One of the many struggles that parents have is over paying kids’ allowance. Of course, the question of whether or not to pay one is very common. Some people feel as though a child should not be given an allowance at all, while others feel as though it is a great opportunity to train their children.
[Find out what NJ High Schools are doing to teach personal finance and budgeting to students]
Beyond that struggle is the question of how much and how often to pay; and also if the payment should be tied to various chores and other responsibilities, or if the kids’ allowance should just be based on general obedience. As with most things, there probably isn’t a clear cut answer to this, because every child is different, and there are pros and cons in each case.
Still, that doesn’t prevent us from taking a look at this issue.
Should You Give Your Kids Allowance?
Pros
Teach Them Financial Responsibility
Once you start giving your kids allowance, you can teach them how to manage money. There are many different aspects to this – some of which we will discuss below – and although each one can be taught without giving your child an allowance, using real money can make things easier.
Understanding The Value Of Money
The first thing should happen when we pay our kids an allowance is that we teach them the true value of money. Kids aren’t born understanding the function of money in this society (I’m unsure if most adults understand this). They think that their parents have an infinite supply of money, or that it “grows on trees”, as our parents used to say.
Giving them an allowance, and making them responsible for saving, giving, spending, and maybe even investing, will help them to see how important each dollar truly is.
When they are spending your money it’s really easy for them to simply give in to their impulses. However, once they are down to their last dollar, they’ll have to give a lot of thought toward how to spend it. And if they don’t, they will have to deal with the same “buyer’s remorse” that adults experience.
Use their allowance to teach them to weigh their options and make the best possible decision.
Saving
Giving your kids allowance creates the perfect opportunity to teach them the importance of saving money! You can have them set goals and save toward them. It may be small and somewhat trivial like buying a PlayStation 3 Dualshock 3 Wireless Controller
Either way, they get to learn early lessons on the importance of saving and planning. To make it more interesting, you can provide an incentive to your child’s saving efforts. Maybe you can kick in $5 for every $50 that they save, or “pay” them regular interest!
Giving
To me, giving is an important part of any budget; and if you feel the same way, you’ll want to teach this lesson to your children early. Giving your kids an allowance is a great way to accomplish this! If you belong to a local church, that’s a great place to start! If not, then have them identify something that’s important to them.
Then you can find a charity that supports them (maybe an orphanage in Haiti), and have your child set aside a part of their allowance for donations.
The Cons Of Giving Your Kids Allowance
Despite these reasons, there are a number of people who don’t agree with the idea of paying an allowance to your children. By doing so, you can inadvertently spoil your child, and make them feel as though mom and dad are nothing more than just ATMs!
It Spoils The Child
Giving your child an allowance could help to spoil them. Keep in mind that you’ll probably buy them different toys, gifts, candy, etc. throughout the year, so adding a regular weekly or bi-weekly payment, can give your children a sense of entitlement. Of course, this isn’t a guarantee, but it does raise the chances of this happening.
This may cause your children to see you as an ATM, rather than as a parent!
Doesn’t Teach Them To Depend On Hard Work
By giving your kids allowance, it may make it difficult to teach them the concept of working hard for money. If someone gives you money each week, you may become conditioned to getting money without working for it. Many people in this society resent hard work and discipline – of course we can’t blame allowances for that, but it is something that you have to watch out for.
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If Connected To Chores, They Don’t Feel A Sense Of Responsibility
I believe that chores are best used as a way for children to contribute to the household and feel a sense of responsibility. By attaching them to a payment, they may not see their chores as a non-negotiable obligation, but they might just regard them as something to do when they need money!
So what happens when they get money for other things (birthday, Christmas, or good grades)? They may lose the motivation to do their chores, and you end up in a battle trying to get them to handle their responsibilities around the home!
So What’s The Answer?
I believe the answer to this issue is to take all of these things into consideration. If you choose not to pay an allowance, make sure that you look for other opportunities to teach your children proper money management. Of course, if you do decide to go pay, try your best to avoid some of the cons listed above.
Ultimately, it comes down to how well you know the individual character traits of your children and what priorities you have set for your household.
photo by GoodNCrazy
Reader Questions
- Did you get an allowance when you were a kid?
- What do you think are some potential problems to doing this?
- Do you think there is a particular age when you should start?
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{ 16 comments… read them below or add one }
YES give allowances!
YES make sure your kids know that some work is NOT paid
YES let them do extra work for extra money
YES help them figure out how else they can earn money
I have never seen an allowance cause a sense of entitlement.
I think it helps to have them do work that is not connected to an allowance. I like your idea of giving them ways to earn extra as well!
Hi,
This is an interesting post you have made and it has prompted me to make a comment.
Firstly, I did not get an allowance when I was a child, and was always envious of the children who did, I always had lots of things at Christmas, but was only ever given any money by my grandparents, which was not often as visits were infrequent.
So my answer is that it is important to give your child an allowance, it teaches them the value of money, it gives them savings goals, and if there is anything they really want, they can get it, if they have saved enough.
It will also stop them pestering their parents to buy them things, if they understand that they have to get whatever it is for themselves, and of course it may also help prevent them from being frivolous with their dollars.
