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Kids and money: Allowances
Do your children receive an allowance or earn a salary?
Tue, May 24 2011 at 12:06 PM
 10

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Green Kids, Save Money
Child putting money into a piggy bank

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My children are 9 and 7, and money topics are beginning to come up more frequently. One word that I keep hearing is “allowance.” My children want to know what an allowance is and how they get one. They have classmates who receive an allowance, and they are starting to wonder what is wrong with me because I don’t offer that benefit to them. So today I want to discuss kids and allowances, tell you what we do, share the experts’ recommendations and then hear from you on the topic.
If you’re wondering what kind of mean mom doesn’t offer her children the ability to earn an allowance, let me explain the reason behind my decision. In most cases, allowance is either a fixed weekly payout or earned for performing household chores.
 
I’m of the mindset that helping out with household chores is just part of living in the house. You pick up your bedroom, you help with the laundry, etc. These chores have always been tailored to the child’s age and they are just part of our regular routine. I never wanted to tie monetary compensation to them.
 
Although we don’t offer a traditional allowance to them, both kids receive money throughout the year for birthdays and other special occasions. They also have an open invitation to write a blog post for one of my websites and earn money for the post. Both children do have the ability to learn about saving, spending and giving their own money, so I just haven’t seen a need to institute an allowance. Perhaps this will change one day, but for now our system seems to be working.
 
Now all of this got me wondering about what the personal finance experts say on the matter.
 
Both Suze Orman and Dave Ramsey want to ditch the word allowance. Orman prefers the term salary and Ramsey calls it commission. In other words, if you don’t do the work, you don’t get paid. Sounds like having a job —  as a working adult, if you don’t work, you don’t get paid. This is definitely a great way to teach children about the value of working for your money.
 
Maybe I’m on the right path with allowing my children to write blog posts for financial compensation if they choose to — they earn money for their work. Besides, writing a blog post also has an educational benefit as it helps my children work on their writing skills.
 
I wonder how many other families take a non-traditional approach to the allowance issue. If you have children, how do you handle allowances in your household?
 
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Comments: 10
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anonymous
Nancy May 28 2011 at 8:19 AM

We owned a small business so from the day our children could count and write to ten they were doing inventory. They earned money for doing cleaning, each job paid a certain amount. Everyone that worked at the business got paid for their work. We did not pay them for work done at home because that was something expected and we all had to do our share. My children are all in their mid to late twenties either going to school or on their own and they handle money,budgeting well.

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anonymous
abby May 27 2011 at 4:12 PM

I firmly support the idea of children earning the money they receive. I grew up in a household in which I earned my money doing chores. I learned at an early age to appreciate the value of money and a work ethic. I learned to save money as well.

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anonymous
abby May 27 2011 at 4:13 PM

I firmly support the idea of children earning the money they receive. I grew up in a household in which I earned my money doing chores. I learned at an early age to appreciate the value of money and a work ethic. I learned to save money as well.

