply there for the child to use for things they want. In addition, in this practice, the child is often directed at a very young age that the money be saved, shared and spent. Literal piggy banks, jars, or even envelopes can be used to separate the weekly funds intentionally with a plan for the spending, saving and sharing portions. Ongoing conversations can be held between parents and children to discuss how and where to save money, and research can be done in the family to determine favorite places to give and share. Children often have big and tender hearts for causes, so demonstrating ways to share and help is something most kids engage in very quickly.
The second theory or approach that is often promoted is to indeed pay children in the family for chores that they do. Advisors and educators who address the allowance issue in this way provide a wide variety of mechanisms and creative ideas on how to dole out the work and the allowance accordingly. Of course, work for kids should be age appropriate and, in this approach, as children get older, their chores can become more complex and substantial. For instance, it’s relatively easy to teach all the kids that they are to put their coats, backpacks or other items they are carrying in a certain place when they come into the house. This keeps down clutter and losing things and creates a more organized feeling home. Mudrooms or a variety of simple storage compartments can be created at the door to facilitate these great lifelong habits. Or kids can be taught to immediately take their belongings to their own room and, once again, place them in an organizing place. The old adage, “…a place for everything and everything in its place” is a good one to repeat often!
One thing to consider if the family chooses to pay allowances based on “work” or chores completed is that confusion may rain down when and if the children figure out that they can play the parent(s) and offer to do more chores or work and then have more money. Early on in this approach, a family will need to lay down rules of the game so that kids don’t start to think they can manipulate situations to get what they want all the time or create a competitive environment. It requires that simple, but very defined parameters are set and this may cause more effort than parents want to make over the years. Here are a few more considerations for chores that kids could be reimbursed for taking on:
– Putting dirty clothes in the hamper or designated place
– Taking dishes and other eating utensils and placing them in the dishwasher
– Picking up the bedroom at regular intervals
– Assisting with house cleaning by age level and ability
– Assisting with or doing lawn work.
No matter what theory or practice a family determines works best for their values, beliefs and habits, one thing is for sure. Kids desperately need to learn the life skills around using money effectively and efficiently. Parents are the front line in starting to introduce the concepts that will best suit their children to achieve good money management practices. It’s never too late to start. Today is a good day to have the conversation and implement practices that lead to peace and security for all concerned.