Feb ’20 Q&A – The Value of Allowance

Q. What is the right approach to give pocket money to 7.5 year old? I’m confused between giving some amount on a weekly basis as pocket money and keeping a list of chores which can be done to earn money. I don’t want her to think work needs to be done only when you get paid. Neither do I want her to think she is entitled to money.

A. I couldn’t agree more that teaching your child that work is done only when you are paid for it is a bad idea. That’s why allowance should never be attached to chores.

What I do believe is that giving an allowance to a child as soon as they are able to understand and be somewhat responsible about money is one of the smartest things you can do. Learning about money—how to manage it, save it, spend it, and value it—is as important for children as learning how to swim. “Entitled” to money—maybe not. But entitled to learn about money—definitely. And you must have it to learn. Critical for the years ahead.

If your children are used to using their own money and knowing what it is for, you will be teaching life skills in so many areas.

  • Your kids will learn to delay gratification.
  • You don’t have to figure out whether to give money or not when your child begs for what “everybody else has”.
  • You won’t feel taken for granted when your kids don’t seem to appreciate the money you spend on them.
  • You and the ATM will no longer be the repository for your children’s spending.
  • Your teens will be able to manage their money responsibly.

When should I start an allowance?

This depends on your child. We started giving our son a quarter a week when he was five or six. He had no idea what it was for and never remembered it. We stopped and started again when he was eight. Our daughter loved money and was piling pennies as a toddler. We started hers at five. By the time she was seven, together with gift money, she bought herself an American Girl Doll. When she was thirteen, she paid for a $1700 violin.

How much do I give?

This is completely personal and depends on what you expect your child to pay for. When our children were little, allowance was for toys and treats. I always bought their clothes but when they were older, they could add to the money I agreed to spend if they wanted the more expensive items. When they went out with friends, their allowance covered movies and snacks.

Some ideas:

You might give allowance in two or three segments: 1) spending money, 2) savings account, and 3) charitable giving.

Spending money is just that. They must be allowed to spend it on whatever they want in order to learn its value over time. There’s nothing like buying a cheap toy and having it break to teach a lesson in quality. When they blow it on candy, they have nothing left for that toy or video game. When they beg for more money, you can say, “You’ll have it with your next allowance.” Period. Begging for something they really want can lead to great problem solving. “I totally get why you want that. Let’s figure it out. How much does it cost? How much do you want to save out of your allowance? How soon can you get it? Can you think of other jobs you could do to earn some extra money?”

Pay for your child’s school lunches and let them decide whether to buy lunch or make their own if they want to save that money.

As they get older, they can rake leaves for the neighbors or sell some of their old toys at a yard sale. Extra money given for birthdays or holidays always adds an encouraging boost. Using her own money for what they want might just bring out the entrepreneur in your child.

When you have decided on the amount, be clear what you expect it to be used for. If it is to cover treats and toys, you must allow your child to blow it all if that’s what he wants. Then empathize and acknowledge his disappointment when he wants something else without the “I told you so” attitude.

It can be tough to resist giving a handout to avoid a meltdown—but it is imperative for the lessons to be learned. Acknowledge how hard it is when you don’t have the money for something you want, share a story of your own, ask your child if she would like your help to save up at least part of her allowance each week. Help her figure out how long it will take for what she wants and mark it on the calendar. Extra jobs can speed the process but in today’s world delayed gratification is a most important lesson. The pride experienced when your child finally has the money and makes the purchase herself is worth every ounce of patience.

Charitable Giving

It is up to you to decide how much extra to give your child to teach this invaluable lesson. Together talk about what or who he thinks needs help in the world. Look at some charitable websites for needy animals, children, the environment, whatever strikes your child. Keep a jar for the charitable amount of the allowance and wait until a certain amount is saved. Then send in the donation in your child’s name. What a wonderful habit that can build.

Chores (I hate that word and so do your kids)
Allowance should never be tied to household jobs and helping out. When allowance becomes a reward for helping, you must withhold it when the chore is not done, so it becomes a punishment. The value of helping out because you are part of a team that is called family is lost.

Learning to swim means your child will be safe and smart in the water. Growing up with an allowance means he will be safe and smart with money. Do you need a better reason for giving an allowance?

We punish our children in an attempt to keep them from pushing our buttons, often escalating the original problem into a cycle of anger and blame. When Your Kids Push Your Buttons is not about what to do to your kids to get them to stop pushing your buttons. This book is about how to be the parent you wish you could be-the parent that only you are holding yourself back from.

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