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.
Author: Gail Vaz-Oxlade
Gail Vaz-Oxlade is the host of the popular Til Debt Do U$ Part on CNBC. Gail is a columnist for MoneySense, Chatelaine, and Zoomer Magazine and blogs daily at her website, where she also offers terrific tools people can use to dig themselves out of the hole. Gail's latest book is Debt-Free Forever.