Giving kids’ allowances raises lots of questions for parents: How much to pay? Should the money be tied to chores – and if so, which ones? Can the kids spend the money freely, or must they save part of it?
One family I read about in the Journal of Financial Planning paid their kids $6 a week, but allowances weren’t tied to chores. The purpose of chores, said the parents (a financial planner and psychiatrist) was to develop a work ethic, while the purpose of an allowance was to help kids “learn to think, chose and consider alternatives when it comes to money.” The $6, though, was divvied up very specifically: $2 went directly to the kids, who could spend it however they chose; $2 went to a charity of the kids’ choice and $2 went to the bank. At the end of the year, the kids could withdraw half the money saved and spend it, leaving the other half to grow for longer. The purpose of the plan is to help the kids learn how to make smart decisions regarding finances and learn about the three main uses of money: spending, saving and giving.
I recently learned about another novel way to give allowance. One mom of a 4-year-old daughter, Alisa T. Weinstein, decided to forgo the traditional idea of paying for household chores. Instead, she compiled a list of careers and simple “kiddified” tasks associated with them. (A market researcher, for example, could do a small verbal survey of classmates’ favorite ice cream flavors, or a banker could give different denominations of change.) Each week or so, her daughter would take on the role of a certain profession and perform the associated work. At the end, Weinstein rewarded her daughter with a “payday,” according to the New York Times’ Bucks blog, which profiled Weinstein.
Weinstein describes the program in more detail and provides a list of careers and tasks in a new book “Earn It, Learn It: Teach Your Child the Value of Money, Work and Time Well Spent,” and on a website EarnMyKeep.com. Weinstein insists the program is not as labor-intensive as it sounds and parents need not devote more than 10 to 15 minutes a week on it.
“The problem with paying kids for doing chores is that first of all, children should do chores as a member of a household,” Ms. Weinstein told the New York Times. “And on top of that, you aren’t getting a real world experience… The beauty of paying children for emulating careers is that besides being fun, educational and engaging, without even realizing it, the children are getting valuable real world lessons.”
Weinstein also said that parents should decide for themselves exactly how much to pay their kids and how often the paydays should be. (Some common allowance amounts: Either $1 or 50 cents for the child’s age or school year.) Parents can also include bonuses for jobs well done or completing extra tasks.
Readers, what do you think of these allowance plans? Do you give your kids allowances? If so, how do you do it? How were you given allowances as a kid?