Should You Give Your Child an Allowance?

Posted April 27, 2015 by

Most children are proud to have their art displayed on the refrigerator. My four-year-old son, on the other hand, is proud to sell me his art. “Oh Mom, you like this? Great, I’ll sell it to you for $2.”

Giving Child Allowance

My three children, including the four-year-old, are looking for an allowance. Since we haven’t started giving one out yet, my kids are trying to earn money other ways. My seven-year-old has offered to walk our neighbor’s dog; but, well, she’s not actually allowed to walk around the neighborhood by herself yet. My nine-year-old planned to set up a hot cocoa stand outside this winter but subzero temperatures shut that dream down.

My kids are not alone in their quest for a paycheck. According to the American Academy of Pediatrics, three out of five teens receive an allowance. I understand why so many families choose to give one. It’s a great tool for taking the mystery out of money and introducing its value in a concrete way. It’s not the idea of an allowance so much as the logistics that have been holding me back, like how much should we give and should they have to earn it? After doing some research, I have the information you (and I) need to begin putting our children on the family payroll:

How much should they get?

The American Academy of Pediatrics suggests giving a modest amount. Rob Lieber, author of The Opposite of Spoiled, offers more specific guidelines in his book: Start with a dollar a week or so per year of age. I’ll be taking the Lieber approach.

How much should they save v. spend?

The reason for giving an allowance is not solely to let our children buy fun things, but rather to teach them how to spend and save responsibly. In the same conversation where/that you introduce the idea of an allowance, introduce the concept of responsible money management and saving. Rob Lieber offers an easy way to teach your kids how to budget. He suggests giving your children three separate containers—one for saving, one for spending and one for giving money away to charity. It’s clear and easy to understand.

Should they earn it?

Experts are mixed. Some experts say chores should not be tied to external rewards, like an allowance. Chores, they say, are really more about being kind and responsible to the family. Tying them to money undermines this effort and may lessen/decrease a child’s natural motivation to help in the long run.

But other experts, like James Lehman, say it’s perfectly fine to pay your children for chores. “I think if parents are financially able to give kids an allowance, they should do it. Your child’s allowance should also be hooked into their chores—and to the times when your child fails to complete his tasks or has to be reminded to do them. So for example, if your child has to be told more than once to do his chore, he would lose a certain part of his allowance—let’s say a dollar. And each time you remind him, he loses another dollar. It is also appropriate to give that part of his allowance to a sibling who does the chore instead. This way, you’re not working on the chore, you’re working on the communications process, as well as your child’s motivation.”

Read More from James Lehman: “I’ll Do It Later!” 6 Ways to Get Kids to Do Chores Now

What are the spending parameters?

My nine-year-old son is hoping to save enough money to buy himself an iPad. But our family has strict rules about owning and using electronics, and no amount of money can change that. When you sit your children down to talk about their allowances, be clear about what they can and cannot buy with the money. Is candy okay? Clothes? Make it clear that their allowance will not override your family’s values.

Allowances are a wonderful opportunity to teach your children how to build a positive relationship with money. I’m excited to head to our local bank this weekend and open up savings accounts for all three of my children, like I did as a child with my dad. I’m sure it will be a true milestone in their lives, as it was for me so many years ago.

About

Jennifer is freelance writer for The Wall Street Journal and several national magazines. Earlier in her career, she was a journalist for “60 Minutes.” She lives in New York with her husband and their three children, ages 9, 7 and 4. You can read her other work at www.JenniferBWallace.com.

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