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Stop Giving Your Kids Allowances

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A couple of weeks ago, my 9-year-old daughter was surfing the Internet, and I casually asked her what she was looking for.

mom giving daughter some cash

Danielle Hoston: She said, "I'm looking for a job for me and a husband for you." I know ... She's quite the comedian. Anyway, without giving that whole "husband" comment much energy, I asked her a little bit more about why she wanted to find a job. It turns out that her reasons were valid: 1) She wanted to know what jobs she was qualified to do, and 2) She wanted to have her own money.

When I was a child, I too wanted to have my own money, but I never received an allowance. I had homework and chores, and either my father paid for things or he didn't. My first job (and first paycheck) was doing small administrative duties at my dad's office. There was simply no such thing as an allowance in our household. It wasn't until I was an adult that I appreciated my father's subconscious message: Money is earned.

I wanted to send the same message to my daughter, but I also wanted to give her an opportunity to actually earn money, so we established some rules:

1. We would not use the term "allowance," we would use the terms "earnings." Money isn't magically "allowed" in the real world ... at least not for most of us, anyway. Most of us actually earn our money.

2. There won't be pay for chores that she SHOULD do. Taking out the trash, loading the dishwasher, and cleaning up behind herself, etc., are "chores" that we all do in the regular course of being a responsible human being, not things we get paid for.

3. There won't be pay for grades. She is SUPPOSED to get good grades. The payoff for performing well in school is the pride she feels in a job well done and becoming a little smarter at the end of the day.

4. She will be paid based upon the estimated time it takes her to complete her "job." We looked up minimum wage (currently $8/hour in California) and determined that as our starting point.

Today, she organized my bathing suits and earned $4. I have a lot of bathing suits, and she's a pretty good organizer, so it was a good deal for both of us. Now, she's thinking about starting a business of breeding hamsters and selling them at school. She told me she already has a few customers lined up. Don't worry ... I think I talked her out of it, but I'm proud to say that I think she may have caught her mother's entrepreneurial spirit and she greatly appreciates the money she's earned. Maybe by the time she's 10, we'll talk a little more about how payroll taxes can affect your net pay, and the overhead costs of running a business. I might even require a mandatory savings account or a 401k for larger jobs she completes. You can never start too early, you know.

Do you believe in "allowances"? Why or why not? What principles do you believe children should learn about the value of earning a dollar?

next: "Mom" Me vs. "Work" Me
30 comments so far | Post a comment now
Anonymous November 12, 2009, 7:52 AM

Making up useless jobs in order to give you an excuse to overpay your child is silly. The idea behind allowance is that as a memeber of the household doing basic things that need to be done you can have access to some of the discretionary funds and so you get a SMALL amount to save and put towards purchases of your choosing.If there are no discretionary funds you are out of luck just like the rest of the family. Allowance is no worse of an idea then what the author concocted or selling hamsters.

Anonymous November 12, 2009, 8:10 AM

They were just discussing this issue on a recent episode of Rachael Ray.

Kristin - November 12, 2009, 8:18 AM

My daughters (ages 7 and 9) get $4 per week in allowance for doing things to be a productive member of the family. We have a weekly “money meeting” where we sit down and talk about their savings goals. The $4 is then allocated between 4 difference “account” (which are really just divisions in their piggy banks) - spending, saving, investing and donating. After a while, their savings builds up and we take it to the real bank to deposit it into their savings accounts. I offer them a 100% matching contribution to any amount they save. For instance, if they save $5, I match that and they’re able to deposit $10 into their savings account. I think this helps introduce the concept of financial complexities that happen in the real world from a young age. How many 7-year-olds do you know who understand what a matching contribution is?

Black Iris November 12, 2009, 8:28 AM

We give our kids allowances for being part of the family. We expect them to do chores because they are part of the family. I guess the values we hope to teach are that you do things for reasons other than money and that families take care of each other.

We give them small allowances so that they can discover the value of saving for themselves. If they spend the money immediately, they can’t get anything interesting.

We don’t make them give to charity. To me that wouldn’t really be teaching them to be charitable.

hillary  November 12, 2009, 9:19 AM

I don’t really agree.

We are also entrepreneurs except right now it is my husband who directly brings in the money. Do I have to show him the jobs I did during the day to earn money for myself? No. We are working together as a family and we all share.

I will be launching my own personal business soon and I will not expect my husband to do work in exchange for a share of the money I earn anymore than my children.

We give our kids spending cash on a weekly basis and help them buy the things they want appropriately. If they want something extra we do help our oldest brainstorm. We’ve had apple stands, lemonade stands and we talk openly and candidly about how we exchange our time and energy for money and what we do with that money.

