I have been reading a book entitled, “If I Were Starting My Family Again,” by John M. Drescher. There are ten excellent chapters, but not one about the dilemma of giving our children an allowance. I have to admit, this is something I would probably do differently if I had a second chance. Not necessarily due to mistakes I made but mostly due to the fact that I hadn’t read or heard much about it when I was a new mom. I didn’t take the time to research it and have never designed a consistent philosophy nor plan about an allowance. Most money experts agree that children should be given an allowance in order to learn financial skills at an early age. Yes, say most experts, stressing some common guidelines: start sooner rather than later, make sure the amount is age appropriate, and – believe it or not – don’t link the money to chores. I do remember discussing the pros and cons of an allowance with my husband at the time our daughter was about 5 years old. She had begun to express and interest in having some of her own money to spend. John and I hadn’t really made up our minds about what we were going to do but we had talked with our daughter about what chores she could do to earn an allowance. I was a working mom on summer vacation and we were running errands one afternoon when I told her that we should stop at the bank and get my allowance (ie. a portion of our earnings that I spent on groceries, etc.). As I drove around the corner catching her intent look out of the corner of my eye, she said, “What do you do to get your allowance, Mom?” I’m not sure which one of the many emotions racing through my head came out in the look on my face but I explained that I earned money at the job I did during the school year, plus I listed numerous chores I did around the house. To this day I believe it was an innocent question on her part but as you read ALLOWANCE from page 7 along in the next paragraph you may discover that perhaps not linking an allowance to chores is a wise decision. Further more, we were having a difficult time coming up with some new chores as she already had some age appropriate chores in her weekly routine. Many child-development experts agree that linking an allowance to the completion of chores is not the best approach. “My recommendation is to keep the allowance totally separate from the chores,” says Aletha Solter, a developmental psychologist and founder of the Aware Parenting Institute in Goleta, California. “That way, children will learn the value of responsibility, cooperation and experience what it feels like to contribute to the family.” In addition, once children have other streams of income, such as monetary gifts for birthdays and holidays or a part-time job after school, they often balk at doing chores at home in order to earn their allowance because they are no longer dependent on Mom and Dad for all income. Allowances can help children understand the concept of budgeting and saving, but you have to teach them. A regular allowance helps kids take responsibility for spending decisions and encourages independence. Instead of getting money ‘on demand’ whenever they need it, children with regular allowances can learn to plan ahead—to anticipate spending needs and make choices about what’s most important. If you’re considering giving your child an allowance, here are several things to decide: What age?; How much?; How often?; What for?; How do you get them to save?; Should you dock their pay? and What about charitable giving? What Age? - Give your child an allowance when they are old enough to manage it. A child should probably be at least six years of age. There’s no need to rush things and preschoolers generally don’t understand the abstract idea of money anyway. A good measuring stick could be to give an allowance when the child expresses an interest in buying something with some money. How Much? - Give children a basic allowance that is linked to spending responsibilities. Sit your child down and decide what expenses the allowance will cover and try not to underestimate a child’s cost of living. Allowance doesn’t depend on a family’s financial situation to the degree you would think. It depends on how much money parents think kids need access to. Most children have a limited number of things to spend money ALLOWANCE from page 8 on—no matter what the family’s financial situation. First graders probably need $.50 - $1.00 a week to do any serious spending or saving. As children get older, adjust the amount upward depending on what expenses you expect them to cover. How often? - Parents need to pay allowances on a regular schedule. A weekly payment is best for younger children because long term gratification isn’t their strongest suit. Budgeting skills are linked to the acquisition of money. Teaching children to budget in their teen years helps save them from the consequences of not knowing how to budget as they get older. Budgeting and saving come with instruction and practice. What for? - One of the most controversial issues regarding allowances is whether or not you should expect children to do chores in return. Give your children a basic allowance that isn’t linked to chores but is linked to spending responsibilities. Some parents pay children for good grades. It probably isn’t a good idea to bribe children or pay for performance, that undermines the kind of lessons we want to teach our children. Extra hugs, words of encouragement, or a later bedtime along with learning the personal satisfaction that comes from doing a good job are more appropriate avenues to reward such accomplishments. How do you get them to save? - It is important to know your own child’s personality and to realize that all children respond differently to money, even those in the same family. Some children save on their own; in fact some are little hoarders. It’s almost difficult to get them to spend money. Children that don’t want to save, will need extra encouragement. Require them to save a percentage of their allowance, but try to make saving fun. Have them save in a piggy bank, especially one where they can see the money growing. When they save enough, help them make their own purchases so they see themselves being rewarded. Children should be saving for something specific. Saving for short-term goals rewards them but also teachers them they don’t have to have everything right away. Another incentive is to match what they save. Involve your child in any long term saving you may be doing. Should you dock their pay? - Docking allowance as punishment isn’t a good technique. Children should learn the consequences of their behavior or poor decisions in more appropriate ways. When children misbehave, it’s better to make the discipline fit the deed than to dock their allowance. What about charitable giving? - I believe a portion of a child’s allowance should be allotted to charitable giving. Whether your child is encouraged to give a percentage of their allowance at church or a portion accumulated to make a donation to a worthy cause; charitable giving is an important trait to encourage. Have you ever noticed that children will spend unlimited amounts of money as long as it’s yours? When it’s their money, children make more informed purchasing decisions. Consider allowing your child the opportunity to experiment with an allowance, make mistakes, but learn how to balance money in a cost effective way.
Linda Swanson, retired Southwestern Elementary Principal. She earned her B.A. degree from Houghton College and M.S. in Early Childhood Education from Fredonia State. Mrs. Swanson is a lifelong resident of southwestern New York State. Her early teaching experience was at Randolph Elementary. She currently enjoys substitute teaching and volunteering at Z.E.A.L., an after school tutoring program at Zion Covenant church.