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What Do You Want Kids to Learn From Allowance?

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The perennial parent question of whether to give children allowances leads to a few more (often trickier) questions: How much? How often? For what tasks?

Before you read any further, know that I won’t be providing specific amounts or activities for the above three questions. Instead, I recommend that parents answer another question themselves.

What do you want your child to learn by having an allowance? The answer to that question is the guide to the first three.

One of the most common reasons parents cite for giving children an allowance is so they learn how to earn money, save money, and become more financially literate. If this is your primary reason in favor of an allowance, then the tasks or chores matter less. Sure, you want the money to be earned, but if the important aspect is learning how to handle money then that must be the focus. That means regular discussions with your child on how his saving and spending is going and chats about what he can and can’t use the money for.

You may want to have your child use the money for certain items, for example, games, movies, or even new clothes. Asking your child to save for items which he needs frequently will allow him to learn how short-term saving (or spending) has immediate consequences. Asking him to save for something long-term means he will also take longer to truly understand the benefits of saving.

If financial literacy is the main goal, the questions above would be answered:

  • How much? Higher amount

  • How often? Frequently

  • For what tasks? Less importance placed on the tasks

Another key reason parents want their children to help out is to learn the meaning of work. Effort in equates to reward out. This is the “life isn’t free” argument and children should understand that the things we use every day have to be earned by somebody.

How much is the right amount? That would need to be an amount which is appealing but not overly indulgent. Again, smaller amounts for a number of quick tasks or chores probably make more sense than a large amount for a large task. Chores should be useful, but really it’s more important to tie the amount of effort to the reward.

In this instance, the answers are:

  • How much? Average amount

  • How often? Frequently

  • For what tasks? Average importance placed on the tasks

Another rationale given for having children earn their allowance by doing chores is to help out with the family. As parents, we know all too well that certain tasks must be completed each day. Whether it’s setting the table, preparing dinner or cleaning up after, caring for pets or siblings, taking the trash out; through to gardening, repairs, or home maintenance, there are always things to do. If this is the goal, as you see it, then what gets done is more important than how much is paid out. As far as the frequency is concerned, that depends upon what needs to be done, but, in general, the more frequently children accomplish a task, the quicker they learn.

In this case, the questions would be answered:

  • How much? Lower amount

  • How often? Frequently

  • For what tasks? High importance placed on the tasks

So rather than just copying the Joneses and paying out the going rate, think about what you want your children to learn. It’s likely a combination of all of the above, but if there is a prime reason, then that should win out.

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