Everything You Need to Know About Giving Children an Allowance
Chances are, if you have children the conversation of an allowance has come up. This leads to the questions how much allowance to give and what requirements should come with a child’s allowance. There are many theories out there.
Theory One: Allowance should be tied to chores
This sounds reasonable. Giving kids an allowance for completing chores is the same as an adult working for a paycheck. If the adult does not work, he or she does not get paid. Why should it be any different for a child? Under this theory children will appreciate what they have earned more because they worked for it.
However, the problem with this theory is that research has shown that this does not sustain motivation for completing chores over time. If a child no longer needs an allowance because money is saved up, the chores will not get done. It also takes away the ability to take away an allowance as punishment. Furthermore, he will find out that doing the chores isn’t a choice, like going to a job, and that he must complete the chores that are supposed to be for allowance anyhow. Children are very clever in that they will not get the message that “chores to allowance” is not the same as “job to paycheck,” and the message will be completely lost. Children may also develop a “What’s in it for me?” mentality and not learn that sometimes you do what is right simply because it is right.
Theory Two: Allowance is given no matter what
This can be a very good theory if it is done to have the child make all of her spending choices, within reason. If the child is learning that there is a limited supply of money and you must live with whatever consequences she has chosen, then the life skills of saving and spending are being taught very nicely.
If the child still receives items from the parents without needing to spend her own money, or no guidance in what may have been good or bad choices, then this theory will fall flat. Additionally, if a parent controls too tightly how the money is spent, nothing is to be gained. If there is money management being taught, then the child just learns you get because you exist. The child may also not learn that work equals allowance.
So, which theory should you choose?
The best thing to do is to combine the two theories and avoid the pitfalls.
The parent and child should sit down together and decide upon a base amount. This amount needs to be based upon what costs the parent expects the child to cover. Does the parent expect the child to pay for all his own clothes and toiletries or just extra’s, like going to the movies with his friends? While a theory exists that a child should receive $1 for every year old, it might not be realistic if the child is expected to buy his own shoes and is only 10 years old.
The allowance rate should be based on an understanding of what the child is expected to purchase and the child’s ability to make wise decisions. A parent can expect more of a 12 year old than what can be expected of a 7 year old. Each year, the parent and child should sit down and renegotiate the allowance contract.
The expectations of chores should not be included in this amount. The child should learn that doing chores is part of being a member of the household. Adults do not get paid to come home and clean the house; they do so because it needs to be done. Chores should be a separate requirement as a member of the family. This will then also teach the child to take care of a home and be a productive member of the family.
The child should then be given an opportunity to earn extra money each week or month by doing things that go above and beyond his regular chores. Such things might be washing the car; it is not his car and he shouldn’t be required to care for it in the same way he should be required to keep his room and bathroom clean. Washing the car would be a reasonable thing for him to do to earn extra money towards items that might not be covered by his normal allowance, like saving towards a laptop. This will help the child learn the value of hard work and getting a paycheck.
It is important though that once an allowance is given that the parents sit back and allow the child to choose how to spend the money. If the child opts to skip a haircut or to continue to wear shoes that are too small, the parent should let the child learn the consequences of those actions. Child learn better when it is their decisions and the consequences are a natural consequence. The ultimate goal parents should have for their children is to teach them to be responsible adults, and that means letting them make mistakes as children while the parents are there to catch them. This does not mean that the parent should remain idle at all times. It is still the parents’ job to discuss, guide, teach, and step in when absolutely necessary.
Spell out the allowance guidelines on what is to be given and when. Be specific. Define what above and beyond jobs are, and how much they are worth. State what is to be covered by the allowance so that the child can’t claim ignorance later. As a parent, make sure you let the child know that you are giving her trust to make her decisions. Both parent and child should sign the allowance agreement. Make a small chore chart for the above and beyond jobs that the child can mark off and date when one is completed and the parent can sign as approved. Then stick to it!
What age to begin
While, it is never too early to start teaching money management to a child, two children, even from the same family, should not necessarily start at the same time. There is no magic age. What age to start an allowance needs to be based on readiness.
A child should have a basic understanding of money. If the child does not know the difference between coins and dollars, then the child isn’t ready. If a child is asking for things all the time, make them ready, if not already. Learning the value of money and that it is not an infinite resource is important. The sooner they learn this, the easier time they will have as adults with money management. Another sign it is time to start an allowance is if the child is asking for one. It’s actually probably past time.
Giving children an allowance will teach kids money management, one of the most important life skills they will need as adults. Parents want their children to learn the value of work and household responsibilities at the same time. By following the hybrid theory of children allowance, both can happen. Parents just need to remember an important part of an allowance is stepping back and allowing their children to make their own choices with money. Getting rid of the “I want…” and “Give me...” is just a bonus.