All About Allowances

With the way the economy has been lately it is becoming more and more important to teach our children the value of money. So when do you start giving your kids an allowance? What types of chores qualify for earning said allowance? I turned to some experts to find the answers to these questions. 

Candi of Nannies4Hire.com sent over these tips:

Your kids get an allowance every week. Do you make them work to earn their allowance? What are the advantages of creating “jobs” (chores) for your kids in exchange for earning their allowance?

* 1. Your kids will learn the value of a dollar. It’s easy for kids (and adults) to go through money like crazy when they’re spending money that isn’t their own. When kids have to work for their money, and they realize how much time and effort it takes to generate a given amount of money, they usually make more conservative spending choices.
* 2. Your kids will learn to budget their money. Assuming that you don’t grant your kids loans every time they run out of money, your kids will learn to conserve their money for the expenses that they can anticipate.
* 3. Your kids will learn accountability. When work is performed unsatisfactorily (or not performed at all), you can deduct a proportionate amount from their allowance for the week in which the work was under-performed or not performed. Kids then learn that, in order to get the money that they want or need, they must perform their work satisfactorily. (NOTE: when holding your kids accountable, always communicate with your kids about what your expectations are, what their performance was, what the gap was between expectations and performance, and why it’s important to the family to perform to expectations.)
* 4. Your kids will learn to have a work ethic. By learning that the family depends on them to get certain chores done, and by experiencing accountability when chores do not get done, kids will generally learn the importance of work ethic.

All four of the advantages above are life lessons: lessons that will benefit kids into their adulthood. In sum, making kids work for their allowance is a good way to create responsible, productive adults.

Angela Nielsen used a different method, popsicle sticks, with her children:

We have 4 children (currently 8, 6, 4 and 3). We started giving the older 2 allowance when they were 5 and 3. At that age, it was in the form of popsicle sticks. They each had a jar on the counter and would “earn” popsicle sticks for doing special things for mom and dad. Once every couple of weeks, wed count their popsicle sticks and they go a quarter for each one they had collected. In turn, we took them to the store to spend their money (of course, they didnt quite understand that 12 quarters could not purchase a $20 toy). We added a layer to their allowance, that if they misbehaved, we would take away a popsicle stick. This worked very well for a couple years, until they got old enough to want “real money” and no more pink or blue popsicle sticks. We still continue our allowance with the older 2 children (now 8 and 6), and have thrown in a reward for good school work. My 8 year old gets $5 per week to clean up the yard (we have dogs), and an additional $1 per week if he gets a 100 on his spelling test. He has gone from failing tests to getting perfect hundreds! My 6 year old shares a room with her 2 younger sisters, who aren’t quite old enough to clean up their room very well, and they tend to make a much larger mess than she does. So she gets $5 per week if she cleans the entire room on Sundays.

Cathi Brese Doebler of DitchThe.Com also weighed in with how she taught her kids how to earn their allowance and what chores are perfect for each age:

I started giving each of my children an allowance when they turned four. At that age, they were already able to help with or do several tasks, including making their beds, emptying the dishwasher, folding towels, and feeding the dog. As they’ve grown they have taken on more difficult tasks. I use a chart to track how many tasks they help with and pay them according to what they complete. An allowance is one way to begin teaching your children about effectively managing money.

The chores below work well if you first take the time to teach the child how to do them. For each of these tasks, I spent time coaching my children on how to do these tasks well, and also realized that some tasks will be done more effeciently as they grow in dexterity and size. For example, when a four year old makes their bed, it may not look like a bed made by an adult, especially if the bed is high up for them to reach. But encouraging them as they learn goes a long way toward the child learning the task well over time.

Age four: make own bed, help set table (napkins, forks, spoons), feed the dog, give the dog water
Age five: fold clean towels, pick up sticks in the backyard
Age six: match clean socks from laundry, help put laundry away in drawers
Age seven: collect small garbage bags and put in large one, set whole table for dinner, vacuum
Age eight: water plants, shop vac out the car floor
Age nine: clean toilet and/or sink

Psychotherapist Elsbeth Martindale echos many of the thoughts already shared:

Allowance should not be tied to work. Kids should get graduated amounts of allowance beginning in kindergarten or first grade. The purpose of allowance is to teach them how to manage money and to begin to save for the things they desire. Kids should be allowed to spend their money on whatever they want. It may be helpful for parents to hold an account for them so they don’t lose their money.
Children should have chores they do regularly. The allowance is not payment for chores. If a child wants to earn more money than their allowance they can be paid to do additional chores around the home. If a chore is not done as required the parent can decide to do the chore for the child and then charge the child for doing their chore. When my son forgot to make his bed I made it for him but charged him .25¢ – he learned quickly.

In regards to how much allowance should be, a good rule of thumb is to pay the child a dollar for each grade they are in school. (It was a dime a grade when I was a kid!) This seems to be enough for spending money or for saving for bigger items. Lunch money, clothing money, entertainment costs should all be separate from allowance. In high school entertainment can start coming from allowance or bigger jobs agreed upon around the house.

On the other end of the spectrum, Andi, a financial planner offers her advice when you don’t get an allowance.

Personally in our house we did not give allowance. We provided what was necessary for our children, and often times more than necessary. But what we did do was to offer pay for certain jobs. We are a military family, and believe that the family as a whole should contribute to keeping the house clean, picked up, etc. We encouraged our children to seek their earnings for the most part by outside work. The two things we have always paid them to do are to shovel and mow. Most other chores have to do with picking up after themselves, cleaning their own things, and becoming a contributing family member.

Our children are in college currently. We have four in college right now, and each still has the opportunity to earn money by mowing our lawns. We have a house in NC that one of our children mows to earn money while in school, and we have a small yard in Boston that has needed mowing and shoveling often this year that another child has been doing. I was extremely busy with work a few weeks ago and offered one child a set amount of money to clean the house when she came back for a weekend, but that is because she doesn’t live at home, and not responsible for the clean up.

 

Do your children receive an allowance? At what age did you start and what system do you use?

 

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4 comments

  1. Rebecca @ Unexplained X2

    Love this. The Crazies are too young for an allowance, but I've often thought about how I'll structure it when the time comes. I do think there will be some chores that are expected no matter what and I will not tie allowance to that, but then there will be others that will count for extra bucks. They'll probably be able to keep track of it better than I will!

  2. Our kids don't get an allowance. We tried that at first, but if they didn't want to buy something then they wouldn't do anything to help with chores. (They're too smart for my own good, that's for sure. lol) So, now the chores are manditory for being a part of our family. When they want money they work for us in our business — they are responsible for shredding our old files since those can't just be thrown out. That's something that can pile up when they don't feel like working, and when they do, it saves the two of us from having to spend the time doing it. This has been the best answer for us so far, and believe me, we tried all kinds of things. :0)

  3. Barbara Manatee

    We've been talking about starting a chore list and allowances sometime soon but hadn't put the idea in place yet. Thanks for the suggestions. I like the popsicle stick idea!

  4. Good tips! We set up a "virtual family bank" to track the kid's money, start really simple early on and add sophistication as the kids mature, and use a hybrid allowance/paid-extra-chores approach. More detail here: http://blog.famzoo.com/2011/03/teaching-kids-good-money-habits-3-tips.html

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