Allowance: For learning or reward?

Children receive mixed messages about money. At home they hear one thing, at school and among their peers another. Dad does it one way. Mom is the complete opposite. What is consistent is that nobody seems able to agree on the money rules. And often those mixed messages stay with kids long after our parental influence has passed.

One of the most hotly-debated issues when it comes to kids and their allowances is the idea of what an allowance should be tied to.

 

Most people have no difficultly with the idea that before kids can learn to manage money, they first need to be able to get their hands on some. But when it comes to what we should require of our children in exchange for an allowance, well — that's where we often part company with friends, neighbours, and sometimes even our spouses.

Some people feel an allowance should have no strings attached. Others think it should be tied to chores in the home, school grades or even behaviour — as in, “If you don't smarten up, I'll cut off your allowance!”

There's also a lot of debate about whether or not kids should work for their money:

  • Some parents feel that school is a child's job, and any other work detracts from potential success at school.
  • Others think that a part-time job is perfectly fine.
  • Still others believe that a part-time job is essential because it begins the development of a good work ethic.

I'm of the school that believes that allowances should come with no strings attached, and that it's perfectly fine for children to get a part-time job to supplement their allowance — not to replace it — when they get older.

Think about why you're giving your kid an allowance. The goal should be to teach her money-management skills. The fact that you work hard for your money will be brought home when your child learns relative value — how many hours she has to work to afford that outfit or that iPad.

Money doesn't work as a reward for good behaviour. Just ask any of the management gurus who have proven that money is not a motivator for adults. If it's not a motivator for you, why should it be for your children? Good behaviour is based on an understanding of right and wrong, thoughtfulness, caring, and consideration — along with myriad other positive attributes, all of which have to be internalized.

Good grades are your child's responsibility. School is his primary job, and good grades are an indication that he's doing his job well. If you provide financial rewards for good grades, you are externalizing the reward. Instead, the reward should be internalized: the self-esteem and pride that accompanies having done well.

As for an allowance being payment for chores, who pays you to do the chores in your home? Chores are a part of each individual's responsibility to the family. Payment for extra household tasks — those above and beyond a child's normal chores — is fine when they are specifically doing the task to earn some money.

The biggest problem in tying your child's allowance to the completion of his routine chores comes on the day when you must withdraw the allowance. Now you're teaching your child, “I have the money and you'll have to do as I say to get some of it!” That's a straight-out power play. “I have the money, so I have the power.” Ouch! Not a lesson I want my children to learn. A far better tack for children who don't follow through on household responsibilities is to do a like-for-like comparison. “Matt, if you don't make your bed, I have to. And I only have time to do one thing: make your bed or make your lunch. Which one do you want to do?”

The strings attached to the money you got as a child will have a strong bearing on the strings you attach to your children's money. We know our money history plays a big part in our money personalities (or money blueprints, as J.D. calls them). Perhaps you were never given an allowance and had to work for every penny you got. Or perhaps your parents' strong work ethic was a point of great pride in your family. If you had to put yourself through college or university working at the local carwash on weekends, and waiting tables at night, this will no doubt colour the way you look at money in general. If your allowance was tied to chores, or you were required to save all the money received as gifts, you may see that as the “normal way to do things”.

Whatever your own experiences with money as a child, try to put them aside as you begin to teach your children how money works and the role it should play in their lives. To ensure money is not imbued with meanings it shouldn't have, don't tie things like self-esteem, power, or love to money. Stay balanced when you talk about it. And, above all, figure out what message you want your children to get from your money lessons. For, consciously or not, they're learning all about money from you.

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Pat @ Do Not Wait
Pat @ Do Not Wait
9 years ago

Money may not be a direct motivator for kids, but I find that the final end product is. For example, my little brother really wants a new computer. He doesn’t want $500 but he wants a brand new pc. In order to earn this he understands that his grades and house chores need to be at a certain level. I personally have been working since the age of 14. I feel that unless you’re really active at school (sports and academics) that you should hold a part-time job. You don’t have to work every single day, but working for your… Read more »

Jerry
Jerry
7 years ago

I agree that the media plays a big part in how our children view money. I think explaining that money doesn’t just come to you magically out of the ATM machine (what my 7 year old thinks) and that you have to work hard for that money seems to be making a difference. Having our kids work for their allowance I feel is insurance for them to understand the value of money. There are some chores that are just necessary but some earn money and it leads to motivation on their part.

