For today’s reader question, I’m going to partially pass the buck by linking to some great resources and then add my own 2 cents to it (pun intended). Michelle asks:
Today I revisited a question that’s come to mind a few times, in slightly different forms, but with the same concept. I also read, and loved, Alfie Kohn’s Unconditional Parenting; it gave me so much to think about. So many things that my parents did that I thought were good (um, monetary rewards for grades?!), I now see in a different light…
Which brings me to my question. My three-year-old son was helping me pick up the house today, and the thought of an appropriate age to begin allowances popped into my head. Then I thought, no, no allowance: that’s essentially bribing my son to help, when theoretically, I’d like him to help just because he’s contributing to his family and that makes him feel good. But at a certain age, I think children are also going to start wanting their own money (which I wish wasn’t true, but I think in our consumer based society, it’s going to be hard to escape), and until they can get a real job, what do you do? I certainly don’t want my children to learn to expect money from me whenever they want it; money has to be earned and I think there’s a lot of valuable lessons we as parents can teach about saving, when to spend, etc.
I know we are several years away from worrying about any of this, but I like to think to the future
And it’s a question I’ve thought of a couple times now. I believe your children are also quite a few years from tackling this subject, but I would love to hear what you think about the topic.
My readers have the greatest questions! Thanks for asking this Michelle. You are right that we haven’t tackled this yet, but it is something that I’ve thought about and I certainly have some thoughts on it.
Teaching Responsible Money Management
I do plan to give our children an allowance as a tool for teaching responsible money management. I want to teach them about the trade-offs between buying something small now versus saving your money for a few weeks or months to get something that you really want. I want to teach them to give to charity. I want to teach them to put money away for the future. From that perspective, I really like the allowance system developed by the parents at raising4boys.com. They give their children a certain amount based on their age (in their case, $0.50 per week per year of age) and that money gets divided into spending money (60%), long term savings (30%) and charity (10%). I think the amount given can vary depending on the family, but I love the idea of having a formula like that to divide it up. I think it is important to teach our kids about saving and it is also important to teach them to give to those that are less fortunate than they are, just part of trying to overcome the empathy deficit in our society.
The question of age is a good one. I think you have to judge your own child’s readiness and interest in things related to money. I think we’ll probably start a bit later for my son (maybe at 5 years), but probably a bit earlier for my daughter, since she will see her brother getting money. The parents at Raising 4 Boys also answered the question of the right age to start an allowance and concluded that 3 years old was right for their 4th child.
When my children are older, I also plan to implement something that my dad did. When we were out of high school and starting college and university, my parents generously supported us in our education, but also expected us to have summer jobs to earn some of the money ourselves. In order to figure out how much money I would need, my dad required me to submit a budget. I had to indicate how much money I would need each month for things like food, rent (when I went away to school), clothing, entertainment, etc. and then we reviewed it together and he scoffed at some of the numbers being too high, warned me in some cases that I might not be budgeting enough, and so on. It was a great way to prepare for heading out into the real world.
Contributing to the Household
I do expect our kids to contribute to the household and as they get older we will have to figure out the best way to manage that. At the moment, they love to help with some things (unloading the dishwasher, vacuuming, matching socks, setting the table) and don’t like other things so much (cleaning up their toys when they aren’t done playing). Fair enough. Everyone has chores they like doing and ones that they don’t like doing. I can envision a process in the future where we sit down as a family and agree who is going to do which chores, giving each person a chance to choose some favourite chores, but possibly also having to take on some not so favourite chores.
If our children continue living with us as adults, my expectation is that they will contribute financially to the household as well. We will work out a system for them to pay a certain amount of rent based on what it costs us to have them in the house and/or what they are earning.
Not Tying Money to Behaviour
I don’t think it is a good idea to tie an allowance to a child’s behaviour or to their household duties. You often hear parents threatening to take away their allowance if they don’t make their bed, don’t clean up their toys, aren’t nice to their sister, etc. I think this sends a bad message. They start to expect money for doing those things and will start to refuse to do anything if not paid for it. I want my children to learn the value of cooperation, of contributing to the household, of getting good grades, and helping others without expecting to be paid for it. I see way too many young people entering the workforce these days that are always questioning what they will get for any extra effort that they give and I really don’t like that attitude. This article by Aletha Solter talks more about why an allowance shouldn’t be tied to specific household duties.
