Real-life money lessons

The Great Allowance Debate

Allowances. To give or not to give. It’s a hot topic.

To put it simply, I think there are three main camps:

  • Don’t give it at all. I already feed, clothe and shelter you.
  • Give it unconditionally. Here is some money and it is yours.
  • Give it conditionally, based on desired actions. Here is money for completing X chores, getting Y grades, etc.

And we…

Subscribe to the second item, unconditionally. With caveats. (I realize that sounds contradictory.)

J receives a bi-weekly allowance (fortnightly if you will) of $9 (at 9 years old).

He is strongly encouraged to save at least 10% of it, and after that, he can decide how to divvy it up between savings, spending and giving (and possibly even short-term savings if he’s saving up for something specific).

Not tied to chores

There are chores that he’s expected to do because he is a member of the family — basic things like helping to make dinner, clearing the table, drying dishes, picking up his clothes, etc.

And there are extra chores he can do to earn more money — dusting, vacuuming, shredding papers, etc.

But he gets his allowance regardless.

So why give an allowance?

Initially when I started paying interest on savings, J’s deposits were really low or non-existent. Because I wanted J to see how money could grow and and get more hands-on practice with it, I decided to start paying him an allowance. The allowance also gives us the opportunity to talk about it at least every two weeks when he gets paid.

But… work = money? So, no work, no money?

Dave Ramsey is a big fan of earning money. He thinks kids shouldn’t get an allowance, rather they should have to work for it. That’s how it works when you’re an adult, right?

While I can appreciate this for adults, I don’t know that I agree for kids. While J does have some work to do and will have increasing responsibilities as he gets older, I think that he should enjoy being a kid. And also, as I said earlier, the allowance gives us more opportunities to talk about, handle and manage money.

What do other bloggers have to say?

At Marriage, Kids and Money, Andy talks about earning an allowance as a kid based on completed chores on his chart. He learned to correlate hard work with reward, and he and his wife Nicole developed a great age-appropriate chore reward system for their daughter, Zoey.

At Couple Money, Elle doesn’t tie allowance to chores, but expects her daughter to do some chores because she is a member of the household.

Chris at Dadding Value isn’t sure exactly what to do but is going to experiment. The same with Budget on a Stick. It looks like they’re trying new things (including paying themselves an allowance) and trying to figure out what works best for them.

Melanie at Mindfully Spent uses a hybrid approach. I love that the whole family gets in on offering her son paid work for large household projects!

At Mom and Dad Money, Matt gives his 5-year-old an allowance with no restrictions. He doesn’t make decisions or judge his son’s decisions as good or bad. This reminds me of the saying about allowing kids to make small money mistakes now so they don’t make big ones later.

Tracie, the Penny Pinchin Mom, gives her kids an allowance and also helps them make a budget. She says it’s the perfect opportunity to talk about your own budget (and show your kids too)!

Mr. Money Mustache pays his son a salary of 10 cents for every mile biked or walked as part of family life.

At Smart Family Money, Cindy also gives an allowance and suggests doing so in $1s (which I also do!) so that the kids can divvy it up between accounts more easily. I also liked how she sat down and talked to her kids about it. Communicating is so important!

Kumiko, the Budget Mom, started her son early — at 3 years old! I love the total savings caterpillar on her free savings worksheet. It reminds me of these coloring pages for paying off your debt. Visualizing your savings and/or debt repayment can be a big motivator!

Paul from Asset Based Life details and pros and cons of allowances against his goal. Here’s a follow up detailing which route he chose and also includes a contract!

Last but not least, one of my favorite sites, Fam Zoo has a WEALTH of information on giving allowances. Bill talks about a well-tuned allowance, tell us that an allowance is not a right and maybe we shouldn’t even be calling it an allowance at all.

(And just to be a little bit meta, here’s a post of other posts about allowances, too. Courtesy of Keep Thrifty!)

What works for your family

Ultimately, you should figure out what works best for your family. What works for others may not work for you. Like all parenting decisions, I believe that if you put some thought into it, you’ll find a system perfect for your family and your situation.

How do you handle allowances?

6 replies on “The Great Allowance Debate”

We do not have children just yet, but in terms of my own upbringing my brothers and I were given the option to complete a list of chores and earn money or go play. I mainly chose to play, but when it came to wanting something and I didn’t have enough money for, I knew I had to work for it. Lesson learned: Nothing in life is handed to you.

At the same time, it was expected that my brothers and I take turns cutting he lawn, taking out the trash and other misc tasks for free. Lesson learned: You pitch in, without expecting anything in return, because it is the right thing to do.

To each their own, right?

We don’t give an allowance yet. Probably won’t but this got me thinking about ways to help my kids earn money and enable them to manage it so that they learn these valuable life lessons.

Thanks for adding me to the conversation Maggie! I think you’re spot on – there is no right or wrong solution for allowances, just an approach that works best for you and your kids.

Perhaps the most important thing is to be aware of the drawbacks for the approach you choose and make sure those don’t become too much of a problem.

I look forward to an update to see the pros & cons of your approach. Good luck!

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