Sam
Sam
9 years ago

I thing the jar system or the divided piggy back is a great tool for kids, learning to save for long term, short term, to give away and to pay taxes. While I generally agree that school and grades are a child’s primary job, being a good family member is also important. As a result, I think that allowance should go along with simple/age appropriate chores, things like making your bed, putting toys away, feeding the dog, etc. As a child gets older they can take on more complicated chores and tasks for neighbors. The girls across the street regularly… Read more »

olga
olga
9 years ago

While it sounds good about “grades shall have an inernal reward”, in a real world, having a bonus, or getting an allowance cut tied to school performance works magic. And is veru much resembling life after school – you do well, you get up the ladder, you fail – you get kicked. What kids “should” do doesn’t often come true.

Nicole
Nicole
9 years ago

Your stated philosophy is the same as mine, for the same reasons. But I don’t begrudge anybody a different philosophy.

I also think it’s important that if an allowance is for money management purposes that the allowance not be too high (unless the child is in charge of buying his or her own necessities like clothing as well). Friends growing up who had large allowances and were flush with money at the beginning of each week didn’t really learn much about money management and still have problems as adults.

Jennifer
Jennifer
9 years ago

I couldn’t disagree more. Money certainly is a huge motivator for me. If I don’t go to work and do my job, I don’t get paid, and therefore I don’t eat. In my experience as a parent, money has been the best motivator ever. From the time my daughter was a toddler, the threat of not receiving her weekly allowance (a quarter at the time) did what no amount of time outs or spanking could. You’d better believe I want my daughter to learn that he who holds the money holds the power. That’s the way the world works, and… Read more »

Beth
Beth
9 years ago

Grades are fickle things. To some kids, another A doesn’t mean much because the work is too easy. Other kids bust their butts to earn a C and still feel horrible about themselves rather than proud of their efforts. Not all kids achieve good grades. The school system tends to favour the type of kid who does well sitting in desks and learning from textbooks, etc, not kids who do amazing working building walls or fixing cars. There are many kids who aren’t meant for university or high powered careers, and there are more valuable lessons to be learned from… Read more »

Tiffany
Tiffany
9 years ago

I agree with your philosophy. I also think the amount of weekly allowance should grow as the child ages. However, I want my kids to work part-time as teenagers. I want them to know that money is earned, and spending money equals time spent working. My parents were VERY controlling with money. Money equals power to them. They wouldn’t hesitate to not give rent in college if I didn’t do what they wanted. I have to say this backfired in a major way. My siblings and I really came to resent them, and became financially independent very early on. The… Read more »

Panda
Panda
9 years ago

My childhood matched your philosophy pretty well. We did chores because chores are part of being in a family. (I often had enough money saved that it would have been easy for me to forgoe my allowance and just not empty the dishwasher that week.) School was my job, and I didn’t get paid for grades. (However, right after report card day I usually got some small gift that I had been wanting, but not enough to spend my own money on.) Until I got to high school my allowance and any money I earned was just for my fun… Read more »

mary b
mary b
9 years ago

I have to agree with #5 Jennifer that children do need to learn that in our society money is tied to work. For our household our children are expected to do basic things like pick up after them selves, put away laundry, help set & clear the table, etc. just because they are part of the family. They have other extra chores that are tied to a weekly allowance. We will deduct $ from the allowance if something does not get done, they have to be reminded, or there is attitude about completing work. School work is absolutely not tied… Read more »

monsterzero
monsterzero
9 years ago

I never had an allowance. Aunts and uncles gave me birthday/Xmas money, most of which I was excited to be able to put away in my savings account. (Five percent!) I didn’t have my own checking account until college, but my parents showed me how they worked (writing checks and balancing the checkbook) at a pretty young age. I’m not sure an allowance is necessary for teaching money lessons. I am pretty sure (from observing the other kids) that tying it to school or chores performance is a terrible idea. You’re supposed to do those things no matter what! I… Read more »

jreffy
jreffy
9 years ago

I agree completely with your idea that chores are a responsibility and are to be expected, as well as excelling in school should be self-driven, not money-driven. However, aren’t you a bit contradictory when you say there should be no strings attached to an allowance? You said there should be no strings attached, but yet in the very next paragraph you say, ” The fact that you work hard for your money will be brought home when your child learns relative value – how many hours she has to work to afford that outfit or that iPad”. Well, how exactly… Read more »

Rachel
Rachel
9 years ago

We’re sort of middle of the road on this issue, much like Mary B stated. Certain chores are required, as are good grades. Not doing those things results in loss of priveleges. Extra chores earn rewards. Our kids do get a set allowance each week ($1/year of age/week), and have to tithe and save portions of it. The rest is spending money. Our intention is to increase the amount as well as the responsibility as they age (i.e., by 15 or so, they’ll have to budget their own clothes, etc). I also agree that I wish my parents had done… Read more »

