By Tish Davidson
Mom, I need some money. Mom, I gotta get some new songs from I-tunes. Mom, it’s just a candy bar and a pack of gum. Why won’t you buy it for me? Kids’ requests for money seem neverending, but American parents are divided about when, how, and why their children should receive money. According to a Harris Interactive poll, only about one-third of parents regularly give their children an allowance.
Even without providing a regular allowance, these parents still end up spending money on their children. Other parents say that their children are too young or that they provide everything their child needs, so that there is no reason for an allowance. Some families have cultural or philosophical beliefs that work against allowance giving. Others grew up not getting an allowances and think they are not necessary. If parents do provide allowances, they are faced with questions about how much to give, what children should pay for with their own money, and whether allowances should be linked to behavior.
How Soon and How Much? Experts suggest that children should get an allowance as young as three or four, as soon they make the connection between exchanging money for material things. Many parents, however, doubt that giving pre-schoolers an allowance is meaningful. Most often, parents start an allowance plan when their child is in elementary school, although some wait until middle school, when their child is doing more independent activities that require money.
How much the allowance should be depends on the age of the child, the local standards, what the parent expects the child to pay for, and the amount of disposable income a family has. According to The Wall Street Journal, the average weekly allowance for children 6 to 12 was about $5, while children ages 13-17 got twice that. Another factor in how much to provide is whether the child has the opportunity to earn money from another source, either at an outside job or doing special chores around the house.
If the idea is to reward and encourage certain positive behavior, then parents may not need to pay with money. For example, letting a child fill up a “fuzzy jar” with little colored fluffy cotton balls can be more effective for young children than money. The kids get instant gratification and by filling up a glass jar they get to see the ‘fruits of their labor’. Once the jar is full then the child might get a special treat or a specific dollar amount. In the meantime they had fun filling it up.
Chores or No Chores?
The great philosophical divide among allowance- giving parents comes over whether an allowance should be tied to doing chores or given simply for being part of the family. Parents who link allowance to chores believe that it teaches a work ethic that will carry through to adulthood. One mom explained that she wants her daughter to learn that “we don’t get a paycheck until after the work is done.” In some families, however, linking chores to allowance allows children to assume that if they do not want the money, they do not have to do the chores. This is especially true when children are old enough to have outside jobs. “Why should I do chores at home for money when I have a job that pays $12 an hour?” asks one high school senior.
On the other hand, many parents see both chores and allowances as something that comes with being part of a family. Karna Converse of Storm Lake, Iowa, mother of three children, ages 8, 10, and 12 feels this way. “Allowance is how they learn money management. They do have weekly chores and as-requested family work times, but we view these tasks as something they do because they’re part of the family.”
Directed Saving or Free Choice?
Whether children should have complete control over how they spend, save, or give their money is another question parents grapple with. Some families feel money management is best learned by a hands-off approach. Keith Loria of Larchmont, New York, says that his seven-year-old daughter can spend her allowance on anything she likes. “However she was told at the start that by getting her an allowance we wouldn’t get her small things that she usually wants at the store and she would have to use her allowance for those things.” Other families put limits on specific purchases, such as junk food, candy, or clothing they consider inappropriate. Karna Converse uses an even more directed three-pot system where money is divided evenly for immediate use, for long-term savings for a special item, and for charitable giving. Many parents who use an enforced savings plan help their children open bank accounts to reinforce lessons in savings and investing.
Some parents effectively encourage saving by using an incentive plan that matches a percentage of what their child saves. Vicki Hogue has found an informal program works well with her six-year-old son who gets $2 per week.
“We don’t force him to save, but we do encourage him,” she says. “He is trying to save up $20 for a particular toy, and I told him if he gets there, I will give him an extra $2. In the past it has been hard for him to save much beyond $6 or $8, however he has now saved $18 toward his $20.” What Should Kids Pay For?
If an allowance system is going to work, parents and children should agree to what purchases are the child’s responsibilities. The most common items young children purchase are toys, candy, and books. Teens are more likely to use their money for clothing, movie tickets, music, and to save for more expensive items such as video game systems, cars, and trips. Key to making an allowance work is finding a balance between the amount given and the purchases required. Most families with younger children expect the allowance to cover only extras. However, as children get older, they can be given more money and more responsibility for budgeting for their basic needs.
Sometimes what is covered leads to conflict, especially among older children. If, for example, the child is supposed to buy school supplies with the allowance, but the parents are paying for clothing, who buys the required school gym clothes? Another source of conflict arises when teens get jobs. Parents appear to be equally divided between those who think the allowance should stop when their child gets and outside job and others who think the child should not be penalized for his or her initiative and the allowance should continue so long as assigned chores are done.
Making Allowances Work
- Pay allowances at a regular time each week.
- Choose a time when the child cannot immediately spend the allowance. Sunday morning may be a better time than Friday evening.
- Make a written agreement about any conditions (chores, behaviors, charitable giving) attached to getting the allowance.
- Make a clear agreement about what the allowance covers.
- Discourage or forbid borrowing against the allowance.
- Teach your children about advertising and how it seduces consumers into buying things they don’t want or need.
- When possible, encourage your children a chance to earn extra money through special chores.
- Help your child open a bank account; consider special rewards for regular saving
- Review the amount of the allowance and the conditions attached to getting it at least yearly.
Ultimately, different allowance plans work for different families. If the plan is clear and both sides are willing to review it regularly, almost any scheme can successfully teach money management and responsibility.