Some people believe chores and allowance go hand in hand. Some feel kids have to “earn” money through extra tasks. Some think paying for good grades is a smart idea.
For clarity’s sake, I’ll say it up front: I do not believe this about kids and money.
Allowance: A System That Works
If you take the stance, as I do- and countless others, including NYT money blogger, Ron Lieber, that an allowance has one key purpose: to give kids real life experience handling real life money, then it becomes easier to commit to a process where money IS NOT attached to chores, work, grades, or any other “task” but it is given freely to allow for ample practice saving, spending and giving it away.
Incidentally, earning money for work performed is another skill set altogether.
Why Give Kids Money?
It is valuable for parents to allow their children, at the earliest possible age, to make choices about how they will spend their money, when they will spend their money, where they will keep their money and so forth so they can develop a healthy relationship with money when they are young- one that will carry over to their adult lives.
Allowance 101: The Basics
When should parents start?
Parents should begin giving children money as soon as they are certain little cherub won’t put it in mouth his.
When should it be given?
Money is given each week so that it becomes a part of their lives and they grow ever more confident about all aspects of money.
How much should parents provide?
The reasonable rate is one dollar per year. ($3 week for a 3 year old). If it sounds steep, think of it this way, when you hand the money over to the children, you remove your obligation to purchase anything non essential for them. That means stuffies, gatorades, video games- you name it. While it seems like a lot up front, I assure you– you get out of spending on useless crap. Guaranteed.
Teaching your kids to spend, save and give away their money takes a lot of practice in restraint. In order to let them learn, you must be willing to zip the mouth (Duct Tape Moments!) and watch them buy the big plastic toy that breaks or the sparkly robot lazer gun that turns out to be junk. Kids learn really quickly whether or not something is valuable once they’ve had a chance to buy the crappy stuff or find disappointment in a purchase!
Key Takeaway: Let Them Do It All Wrong
Most importantly, you have to let the kids go about it wrong. It’s ok to allow your children to forget their money, lose their money, give the money to their siblings, or anything else they want to do with it. Once it crosses from your hands to theirs, it is no longer your concern. The trick here is that when they do “run out” or “don’t have any money left” you look at them and say, ok, well, next week you’ll have another chance vs. saving them or giving them a loan.
Yes, you’ll feel upset, sorry for her, heartbroken (if you’ve seen a six year old lose a baggie filled with her life savings, you know what I mean!), angry, annoyed- all of those and more but if you trust there is value in it and you plan for the emotions to arrive, then it’s far easier to stay on course. – Vicki
Do you give a dollar per year? How has it worked out for your kids? Tell us on our Facebook wall!