Edward - Entry Level Dilemma
Edward - Entry Level Dilemma
9 years ago

I do agree with Beth about education. I put less work into my high school education than my sister did and got better grades. Then I struggled through college because college was actually work and I had just spent 13 years putting out minimal effort to obtain almost a 4.0 GPA. When I was young, I received an allowance. Nominally, it was to do my chores but I still got paid if I forgot to take out the trash. My allowance was cut off when I was 12 because my father lost his job and, even after he got a… Read more »

Nicole
Nicole
9 years ago

It’s interesting (#5 and others about learning harsh realities)… I do get paid for work but I don’t work JUST for the pay. That would be very depressing. I’m glad that my work has intrinsic rewards as well. I wonder if this is related to what people believe the purpose of a college education is… job training vs. a coming of age experience. These views may be linked. We just had an interesting discussion on that on our blog yesterday. Shameless plug: http://nicoleandmaggie.wordpress.com/2010/10/19/another-comment-on-doing-what-you-love/ p.s. Most anybody can do calculus with the right teaching. Real analysis, maybe not, but calc is… Read more »

HollyP
HollyP
9 years ago

It is always interesting to learn about how other families do this. I’ve had difficulty managing to be consistent with chores = allowance at my house. With MrP and I both working outside the home, I’ve had difficulty remembering to be consistent with the chores. I’d love others’ ideas on how to surmount this issue with kids at 8 &10. What I have done with success is to frame family purchases as choices. Do we want to go out to dinner every week, or save up to go to Disneyworld? Would the kids rather pay $25 to pick a half-bushel… Read more »

Nate
Nate
9 years ago

I agree that allowance should come with no strings attached and thought that this was an excellent point >> “The goal should be to teach her money-management skills. The fact that you work hard for your money will be brought home when your child learns relative value…”

This is an excellent way for kids to begin understanding the purposes behind money management at an early age. As they get older, it’s possible for them to work a part time job without sacrificing grades or school time.

David/moneycrashers
David/moneycrashers
9 years ago

An allowance should be a compensation for work performed.

The “chores” can be as easy as you want them to be, but it should be tied to work, and not schoolwork.

If you tie an allowance into the completion of schoolwork, I think that could get expensive and set a bad precedent

LoveBeingRetired
LoveBeingRetired
9 years ago

I believe that getting good grades in school is the main job of my children. While away at school, I gave each an allowance – not to much, not too little – in addition to paying their tuition and room and board. The allowance was for themselves for whatever they wanted. If they felt the need to have more money, they could always pursue a part time job with the understanding that if their grades suffered, the job was out. One down (and employed!) and the other will graduate in June so it worked for us!

Jackie
Jackie
9 years ago

As a kid I received an allowance that was tied to chores, plus lunch money every week. I also had a part time job starting at age 14, which became a full time job my senior year of high school. However, I do things a tiny bit differently with my son. He gets a twice-monthly allowance that is NOT ties to chores, for two reasons. One, I strongly suspect that given the choice between cleaning his bathroom regularly for $20 twice a month, he’d rather not clean it and pass on the money. Two, I believe families should work together… Read more »

Candy
Candy
9 years ago

I would like to watch Gail’s ‘Til Debt Do Us Part’ show but I no longer have cable! Does anyone know where/if it can be viewed elsewhere on the net? TIA

Michelle
Michelle
9 years ago

I’m more in line with Jennifer (#5) and Mary B. (#9) on money being tied to some sort of effort/work.

I have issues with “As for an allowance being payment for chores, who pays you to do the chores in your home? Chores are a part of each individual’s responsibility to the family.”

True, but on the flip side, I don’t get money just for being a member of the family. I work for it. Teaching my kids where money comes from is one of my priorities.

To each his own.

Kris
Kris
9 years ago

Our kids never really bought into the idea of allowance. Instead, when they need money we offer to pay them for simple jobs around the house. Seems to work out fine.

