When I was a kid, my dad used to give me five dollars a week for pocket money. When I wanted to go out with my friends, I would just ask, and he would give me a twenty. While this was very generous and all my friends used to be jealous, I never really learned how to budget my money. As a parent, I want to teach my kids good money skills. My son is saving up for a new laptop computer and while I want to help him, we haven’t been especially regular about handing out allowance money. Is it too late to start a program now? And what do you recommend? Should allowance be given or earned?
ALLOWANCE: GIVEN OR EARNED?
In the real world, money is earned. Teaching kids this lesson now will help them to develop good stewardship of their money at an early age. Saving and earning something you want yourself leads to self-reliance, responsibility, and an overall feeling of well-being.
[icon name=”angle-double-right” class=””] Teach Your Kids Save, Share, Spend First
HOW TO START AN ALLOWANCE PROGRAM
It’s never too late to start an allowance program. Here are a few tips to help you get started:
- Give your kids a list of chores (or have them write one up with you).
- Assign a dollar value for each completed task.
- Harder tasks are worth more money.
- Easier tasks are worth less.
- Consider age-appropriate chores when assigning monetary value. For example, your five-year old might not be able to wash dishes, but he or she can certainly help set the table.
- Establish a regular payment schedule, for example, allowances are handed out every Sunday morning after breakfast.
DEVELOPING GOOD MONEY SKILLS: IT’S A TEAM EFFORT
To offer your support of his goal, you might offer to match your son’s contributions. Or join him: work alongside your son on your own financial goal, for example, paying off a certain amount of credit card debt. Together, you can discuss the things you decide not to purchase – the mocha latte at the coffee shop or the candy bar at the concession stand – in pursuit of your goal. Working together you’ll be able to cheer each other along, commiserate on the days that it’s hard and celebrate in the accomplishment of a goal well earned.
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Bottom Line: Giving children money they don’t first have to earn can send the wrong message.
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We actually do the opposite – but I think there’s merit either way you do it. We want our kids to do chores around the house because they’re part of the family, and not related to money. The message is, “This is what family/community does.” And then we started giving an allowance recently to the 5 year-old, and he has three jars: Save, Spend, and Church. So in giving him his weekly money, we go through the prioritizing process every week, and talk about what we choose to do with it.
My Dad also made it clear that we had to do chores because we were part of the family, but we also earned our money. This is what I teach my children, too. Aside from our weekly chores and allowance, there are always extra, age-appropriate chores that can be done to pick up extra money when saving up for something.