Allowance Strategies for Families

When it comes to kids and allowances, there are two main schools of thought. The first says that kids should be given money simply as a learning tool with no chores or responsibilities tied to it. And any jobs the kids do around the house should be done free of charge. After all, no one pays you to do the laundry do they?

The second school of thought is that any money kids are give should be payment for chores that they do. After all, no one gives you money for doing nothing, right?

As someone who thinks (and blogs) about money a lot, I’ve given each theory its share of consideration. And I see value in both. Therefore I would like to propose a third, combination approach for your consideration.

This combo approach would have a child perform a set of basic chores with no payment attached. This is part of being a member of a family and household. Examples might be setting and clearing the table, loading and unloading the dishwasher, taking out the trash, or feeding the dog.

Over and above this basic list, however, would be larger, optional chores for which the kids would be paid. Examples of these might be raking the leaves, cleaning out the car, or washing windows. This puts them in control of how much money they make and gives them the experience of working for money when they’re young. As they get older they can branch out to babysitting, pet sitting, lawn mowing, and other entry-level type jobs for kids.

When it comes to how kids spend their money, a combo approach also works well. Parents might want to set some boundaries. Two common approaches are half into savings and half for spending or a third for giving, a third for saving, and a third for spending. This works well not only for earned money but for gifts as well.

It’s important, however, that a child be given complete control over a part of his money. If he or she wants to spend it all on Pokemon Cards, arcade games, or any other item that adults consider wasteful, it’s important that they be able to do that without input from the parents. It’s how they will learn. And let’s face it, we all have our guilty pleasures…even as adults.

Regardless of the allowance method you choose to implement with your child, make sure that the conditions are spelled out well and that you follow through on your part. When done correctly, it’s a great teaching tool whose lessons may last a lifetime.