The big "A" word is commonly regarded with skepticism as to what benefit it will bring to kids in the long run. Yes, we're talking allowance, earning commission or whatever term you deem appropriate for your family. The debate among parents continues to blur the line between right vs. wrong.
We're here to make the topic of allowance something more clear, concise, and defined for those families who struggle on which side of the fence they're on. We will let you in on a little secret: there is no right or wrong, there are no sides, and the stance on allowance varies widely depending on the family's values and comfort level.
How Much Allowance Should Parents Be Giving?
The best way to dictate an amount for allowance is to assign a number that you as parents are financially comfortable with. It also can depend on what exactly their allowance will be covering. Most important is picking a consistent system that is given regularly and increases with age, teaching kids how to maintain financial stability. Financial experts generally recommend kids receive .50¢ to $1 per week for every year of their age. For example, a 10 year old would receive $5-10 a week.
At What Age Should Allowance Start?
An AICPA survey found that 54 percent of parents begin the allowance system by the time their child turns eight. The rule of thumb as told by Kristan Leatherman, co-author of Millionaire Babies or Bankrupt Brats? Love and Logic Solutions to Teaching Kids About Money, is to begin an allowance system when your child begins to understand that money can buy them things they want.
Ask your child questions like "If I give you $1 and you want to buy a .50¢ candy bar, how much will you have left in your wallet?" or "If you have $25 and put $10 in savings, how much will you have leftover to spend?" These kinds of questions help gauge your child's level of understanding on the concept of money and its worth, while helping parents know if those little hands are ready to responsibly accept some cash.
Tying Allowance to Chores
The argument for: Connecting allowance to chores helps children understand the lesson of earning your own money through valuable tasks. Many experts believe that granting kids money for chores teaches them the the importance of work and builds a strong work ethic at a young age.
The argument against: The alternate side says that household work should not be granted a reward but instead should be seen as a mandatory communal effort to help serve the family. Some psychologists say that money for chores can lessen a child's motivation to help, creating this idea that household responsibility is optional and teaching them an unrealistic lesson about offering financial incentives for tasks that should be considered mere responsibility.
The Pros and Cons of Allowance
Pros: An allowance, for most parents, becomes a financial lesson for children on how to save, give, spend and manage the commodity that is money in a controlled environment. A lot of parents use allowance to teach their kids the value of banking and saving money for future investments, using their allowance as a tool to start a checking and savings account.
Cons: Many parents are sensitive when it comes to the word "allowance," assuming it stands for money that is just handed over to children for free. This can then tend to be seen as a sense of entitlement that millennials frequently get accused of today.
1. Personal Responsibilities vs. Extra Work: A common method for parents is to separate personal responsibilities from extra chores to differentiate what is expected and what is extra. This gives children incentive to want to do more work around the house to make some extra cash but doesn't take away from their regularly scheduled personal tasks such as cleaning their own room, bathroom, making the bed, helping with the pet, setting the table, etc. Extra chores include tasks like washing the car, mowing the lawn, mopping, cleaning the fridge, re-organizational projects, etc.
2. Chores for Screen Time, Not Money: To counteract the issue of tying chores to allowance, you can reward your children not with money but with screen time instead. Rewarding your children with screen time helps parents manage their children's media usage and helps kids recognize screen time as a privilege and something that should be earned.
3. Career Oriented Allowance: Alisa T. Weinstein, author of Earn it, Learn it: Teach Your Child the Value of Money, Work, and Time Well Spent, says that paying children for chores can teach them that working for money isn't fun. Instead she proposes an alternative solution to the problem by suggesting that parents connect the allowance with tasks related to various careers. Children can then choose a career and complete tasks related to that career, making allowance earning fun and guiding them through their interests. "If you capture that, then you're much more likely to have a child who grows up and can find emotional and financial fulfillment in their careers," Weinstein says.
4. Scheduling Apps to Keep the System Stable: Apps like Allowance and Chores Bot allow you to keep track of your family's allowance and chores and automatically syncs to all of your family's devices. Your kids won't be able to claim "they forgot" with the notification feature that sends each child a reminder for each chore.