What do you give your kids for allowance?
When I started giving my kids a regular allowance, I initially intended to tie the money to specialized tasks that required extra effort, such as vacuuming, dusting, or cleaning the car. I wanted the kids to recognize that picking up their clothes and setting and clearing the dinner table was simply expected, with no monetary reward. A household is a community, and I wanted them to recognize the value of contributing to the community without expecting a handout.
It hasn’t worked out exactly as I planned, mainly because we’re all too busy to maintain the structured approach. They consistently set and clear the table at every meal, clean the basement, pick up their rooms and put away their clothes after I do the laundry. (I’m introducing them to actually doing laundry at the moment.) They occasionally do the vacuuming and car-cleaning, usually when they’ve spilled an entire box of Coco Puffs or the car is so filled with debris you can’t see the floor.
My older girls, 10 and 8, get $20 every two weeks. They have to set aside 20% for savings (which goes into their bank account), and 10% for charity. I haven’t started my four-year-old on an allowance yet.
On the other hand, we don’t pay or offer material rewards for good grades,. We want the kids to enjoy the intrinsic reward of a job well done, rather than basing their behavior on extrinsic motivations. That said, I don’t think there’s anything wrong with a celebratory dinner after an excellent report card.
How do you structure your kids’ allowance? Does the payout depend on the work they do? Do you pay for grades? I’d love to hear your views. Comment here or email me at laura at laura rowley dot com.
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August 10th, 2007 at 9:02 am
I don’t have kids, but I’m curious – is the 20% forced savings for any particular goal? Or does the money go to the bank and they can’t touch it ever? And how does controlling their savings fit with the principle of letting them make their own financial mistakes?
My parents taught me about savings when I was 10 or 11, and they stopped giving me money to pay for Christmas presents. They explained that if I set aside $1 every week (20% of my allowance at the time), I would have enough to buy nice presents for everyone, but if I didn’t, then I wouldn’t. But I suppose that only works if they have enough self-awareness to be embarrassed to show up to the family Christmas gathering without presents.
Hi KBH –
My kids’ savings are for college. We talk about that a lot. Their dad and I have been saving in 529 plans that we opened after each child was born, and will hopefully have enough to cover tuition and room and board. But I think it’s important that they cover part of their expenses — books, fees, travel, etc. — and have an investment in their education. I teach at a university, and the students who are paying for their educations are clearly motivated to get the most out of their time at school.
I mentioned experimentation and making mistakes in the context of spending. I wanted to build in the forced savings piece because that’s going to be a life-long requirement if they want to retire. (I force myself to save 20% of my income.)
I cover the vast majority of my kids’ expenses, whether it’s clothing or an afternoon at the movies. They receive more expensive luxuries — like tickets to a Broadway play — for Christmas presents. But I think when it comes to material goods that aren’t necessary — those little trinkets at the mall — they should pay for them. I hadn’t thought about the Christmas angle. Do you think it was good training or did you resent it?
Laura
August 10th, 2007 at 10:51 am
Well, I was a natural-born saver to begin with – I’d already saved up $100 for no other reason than I thought it would be cool to have $100 – but I think my parents’ approach worked really well for me. Such a structured approach to saving would not have occurred to me on my own, at that age, but once they explained it to me, it made sense. One thing that really stuck with me was when they said “And if you save so much that you have money left over, then you can buy yourself a present.” That sounded pretty good to me. I also really appreciated the fact that it was my choice. They just explained what my options were and what the consequences would be for each. But if I hadn’t already understood the concept of delayed gratification, it might not have worked so well.
As I got a little older, I decided I’d use the same approach to save for things like optional school trips. I’d get my allowance each week and divide it up among the compartments in an old jewelry box, each for a different goal. I think I actually had a more complicated budgeting system then than I do now.
August 10th, 2007 at 4:44 pm
Hi LAURA,
You are a WHIZ Parent!
I just read your “Nine Tips for Raising Financial Whiz Kids”, and it’s great!
My grandfater used to tell me that it only takes SO much (meaning very little) to be better than the next guy.
However, you are WAY ABOVE “the next parent” in your financial whiz kid advice.
My point is that most parents, including good ones, do not even think about training their kids in financial wHizdom.
So, your nine tips are simply FABULOUS!
Kind regards,
Alf
Thanks Alf!
Laura