Teaching About Earning Money and Entrepreneurial Spirit
I’m an entrepreneur. I always have been an entrepreneur. I was a successful babysitter as a teenager (and I’m still amazed that I often managed to take care of 3 or 4 kids at a time with ease whereas my 2 kids completely exhaust me now!). I also started a business teaching private swimming lessons in peoples homes. I also worked in my father’s business, sometimes as an employee and sometimes working on special projects to earn a bit of extra cash.
I would like to give my kids the opportunity to earn some extra money by being entrepreneurial, both inside and outside the home. Some families have a list of extra chores that their kids can choose to do to earn extra money and I think that is an option. But more valuable than that, I think, would be to get them to propose ideas for things they could do to help and get paid for in return. Essentially, I would want a mini business case or proposal for what they are suggesting. I will also encourage them to start their own money making endeavours outside of the home, whether that is something as simple as babysitting or as complex as figuring out the next big trend in IT and capitalizing on it.
Money Isn’t Everything
I want my children to understand the value of a dollar, but I also want them to understand that money isn’t everything. I want them to value friendships, taking time to relax, and enjoying the simple pleasures in life. How will I do that? I’m not sure yet…that is maybe a question for another day. Or for my readers. What do you think? How will you teach your kids that money isn’t everything?
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I just edited to add some info on the appropriate age for introducing an allowance (under the Teaching Responsible Money Management section) because I realized I forgot to address that aspect of the question.
Another great post! I would say I agree with everything you’ve said here. Here’s how we do it with our kids.
My husband likes the ideas at http://www.fiparent.com/
We decided that when our kids started asking us about money, then we would begin giving them an allowance. So when my son asked how much things cost and was paying attention to how we spent our money, we wanted to begin. Unfortunately, we weren’t able to because of being unemployed, but we started as soon as we could.
Since B and I have an “allowance” we give one to our son as well. We set the basic rules like he has to put $1 into savings each time he gets his allowance and he can not spend his money on junk foods. He also has to pay for things that he damages or breaks. For example, he lost a library book and he had to pay for it with his money. The last rule is that if we aren’t buying for the entire family, and he wants something, he will have to purchase it. Like if we go to a pizza place with arcade games, we might give each child a dollar for games, but above that has to come from his money. If he doesn’t remember to bring it with him, then he can’t play more games.
Working around the house has nothing to do with money at all and has never been linked to it, so he sees no connection. We also do not tie money to behavior. So far it’s been easy to keep up with. I pay him when I pay the bills every two weeks and he hasn’t spent but one dollar of his money on anything since. I’m not sure why exactly because he asks for things all the time, but whenever I bring up his money, he changes his mind.
As part of his education about money, I invite him to watch me pay the bills and ask questions. He hasn’t been that interested so far. I do sometimes wonder if he’s really ready for his allowance. By the way, he is nearly 8 now, but he didn’t start asking about money until this year. My two girls are still too young.
good post
I like most of what you’re saying here. I won’t have kids for a few years at least, so I can’t directly relate, but I do have a question. I see in my generation and a bit younger (I’m late 20s) a certain sense of entitlement among many of my peers when it comes to money. This leads to consequenses such as out of control debt and poor work ethic. I feel that much of this sentiment originated perhaps because they received money (allowance) from their parents whether they helped around the house or not. While I definitely see your point about not wanting to tie household chores to allowance, how would you suggest balancing that with teaching children that money is not a given, that it needs to be worked for and respected?
Thanks! (Great blog, btw!)
Great post, as usual
My oldest is only 3 but she definitely has ideas around money already. Items she wants are endless; if she wants more of something, we can just go to the store and buy it. I think part of this is due to her grandparents spoiling her a little bit. That’s what grandparents are for I suppose but considering my MIL has served as a primary caregiver while my husband and I went to work it hasn’t sent the right messages perhaps about money.
I think I will consider the allowance thing once she is around 5years old. It might start sooner for her sister since as you mentioned, she will see her sister getting money and will expect the same treatment. I remember getting an allowance for completing my set chores but I’m not sure exactly how we will work it out. This will be a discussion between my husband and I in the future.
Personally, I think getting an allowance and being able to spend it how I wished helped me as an adult. I hate being in debt to anyone, I never wanted to borrow money from my parents as I was going to school. I hardly use my credit cards and when I do, I pay off the balance right away. So whatever my parents did, I guess it worked