Inside: Allowance: The Important Pros and Cons You Need To Know.
Growing up I wasn’t given an allowance per se. There were certain chores I was expected to do on a daily and weekly basis and in return if I were going out somewhere with friends mom or dad would “slip me” some money. The same way my grandmother would pull a $5 bill seemingly out of thin air and hand it to me whispering “don’t tell your grandfather”. After she passed away we found money tucked all around her apartment that she must have squirreled away for her grandkids but never got a chance to give it to us.
My chores growing up consisted of keeping my room clean (vacuuming and dusting the furniture), bringing my laundry downstairs, and as I got older mowing the lawn. Nothing too over the top but just enough to make sure “I earned my keep in the household”. Those were different times, simpler in so many ways.
Parents today are bombarded with decisions they need to make concerning their children and one of these such decisions is whether or not to provide allowances for children for the work they do around the house. There are different schools of thought on the topic and pros and cons.
Having an allowance system works for some families and not for others. It’s up to you to decide what’s best but here are some pros and cons of providing allowances to children.
What Are The Pros Of Providing Your Children An Allowance
Here are a few of the benefits of providing your children with an allowance:
- An allowance, if handled properly, can teach your children important lessons about finances and the responsibility involved with money. It can help them learn the importance of budgeting and saving for larger purposes.
- If the allowance is tied to chores, kids learn the relationship between work and being paid for your efforts. Helping your child understand the correlation between work and reward will set them up for their future careers.
- Allowances provide your children spending money for frivolous things they might want to buy. It doesn’t save you any money because, in reality, they’d just ask you for $5 to go to the mall but at least with an allowance they’ve earned the money.
- Money is a big motivator for children and adults. Tell your child they’ll get $20 if they help you build a new shed in the yard and they may be quick to jump in and grab a hammer.
- Some parents use an allowance system as a way to teach children about donating to worthwhile causes. Tell your children you’ll donate $1 for every dollar they donate each month to the charity of their choice and you’ll be teaching them an important lesson about helping others less fortunate
What Are The Cons Of Providing Your Children An Allowance
Even though providing an allowance can be a tool to teach there are some cons for providing an allowance.
- Doing something around the house and helping out does not always deserve a reward or some sort of monetary value placed on the action. Sometimes helping out is just that, help.
- If your children have saved all their money and have enough in the bank they may decide they don’t need to do anything else as they have enough.
- If you are on a tight budget at home and barely making it by as it is, then having to come up with an extra $10 or $20 a week for an allowance may be too much for you.
- The flip side of learning the positives of money is the negatives of money and some of the potentially bad purchases they can make.
- Children may begin to use the allowance as a bargaining chip when asked to do a little extra. I am all about negotiation but asking you to take out the garbage one week is not grounds for “a raise”.
What Age Is The Right Age For An Allowance?
It’s up to you as a parent to decide if an allowance is right for your children or not. If you decide on yes then the next question is what age should you start. Yet another decision to face.
Your child’s first foray into the high stakes world of finance is when they lose their first tooth. This tooth fairy paid dearly for those lost teeth but it was my children’s first chance to hold real money. We might have paid $5 per tooth but I’d be lying if I wasn’t short a few times and went into their piggy bank to cover me until I got to the bank. I rarely if ever carried cash when they were young mostly because I didn’t have any. It was always paid back, don’t worry!
As for an allowance, start them when you feel comfortable that they can handle the responsibility. You know your child and what they can and can’t do. There is no right answer here so use your best judgment and decide on your own.
What’s The Going Rate for Allowances?
Now that you’ve decided to provide an allowance how much is the right amount? A popular method is paying them an amount equal to their age. 8 years old nets you $8 a week. Each year they get a built-in raise as long as they are doing their job. This lesson is helpful later in life when they receive annual reviews from their employer.
If their age is too much for your weekly budget or you have a lot of children, you may consider half their age. Perhaps you decide to base their allowance off the difficulty of their chores. Mowing the lawn may yield a higher allowance than putting the clothes in the washing machine.
In NY I was paying $35-$40 a week to have my lawn mowed by a professional service so paying your child $10 – $15 is still a savings if you don’t feel like cutting it yourself.
If they meet the requirements of receiving an allowance then it’s important to pay them every week. You don’t work for free so don’t expect your children to do so either. If they don’t handle the responsibilities then use that as a teaching moment and explain to them why they aren’t getting their money.
If you’re flexible you can offer them a chance to make it up by doing some extra tasks this week.
The Best Way To Give Your Child An Allowance
There are a few ways to handle paying out each week. The simplest way is to provide the cash and have them put in some sort of piggy bank, jar, shoebox, or whatever they want to use to hold their money. Don’t let them just throw it in a drawer where it can get lost or destroyed. This is not teaching them a good lesson about the importance of money. Visibly seeing their money grow each week is exciting for your child to watch so this is a great option.
You may decide to take your finance lesson a bit further as they get older and open up a checking account for them. In doing so you can teach them the important lesson of saving and how interest works. Let’s face it with the savings rates nowadays they aren’t going to get rich but they can learn a bit while saving in this way. As their money begins to grow let them invest in some stocks from companies they like. Maybe Disney or Apple.
There are also a few good apps out there such as Busy Kid that allow you to assign chores to your children and when they are completed their allowance gets automatically direct deposited each week. You can have a specific amount donated to charity each week (teaching a valuable lesson in helping others), placed into savings, or invested. It’s worth checking out as your children get older.
There is no wrong or right age to start giving your children allowances. It’s up to you to do what you feel is best for your family in your given situation. I believe it’s a valuable lesson and tool to use to teach your children the value of money and working for what they want.
Do you give your children an allowance and if so how is it working for you? Comment below.