I recently heard from Laurel, a writer who had interviewed me for a story about allowances. Laurel had a question about her own 5-year-old. She’d given him a quarter for putting away his little brother’s laundry and now he was looking for more ways to get paid.
“I appreciate his motivation, but I feel as if he becomes super money-centric and loses track of doing things just to be helpful. Any ideas for giving an allowance that addresses this issue?”
I’m intrigued by Laurel’s question because it stands the usual allowance issue on its head: Instead of trying to motivate a kid with money, this parent is trying to demotivate her son. And Laurel seems to have run into a snag because she was trying to follow one of my guidelines. I recommend that parents not pay kids allowance to do basic chores but allow them to earn extra money by doing extra jobs.
The principle is that kids should clean their rooms and help unload the groceries because they’re asked to, not because they’re paid. Plus, over the years I’ve learned that many parents have a tough time keeping track of whether their children have actually done their assigned jobs. A survey by DoughMain, a financial education and family organization website, found that 89 percent of parents say they assign chores to their kids but only 29 percent use some kind of formal system, such as a chore chart or written list, to track them. (DoughMain and Tykoon, another kids’ finance site, have online chore trackers.)
But an allowance shouldn’t be a handout, either. The idea is to tie the basic allowance to “financial chores” — spending responsibilities that kids take over from you. For example, you could start by having them pay for their own collectibles or refreshments at the movies.
To make the connection between work and pay, give your children the opportunity to earn money by taking out the trash or the recycling, vacuuming the family room, raking leaves, washing the car, or whatever you define as service above and beyond. (To avoid being caught in a situation like Laurel’s, be specific about what you’ll pay for.)
I think this two-tier system has three pluses: It’s easy to keep track of, it sets up a sensible — and workable — arrangement for tying allowance to chores, and it’s an effective way to teach kids how to make decisions about managing their money.
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