Carla
Carla
9 years ago

I never received an allowance growing up. I was SUPPOSED to get good grades and do my chores. I also wasn’t taught money management either. I guess they figured I would learn on my own and unfortunately, I learned the hard way.

honeybee
honeybee
9 years ago

Yeah, I’m more with Jennifer #5. I think with chores, nobody is ever really suggesting that kids do an amount of chores that would make a dent in their ability to do schoolwork. (I know I wouldn’t.) We’re talking: make bed, put dry dishes away, keep room tidy, take out trash and recycling on the 4th Friday of the month. Easy stuff. These aren’t things that take hours and hours. Between chores and TV, if one is interfering with schoolwork, it’s gonna be TV. Plus, while I like the idea of the like-for-like scenario, I think it’s a bit simplistic… Read more »

April W.
April W.
9 years ago

My spouse and I disagree on this issue. I feel that regular household chores are just part of being in family, and the clean clothes and dishes are their own reward, just as good grades are. Hubby feels that if chores aren’t completed, no money should be given. I usually have the final say on these matters though. I don’twant my kids to grow up believing that having money equals having power. I do want them to learn that having money gives a person ooportunites that not having money doesn’t. There is a difference. Having power is not all it’s… Read more »

Phyllis
Phyllis
9 years ago

Of course a kids’s main job is school but it’s also helping contribute to their home environment – keeping their room clean at minimal, but also helping to keep the bathroom clean, washing dishes, mowing the lawn, and more depending on their age, interests, and skills. They learn those skills by doing. They choose tasks by age and interests. They are members of the household and that comes with privileges AND responsibilities. Even very young children can help put away toys and smooth their beds. They also have the right to sharing some of the wealth of the home in… Read more »

Des
Des
9 years ago

“A far better tack for children who don’t follow through on household responsibilities is to do a like-for-like comparison. “Matt, if you don’t make your bed, I have to. And I only have time to do one thing: make your bed or make your lunch. Which one do you want to do?”” This is a really bad ultimatum to lay down for your kid. Are you really going to forgo his lunch if he doesn’t make the bed? No, you’ll have to go back on your word and then your child learns he can skip chores and still get what… Read more »

schmei
schmei
9 years ago

I didn’t realize it at the time, but my parents silently taught us about the value of giving with our allowances. See, allowances (50 cents to $1 a week when I was small, $2 a week in middle/high school) were divvied out on Sunday morning before we went to church. The expectation was that some of our allowance would then wind up in the collection basket later that morning. When my allowance was $2, I would put a dollar in the basket each week. My father once commented (with some pride) that, if only everyone was as generous as me,… Read more »

schmei
schmei
9 years ago

I find it interesting to note that honeybee #24 links allowance to lunch money. Is this normal? For us lunch money was always a separate category, part of my parents’ food budget. Allowance was strictly “other money” – hence the very small amounts.

Mrs. Money
Mrs. Money
9 years ago

I love your show! 🙂

I have never received an allowance and I learned to manage money just fine. I think it’s more important to provide a good example with money management, as children seem to take in a lot more than we think they do!

chacha1
chacha1
9 years ago

@ Nicole re: math and teachers. I aced Geometry, did middling well in algebra, then got a C in trig in high school. Got to college and a good teacher and aced Calculus. Wish I’d had a good tutor earlier!

Tracey H
Tracey H
9 years ago

We tried the “allowance tied to chores” method for awhile but the kids figured they could just skip the chores if they didn’t need or want the money. So we went back to automatic allowances and other punishments (or hovering over them!) regarding the chores. Their allowances weren’t overly generous (50 cents/year of age) and there were always other jobs around the house (or neighbours’ houses) that they could do for more money (and they did). They also did odd jobs, babysat, taught computer use to seniors, delivered flyers, and got part-time jobs when they turned 16. Neither has ever… Read more »

Karen in minnesota
Karen in minnesota
9 years ago

All 4 of us kids were raised consumer poor but we had the essentials growing up –no extras, few toys, all clothes were hand-me-downs, certainly not a car–but we had health car insurance and mom and dad were able to pay for almost all of our college educations and also their own retirement. We were on our own for weddings too. Of course, we never got an allowance. We worked odd jobs or babysat outside the home to earn money. We all worked in the summers once we were in high school, and after school as well in construction or… Read more »

Roo
Roo
9 years ago

It’s cruel to make children get part time jobs. I don’t know about in the USA, but in the UK it’s near impossible to get a job under the age of 16 and not easy to find part time work at all. Even places like McDonalds don’t really have openings for 17 year olds still in school. My parent’s gave me allowance for nothing. I was expected to wash up and mow the lawn, but really didn’t have many chores (my room was my responsibility but I didn’t care enough to clean it). I got paid extra for big chores… Read more »

Nicole
Nicole
9 years ago

@31 Chacha One of my students just came in to pick up her midterm and said it was the highest grade she’d ever gotten on a math test. She was totally in shock. (And that is a reason I like my job, regardless of my paycheck.) p.s. For those who are saying that without work there is no income… isn’t that what the goal of financial independence is? To have passive income streams without having to work for them? Sure, people who aren’t trust fund babies have to work to get there, but that link doesn’t have to be there… Read more »

Joe
Joe
9 years ago

We give our children an allowance each week. It is loosely tied to chores. They are expected to do the work each week and we use the allowance as a reminder to complete them, but allow some flexibility when they have very busy weeks. We also provide them extra opportunities to earn.