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anonymous
Suzanne@Growing... May 26 2011 at 12:50 AM
We give our two boys (age 9 and 6) an allowance but it is not tied to chores. It does come with strings attached. They are now responsible for certain purchases such as snacks outside the home, playing on arcade games, buying their own video games, etc. They get full control and we don't force them to put a certain amount in savings or charity. It's up to them how they spend their money. We also require them to do chores appropriate for their age around the house. This is because they are part of
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the family team and need to pull their weight. Everyone has to pitch in to keep the house running. In addition, we offer jobs where they can earn extra money if they are saving for something big. These are jobs like mowing the lawn, folding a basket of laundry or cleaning the inside of the car. So far, it's working for us. I share more in this post: http://www.growingrichkids.com/the-5-difference-to-kids-allowances-that-... Suzanne
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anonymous
Lori Popkewitz Alper May 25 2011 at 1:42 PM
We have been going back and forth on this one for years. Every time I offer to pay one of my kids for something I find myself taking a step back and thinking that they need to pitch in without payment since we all live together and work as a team to make the house run. So now my oldest son, 10, wants to earn money to buy a special karate uniform. I think on the surface this is fabulous. But now I am completely confused about which jobs to pay him for-which are part of the regular, you live here
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jobs and which go above and beyond. Maybe thinking of it as a salary would help. Thoughts?
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anonymous
E. Peck May 25 2011 at 1:13 PM
We provide our children (11 and 9) with a weekly $5 allowance, and have done so for about four years. Their allowance isn't tied to the performance of chores. (They do have chores, but they don't get paid for doing them.) They're allowed to spend the money in any way they choose. They each have lockable cash boxes, and they're expected to keep their money in the box. If the cash in the box ever exceeds $50, they must deposit the $50 in the bank, but can get it back for a big purchase. We do not
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extend credit, so they need to have all of the cash they need on hand to make a purchase. At first, the kids spent every dime they got ... predictably... on what I would term "junk." As they got older, they learned that by saving their allowance for a few weeks, they could get better "junk," They also learned about sales tax, because they have to make all of their purchases in cash. They've learned that once cash is gone, it's gone, so they know how to handle cash when it's in their possession. After four years of allowance, the kids know how to save for what they really want. They rarely make impulsive purchases anymore, or spend for the sake of spending. They calculate sales tax on purchases, how many weeks of allowance they'll need to save for a particular purchase, and they even comparison-shop to see who has the best prices on what they want. My son (9) also does extensive product research, and cost-benefit analyses of purchasing new versus used, particularly on video games. For example, he just recently saved his allowance for nearly two months to purchase a new copy of Pokemon SoulSilver because he wanted the Poke-walker accessory, even though he could have gotten a used copy of the game minus the accessory faster and for less. (Pretty good for a kid with ADHD.) In short, the only way a kid is going to learn to manage money is by managing money. Allow them to make mistakes when they're young, and by the time they need to be good at handling money, they'll be up to the task.
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anonymous
Alisa T. Weinstein May 24 2011 at 4:11 PM
You pay your kids for writing blog posts?! Me, too! Well, not blog posts (we haven't done that yet). But my daughter has earned her allowance by editing my blog posts (as an Editor), taking photos while we're on vacation (as a Photographer), even balancing the Ph in our fish tank (as a Marine Biologist). Our back story: one day a few years ago my then-four-year-old was...well...loudly begging for another lip balm. I didn't want to buy her one, and in my exasperation, I told her to "get a job." So
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she did! Since that time, she's been a toy designer, a paleontologist, a curator, a dietitian -- basically, she earns money for tackling kid-versions of adult professional tasks. And, as you pointed out, gets tons of other skill-boosting experiences to boot. (If you'd like to read more about it, check out www.earnmykeep.com) For us, it's totally solved the issue of whether or not to pay for chores (I don't -- she does them as a member of the family) and it also helped our entitlement issues, too. Now she's empowered to spend, save and give the money that she's earned herself. What's great about Ms. Orman's and Mr. Ramsey's phrasing is that it gives kids a taste of the real world right off the bat. Parents often think that "grown-up" subjects like money are confusing for kids. But the sooner we start talking about it in real-world ways, the more natural the experience becomes. I'm thinking you probably agree. :->
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mhincha's picture
Melissa Hincha-Ownby May 25 2011 at 10:48 AM

I love it and you've given me ideas on how to expand beyond the blog post opportunity into others. Thanks for sharing your story.

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anonymous
Alisa T. Weinstein May 31 2011 at 4:22 PM

Just saw your article update -- so fantastic! If you ever want to chat, please feel free to email me at alisa@earnmykeep.com. It'd be a thrill and honor to share how Earn My Keep also teaches kids about green business -- every single career in the program has at least one environmentally friendly task. It's how kids can get a hands-on experience in corporate social responsibility!

Thanks again for your wonderful insights,
Alisa

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anonymous
Amy May 24 2011 at 3:43 PM
I did receive an allowance as a kid, but it was never a lot and it wasn't for doing chores. Chores were expected of me whether or not I got paid. I think my parents gave me an allowance because they wanted to teach me how to save money, and because I didn't receive money for holidays or special occasions. It was never a lot-- 25 cents to start and maybe $3 when I was 12 (this was the early 90s). The allowance was for any extras. I did have the occasional opportunity to earn some extra money by
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working. My mom's a teacher, so I could earn a few dollars by doing sample projects for her or organizing papers. These opportunities usually came up when I was saving for something big.
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