I guess if he were saving up for something that I might hire him to do extra jobs I wouldn’t necessarily ask him to do in the first place, but I think under it all they need a regular access to cash for their own learning experience and I think they should have that just based on being a part of our family.

nguyen November 12, 2009, 10:10 AM

I also agree that children should have allowances. But, if it makes someone feel better to call it “earnings” instead of “allowance” so be it. Growing up, I still had to work for my allowances. The way it worked was, if I gave my mom ‘lip’ for being asked to do dishes or didn’t keep my room clean, I had deductions made from what I was going to get, or wasn’t “allowed” anything. Just like what might happen on a real job. What I really dis-agree with the author on is “not paying” for grades. In the real world, they DO pay for good grades. It is called a “scholarship” and then once school is college, it is called a “bigger offer letter than the next guy”, and I have earned PLENTY of them. As a matter of fact, if my mom would have placed even more emphasis on paying for grades than the dishes, my grades may have been even better. Then it would have been even less out of her pocket when I went to college ( I received approximately $25K in scholarships over a 4 year period)…and I still knew the value of a dollar.

Anonymous November 12, 2009, 10:15 AM

Organizng swimsuits? what kind of made up job is that?

Giving a child allowance or earnings is all the same.

tyler November 12, 2009, 10:17 AM

Danielle, how funny! I just had a very similar conversation with Savannah! Her chores are clearly established and they are non negotiable! However, I do give her an allowance. I don’t have a problem with giving a child an allowance as long as they’re on top of their responsibilities. While I insist she has to do her chores regardless, if she does them all and within the specified amount of time, she will get her allowance. If she doesn’t, she won’t, AND she still has to do her chores.
In addition, I introduced “mommy money” She’s very excited about this. Mommy money is play money earned for doing extra and additional specified work around the house. This money can be used to redeem things such as, a sleepover, a trip to the mall with a friend, a spa night with mommy ect…. I printed out the jobs and how much they pay. Then, the various things she can buy with her earnings. I then printed out money. Upon completion of each job, she recieves her “mommy money” In addition to teaching her we earn our money, that’s how we get the things we want, I wanted to teach her that my time and energy is valuable. And, by assisting me she will better appreciate how much I do.
One final note, Savannah saved her allowance money last year, and bought tickets to her school play for my birthday as a surprise to me. She told me the other day, “everyone buys things for me, I want to be able to buy things for everyone else now, that’s what I’m saving my allowance for.” For me, that in and of itself is reason enough for an allowance!

Dave S November 12, 2009, 12:18 PM

My parents paid me approximately minimum wage for doing tasks from a list they created — things that needed to be done but that weren’t specifically things I was in charge of like cleaning my room. They paid me MORE when I came up with other things that needed to be done around the house (and ran it by them first). That helped me learn to look for other things to do — always thinking about how things can be improved. It was a great life lesson. But I wasn’t allowed to do those things until all the things on their list were done first.

Anonymous November 12, 2009, 1:53 PM

It’s your title, “Stop Giving Your Kids Allowances” that’s the problem more than your point of view. Allowances or no allowances, both are valid. What makes families awesome is the ability to think and decide for themselves what works best. Shoot if I had a ton of money, I’d probably spoil my kids rotten and if someone didn’t think it was a good idea, well too bad for them. Allowance or not, thanks for the idea but I think I’ll make the decisions in my family.

Bpeter November 12, 2009, 2:25 PM

LOL Ever heard of choressssssss sheesh. Obviously school & homework come first but there are valid jobs around the house they can do to earn money. My parents gave me an allowance but that was based on chores & homework for the week being done. Some of it was paid in cash so I could go out when I hit junior high & high school & some went into a saving account that I got when I turned 18 and become my own person. The money was for me to do want I want with which put into a retirement fund but for being so little & paid even less I not only learned the value in hard work but that savings even in a regular account can add up. On my 18 th b day while I knew what money was & knew I wouldnt have a lot when my dad handed me the savings booklet & we went to the bank to take his name off it as old as I was I was still suprised how much had actually made it in & how much their was. At 16 I had a job plus school & the chores & yet I turned out just fine even drinking beer like I did.

Teach Children to Save Money November 13, 2009, 3:23 PM

They have to EARN their allowance, that is key! Chores, etc., nothing for ‘free’. As a single parent that was *less* than good with money throughout my youth, teaching children about money is CRUCIAL, in my mind. I’m not going to blame parents, schools, etc, but quite simply, I clearly “didn’t get it”, and I am still paying for those mistakes a decade later! A program was suggested to me by a friend, that teaches kids to be responsible with money, and puts them in control of their money. It’s a fun, interactive booklet + personal website that makes tracking their money fun – more importantly, the tugs on the pantleg going through the grocery checkout and the tantrums have all but disappeared! I guess that’s a little self centered of me… but any parent knows those situations all to well. For the record, I too used to do this to my parents, I was apparently horrible to bring into a store… oops!

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