They are free to do whatever they want with their money. I think it is important for them to make a few mistakes to learn from. Spend all your money on silly bands and not have any left for a new game? That’s the choice they make.

partgypsy
partgypsy
9 years ago

Whatever is done, it needs to be consistent. When I was growing up, we were all supposed to do our chores. In general my sister and I did, while my brothers (in particular my older brother) didn’t. As my Dad couldn’t remember what was done or not done, and as our brothers were very insistent on getting paid they were paid anyways. When we asked for our allowance, we were often told, what do you need an allowance for? If you need something just ask for it. Yes in many cases I wanted to save the money in the bank,… Read more »

Des
Des
9 years ago

@Roo Most places in the US won’t hire under 16, but my experience is that there is plenty of part time jobs around. In fact, many places would prefer to hire part time employees because they don’t have to provide them with benefits, they don’t risk paying for overtime, and it makes scheduling more flexible (more workers part time means more people available to cover shifts when someone calls in sick, etc.) Typically, when people are talking about their 12-15 year old getting a part time job it is off-the-books work like babysitting, mowing lawns, etc. I don’t think it… Read more »

Leah
Leah
9 years ago

I am so happy to hear your perspective that I’m not even reading the other comments lest I upset myself. I completely agree with your idea of an allowance. And I absolutely love your discussion about time trade-offs (lunch vs making the bed). My parents liked to use the “you can make lunch at home or use your allowance for lunch at school” tradeoff, and that really helped me with my own money management. To me, the key part was when you mentioned the power play inherent behind withholding money. I think that money in exchange for something can also… Read more »

Frugal Texas Gal
Frugal Texas Gal
9 years ago

I so agree with this post (and It worked great as I have many grown children). School is a kids job. Every family memeber needs to contribute to the home. Not only is that fair, but the child who grows up respecting the home and the care it intails will be more respectful as a teenager. Its not MY house, Its OUr house. To that end basic age approrpiate chorse that were age approrpiate wre part of their familiy duties (feeding the dog, making their bed, carrying their clothing down stairs). This also teaches that mom (or dad) is not… Read more »

Ace
Ace
9 years ago

Here’s how my dad did things: We got a modest allowance every two weeks as kids. With our piggy bank, my dad gave each of us a little pocket-sized notebook. In the notebook we were to record every deposit and withdrawal from our piggy bank: $5.00 in for allowance. $3.00 out to buy a toy at the store. $0.50 out for candy. $10.00 in from grandma for birthday etc. Every two weeks, we’d take our piggy bank and ledger to dad for our next allowance. If the ledger and the amount in the piggy bank didn’t match up, no allowance… Read more »

Tracy
Tracy
9 years ago

I think the whole allowance thing is almost always different from family to family. I went through a couple of different allowance schedules when I was growing up, but the one that probably helped me the most was a divided jar system. I learned that you need to put a little bit away for the future, keep a little to spend on the immediate necessities, and then have some to save for a future goal. If I really wanted to save up for something, I could combine my immediate necessities and future goal funds into one, in order to reach… Read more »

Jessica
Jessica
9 years ago

I like treating money management as one of the household chores. Just as children takes on chores as a part of being contributing members of the household, they also take on portions of the budget. For example, you can start by sitting with your child and explaining that you currently spend about $X per week on toys and/or treats for her, and you are now trnasferring the responsibility of how to manage that to her. The child receives that allowance, and you stop buying those things for her (this is key!) Later, other categories can be added, like clothing or… Read more »

Smoovie
Smoovie
9 years ago

I was quite pleasantly surprised by this post. I dislike the use of money as a motivator because, as you say, it undermines intrinsic motivation. To tie allowance to chores is to diminish how their cooperation helps the rest of the family. It also sends a message that they are not expected to do their chores (or earn good grades, or whatever) in the absence of a reward.

Walter
Walter
9 years ago

I couldn’t agree more. We have always given our kids an allowance as a learning tool. It helps them learn how to budget a regular income and how to save. We also created The Bank of Mom and Dad (BMD) when they were younger and encouraged them to break their money up into 4 categories – what they wanted to spend right away, what they wanted to give away, what they wanted to save for short term, and what they wanted to save for long term. In addition to the allowance, we also pay them for doing jobs around the… Read more »

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