Does getting an allowance teach kids to manage money, or does it just condition them to expect a handout? Should you tie the allowance in to chores, or should chores be considered a non-negotiable family responsibility? And how much should a 10-year-old get, anyway?
When I was a kid (in the '70s), my dad used to solemnly dole out a dollar a week to me and my two brothers. Every Sunday, after dinner, we'd wait for my father to take that last sip of wine, fold his napkin, and reach into his pocket for his wallet so we could line up next to his chair and get our weekly allowance.
Kids today get much more. Some experts suggest that you give them $1 per week for each year of age -- which means that I'd be shelling out $44 a week for my five children, which means I'd soon go broke. Others suggest paying kids for the chores they do around the house, which means that some weeks my 13-year-old would be rich while my 15-year-old would be destitute. Or vice versa.
David McCurrach, founder of KidsMoney.org, says that giving kids an allowance is an essential step in helping them learn to manage money. "If your kids don't get allowances, you are managing their money for them by deciding what they will buy and what they will do," McCurrach writes. "Their role is salesperson and manipulator."
In order to determine how much to hand out each week, McCurrach says you should first figure out how much money you already give them and then decide what you expect them to pay for themselves. "Keep in mind the fact that kids have three uses for their money -- spending, saving and sharing," he writes. "Consider all three areas when you are coming up with the amount."
If you have never discussed money with your kids and you need to now in order to handle a financial crisis, keep things open and honest, upbeat, and to-the-point. Sharing household budget constraints can make it easier to save money and lets kids feel like they’re helping, and older kids can benefit from lessons in budgeting and a carefully monitored trial run in the real world. Give your teenager a budget for back-to-school clothes shopping, for example, and insist that she sticks to it. A pre-loaded gift card is a great tool for this; be sure to explain how checks and credit cards work, and if she budgets badly and needs to borrow from you to pay for a few extra items, take the opportunity to introduce her to interest payments and service charges.
While it seems to make sense to offer an allowance in exchange for doing chores around the house, experts contend that doing so might actually get in the way of teaching your child good money management skills. "Chores should be considered a family responsibility that should not be associated with money. Also, kids may not do their chores if they only have to give up a small allowance" or if the amount they're getting is not consistent, an article at MoneyInstructor.com advises.
Parents are split over the allowance-for-free vs. allowance-for-chores issue. If it's essential to you to tie allowances to chores in some way, consider these compromises:
1.) Give extra money for extra work. Kids can get a base allowance each week, and have opportunities to earn more money by completing extra chores. Use a chore chart to determine the value of additional chores or to help kids keep themselves on schedule.
2.) Make chores mandatory, but easy. Designate as "chores" some of the things you want them to learn to do by themselves anyway -- brushing their teeth twice a day, making their beds, putting their dirty laundry in the hamper instead of on the floor of their rooms.
3.) Earn something other than money. If you use an allowance to teach kids about money, use a point system to teach kids that there are rewards that come with hard work. Handipoints offers a system that allows parents to customize chore charts and set goals for kids, who earn points that they can trade in online.
Do you give your kids an allowance? How did you decide what to give, or whether to give any at all?
Lylah M. Alphonse is a Globe staff member and mom and stepmom to five kids. She writes about juggling career and parenthood at The 36-Hour Day and blogs at Write. Edit. Repeat. E-mail her at email@example.com.
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