S is for Should you give your Children an Allowance?

 

 

Giving children an allowance can provide an excellent opportunity to teach them money values and valuable lessons. They can learn how to:

 

  • Handle money in a responsible manner
  • How to prioritize between needs and wants
  • How to make decisions about money, saving and spending

These lessons, along with sharing your money values, will help shape the way they handle their finances in the future.

The main question of debate is should allowance be tied to chores, behavior or simply given each week. Let’s explore the pros and cons:

Parents who tie allowances to chores hope to teach their children that money is not free — it is something that is earned. This can help eliminate the perception the children may have that money is owed to them simply because they exist—a luxury not many of us get to experience in life. On the flip side, it may lead your children to believe that money is the only incentive for behaving or completing chores.

Understanding your children and what will best suit their age and personality is key to learning money values. When tying money to chores around the house, they will learn that they can earn more money by doing more work — this is a good lesson! If a superior job is done, you may even consider a bonus. If chores aren’t completed, then the allowance is taken away or docked.

What this lesson does not teach is how being part of a family means working together for the mutual benefit of all –without any cash reward. It might make more sense to pay the child to do special chores that go above and beyond the daily family needs in order to earn extra money. This way the punishment for not completing regular chores can be taking away a child’s privileges not money. This may help your child gain a better understanding of financial concepts without having to use money as a form of punishment.

Additionally, there are children who are simply unmotivated by monetary reward.  For these children, tying an allowance to their chores can become a parent’s disciplinary nightmare. Now when they disregard their chores you end up having no recourse except to withhold their allowance.

If neither of these methods appeal to you — consider giving your children a small allowance not tied to regular household chores. You can then offer them the option of doing extra chores where they will have the opportunity to make some extra money.

As you can see, each side comes with its pros and cons. You, as the parent, must decide which works best for your family and your circumstances. The most important rule of thumb in parenting is to remain consistent and clear about your choice. So once you decide what is best for your child –stick to it!

Answers from AZ

 

About Ann Zuraw

Ann Zuraw, the voice behind "Chicks, Chat and Change", is a Certified Financial Planner (CFP®), Chartered Financial Analyst (CFA®), and Certified Divorce Financial Analyst (CDFA™). If you have comments on this post contact Ann Zuraw

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