Feb 27th, 2009
Ask the Readers: What’s Your Thoughts on Allowance?
As a parent educator in my spare time (that’s the part time job I sometimes talk about), one of the classes I teach is about money management, and invariably one of the topics is allowance.
Allowance is one of the primary tools we have to teach children about allowance, and through the questions of when to start and how much to give, there are two schools of thought on allowance.
1) Allowance is a reward for appropriate behavior, and inappropriate behavior (not doing chores, coming home late, disrespect, etc.) will result in a reduction or elimination of allowance.
2) Allowance is a share of the family earnings because you are part of the family. Negative consequences for misbehavior will not include withholding of some or all of the allowance.
Both are okay, with one important caveat: you must be consistent. If you set things up so that a negative consequence for misbehavior is withholding of allowance, you need to do it. Or if you say you’ll get allowance no matter what and there’ll be other negative consequences for misbehavior, you can’t start withholding allowance.
What are some of your thoughts on allowance?
I prefer my children to understand that helping out with the family chores and duties is expected and is thus not compensated with money. It is part of the whole package of family life.
Given that, allowance would be given with the explicit intention of teaching handling of money. It would not be a lever to exact compliance or enforce discipline; discipline would be handled separately.
If an allowance is the right amount, it provides children with the opportunity to notice and learn that saving for desired items take some time, and trade-offs might need to be made. In addition, if the allowance is partly for necessities such as clothing, chosen and purchased by the child, the trade-off lessons are more realistic. What allowances are for does depend on the child’s age.
It is also helpful to encourage children to think about money in a business sense from a young age, that is, to encourage them to think in an entrepreneurial fashion. This fills in the gap left by the education system that basically neglects financial instruction. It also encourages children to believe in their own abilities, and to see that if they want something really big, they can achieve it.