The starting age is maybe up to the individual parents, maybe give them a little when they understand what money is, and increase it when they are old enough to go out on their own, or maybe incrementally for each birthday.
I have a 13 year old and a 11 year old and we give them a small weekly allowance, but they still have to do chores for free
. One way i think we get our kids to respect money is to not give them everything they want. My father did that with me even though he could afford to do so. We always had what we needed, but never got alot of toys or gifts like alot of the other kids. I think that was the right thing to do. My brother and I are pretty tight and respectful of our money. That is how i would like our kids to turn out.
I agree with all the other comments here, this is an excellent post that throws up some good pros and cons in the area of giving children an allowance. I think it would be a good idea to connect an allowance to grades and try to instil the discipline of the absolute fundamentals such as giving 10% to church, and saving 10% of every allowance that is provided. Whichever way you look at it however, its still a tricky one to get right.
1. Yes, but I had to give half to church when I was growing up.
2. Nope, prompted a lot of good money conversations between my parents and I.
3. When children start asking about money.
This is an important subject, and I think you have covered it well. I struggle with how my kids use their money. My wife and I make suggestions, and teach what we believe to be responsible options. Ultimately, any allowance is a gift, and has no strings. I find it difficult to see my kids want to spend their entire allowance on ice cream, or removable tattoos, or even pez.
Thank you for this insightful post. I haven’t been blessed with children yet but my sister-in-law has a great method for her three children, who are age 3, 5 and 6. They have a chore chart and when they complete the task they add a sticker. They add up the stickers at the end of the week, which equate to an amount (usually pennies and nickels). They also have envelopes hung by the chart where they can add “wish list” items that they can save for. They go visit garage sales on the weekends and the kids can choose to buy things with their money or continue to save. You would be so pleasantly surprised with their choice… they usually save for bigger things or save to buy gifts for others! It is really amazing. I think the key is communicating with your kids to help them make the best decisions. Thanks for the post!!
Great article and something very worthy of consideration. My parents required chores to be mandatory within my household as I grew up — after all, I lived there and I was part of the family. I never received a weekly allowance. They did, however, offer me opportunities to earn money by doing additional chores when I specifically wanted to get Christmas presents, birthday presents, or save for a special treat. I think a balance is what needs to be struck. Furthermore, no one gets paid to clean one’s own house and sometimes the only reward one reaps IS a clean house. Kids need to learn this…hard work does not ALWAYS reap monetary benefits. Balance is the key to raising a frugal and unspoiled child!
I think an allowance for kids that is connected to chores, good grades, etc., is a great way of teaching them how to hard work yields rewards. After all, we don’t expect adults to work for no money, so why should we expect kids to do the same? And when adults get a bonus (a gift, an inheritance) it doesn’t rob them of their motivation to continue working, so why would it have that affect on kids?
I believe in an allowance for children for chores. It is also an opportunity for them to learn to save for things they want. When my children were young, they were required to save 50% of the money they earned. As they became teenagers, I offered to match any savings from money they earned to purchase a car. My children are successful adults now, so it worked!
I would pay my kids an allowance only if they deserved to get the money that i gave them
I’ve heard that argument about linking allowance to chores and I don’t know. I’m reluctant to give allowance because of the sense of entitlement it creates, so I think what I would do is make them a lunch so they don’t need money to buy crap at school, and if they want money, I can tie it to various things that I would like to get done, but you’re right, you don’t want the feeling to only be it’s for the money.
I like what optionsdude had to say about it though.
My son is nearly 7, and we give him 3 sets of small chores. Morning chores involve making his bed, putting away his dirty clothes, brushing his teeth and setting the table. He gets a quarter for each of the three sets. The problem is he is lazy and rarely gets them done. Unfortunately, I have to pay him very little per week. (Last week he only earned $1 when he has the potential to earn $6 a week!) Now that his little sister is bigger, I “hire” her to do her brother’s chores, and she earns his money. That has motivated him to start doing his chores more.
I think we’ll give lil’ SPF an allowance when the time comes to do so. But we WILL link them to chores with a caveat. Chores must be done, on time, on schedule. Failure to complete chores may (read: will) have repercussions which can include the reduction or elimination of the allowance for that period.
Worked on me. Thanks Mom and Dad.
I don’t believe that there is a right and a wrong answer since it often depends upon the approach that is taken. When I was a child, I did not get an allowance. I was expected to complete certain chores and tasks as part of being a member of the family, like clean my room, bring dishes to the sink, vacuum the house every Saturday (I hated that one), etc. I would get paid, however, for extra chores and for cutting grass.
This is the approach that we have taken with our kids. There is a certain level of expectation and responsibility. Special projects can be compensated. I will usually negotiate with my kids for help in say cleaning the garage. Sometimes it is worth it to them if the day is raining. Other times, they say no and I have to raise my price. My younger son is a great negotiator.
The presumption under which my wife and I have operated is that we don’t want to encourage an entitlement mentality. Each one has certain things to do without compensation as part of a greater role in society, but that there are times when compensation is warranted. Then the value of money is learned knowing that it took me 3 hours to help dad clean the garage so do I want to spend my wages on a water pistol or not. We have tried to equate the cost of various items to the amount of work needed to earn that much money. Hopefully in the end, they learn something.
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