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Moms Talk: Do You Give Your Kids Allowance?

For decades, kids have gotten weekly allowances, but some experts say it may not be the best idea after all. Do you agree?

When it comes to teaching our kids about money, we all want to make sure we do it right. For decades, parents have been shelling out allowances to their kids, but is it really helping them be savvy with their finances in the long run?

When I was a kid, I got fifty cents a week. I dutifully shoved my two quarters into my little metal globe piggy bank and dreamed about what I’d buy when I filled that thing up. Then one day, I met a boy down the street who boasted that he got a whopping five bucks a week. Five bucks a week in the '80s was an astronomical amount of cash for a kid, and suddenly, I was convinced I’d been gypped.

Now a mother myself, I’ve gone round and round when it comes to kids and allowance. At first, it seemed like a grand idea. Until my kids began demanding it first thing every Friday morning. Then we tried the pay per chore system, but that got a bit tricky, too. One kid felt a buck for cleaning three toilets was a joke. Another thought $10 for mopping the floor was fair. A friend pointed out that our kids should help around the house just because they were part of the family, and I tended to agree. The situation was getting a bit sticky.

Lewis Mandell, a professor of finance at the University of Washington, has studied more than 50 years’ worth of allowance research. He says this: “Kids who receive a regular, unconditional allowance tend to think far less about money in general. Those children appear more likely to grow up and be slackers since they aren’t associating work with money. Kids who have to ask for the money have higher financial literacy than those who get allowances.”

But Mandell doesn’t rule out allowances all together. “Allowance can be used very constructively, but it requires time, effort and a degree of honesty on the part of the parent,” he says. He adds that parents should discuss family finances with the kids if they do dish out an allowance.

Other experts suggest paying kids to do things they enjoy, like planning a family trip or cooking a meal, instead of giving an allowance. This helps kids associate work with fun, something they can hopefully realize later in life when they choose a career.

As for what age to begin giving an allowance, experts say that depends on the family dynamics, but age 4 seems to be a starting point. Some say $1 per age of the child per week or month is a good idea.

So as for my house? We’ve done away with the allowances, and we’ve given up on the pay per chore method, too. But if my kids want something special, they know they’ve got to earn it somehow. My teenage son recently wanted cash for a sledding trip, and I asked him what he’d like to do to earn it. He made his own list and set about doing things around the house for the next week, and we forked out an agreed upon amount of cash the day he left for the trip. For some families, this may be too ambiguous, but for us, it works right now.

Moms, what do you think is the most effective way to teach kids about money? Do you implement an allowance? If so, when did you start dishing it out and how much did you start with? Do you pay per chore, or do you have a different method that works in your home? We want to hear from you!

Sharron Smith February 24, 2012 at 08:45 AM
I would give my child chores if only I had time to get my own done!
Etay February 24, 2012 at 02:50 PM
We are using www.bankaroo.com to teach our kids about money and making smart financial decisions as well as tracking the kids funds and allowances from the web and our mobile devices.
John Lanza February 24, 2012 at 05:28 PM
We use the iRewardChart iPhone app to track chores and behaviors we want to promote. Our kids set goals that are achieved by accumulating these points for their work. Using rewards to build good behaviors is proven to work. We also provide an allowance for our kids, but not for chores. Allowance, in our view, is to teach kids to make smart money choices. Mandell may be right about allowance not being effective when it's not done with the correct intent, but our feeling is that it's essential to teaching good money habits when done properly. Kids can make money, if they wish, by doing "above and beyond chores." -John, Chief Mammal, The Money Mammals www.themoneymammals.com
Bryanne Hill February 24, 2012 at 05:49 PM
We work on a salary plus bonuses system. A monthly amount for maintaining a clean room and taking out the trash, transferred directly to his bank account, and a pay per chore if he wants to earn some extra pocket money, he provided input on how much each chore was worth and we all agreed on the final amount. If there is any whining when we ask him to do a chore on the pay system he doesn't get paid. He's 10 and has saved up enough money in the past to buy his own iPod touch (he was 8 when he bought it). He understands the value of the items he purchases and by putting money in a bank account he thinks hard about how much he really wants something before spending that money, there have been times he has changed his mind about buying something small when he has a larger purchase as a goal. He also is learning about bank fees and what it cost to take cash from a different bank's ATM. By having the extra pay per chore he has the option to have cash or transfer to his bank - he knows that he has to buy his own sweets and has gone weeks without candy in order to save up for something he really wants. His current goal is a GoPro camera at $300, between saving his allowance and birthday money he is about $20 shy of buying it. Done right allowances can work, but you have to be able to talk to your kids about money, the economy and the value of goods/services.
Karen Koczwara February 29, 2012 at 12:33 AM
These are all great ideas I am going to look into myself! Here's what another reader had to say. This sounds like it could be a great tool as well: Hi Karen, Enjoyed your article the other day on kids and chores. Almost all parents struggle with these issues. That is why I created www.myjobchart.com. What was intended to help our 6 kids, now has over 130,000 using it and over 300 joining every day! My Job Chart is the free, easy to use, online chore chart and reward system for teaching, organizing and motivating your kids to Save, Share and Spend responsibly. Please feel free to use it as a resource for your readers.

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