The Allowance Decision
contributed by Diane M.
Teaching my children how to handle finances is a top priority for me, mainly because I learned so little about it myself until after I was married. I want to do better for my daughter and son, so I did some reading about allowances before I even had children.
It seems that there are two main philosophies about allowances. One camp believes that allowances should tie in to chores. In other words, the child must complete chores to earn their money. These parents believe there are no freebies, so teach them while they're young. The other camp believes that as members of the household children should be given some spending money. These parents reason that to tie chores to allowance money sets the family up for squabbles. The child may decide that she doesn't need the money so she won't perform the chore. The children should help out around the house because they live there, not because they're paid for it.
Here's what has worked for me. I decided to blend these two philosophies together. Beginning at age three, when my children were just becoming aware of the uses of money, they were given a weekly allowance. We followed the popular practice of dividing the allowance into three equal parts: quick cash, short term savings (for a toy or other coveted item), and long term savings (for future schooling, car, etc.) The child was assigned three chores, and I explained that because they weren't old enough to earn money outside of the home Mommy and Daddy would give them a job inside the home until they were old enough to find employment. The chores were not optional. They had to be done. They are paid to match their age. For instance, $3 was given to the 3-year-old. Raises come each birthday, which they really look forward to.
Also integral was explaining that we are a family and families work together, so any other chores we asked them to do would be expected to be done without complaint. When we all pitch in, we have more time for fun activities. We also explain that we are there to provide for all of their needs and some of their wants, but most of their wants would be paid for with their own money.
This system has been incredible. I love to watch my children, now 6 and 9 years old, compare toys in the store to see which one is the best deal and will be the best to spend their money on. On her own initiative, my daughter has purchased Christmas gifts for the last two years for 14 family members from the local dollar store. She is so proud on Christmas Day handing out her gifts! Right now both of my children are donating $1 week to a special jar. We're buying items to donate to the local animal shelter, which we'll deliver at Easter time.
I occasionally remind them that they receive larger allowances than any of their friends (they love this!) and also that our family is a team and we help each other out around the house whether paid or not. All requests I make for extra chores are greeted with a cheerful response. How many parents can say that?
Our children's bank balances are growing, and I never hear "Mommy, will you buy this for me?" when we travel to stores because they know what my response will be. I always ask, "Do you have your money with you?" (but I always give a loan if I know the child has the money at home)
I save lots of money using this system, my kids are learning about personal finance such as buying items on sale and using delayed gratification, and my house is pretty clean! On a scale of 1 to 10, this allowance system has been a 10 for us all.
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