Do your children earn an allowance for helping around the house (doing chores)? If not, then listen up because they should be.
During my more than 20 years as a Certified Financial Planner, I’ve heard plenty of reasons why a parent doesn’t want to pay an allowance for kids doing chores. Just none of them make sense if you are looking at the deeper meaning behind paying an allowance.
We all need motivation to get things done, and for the majority of adults, the greatest motivator is MONEY. And, despite what the “non-allowance” camp wants to say, MONEY is what motivates kids for the long haul too! That’s right, money! Not stickers, not points, not electronic monsters and not extra TV time.
Eventually everything comes back to money, so why shouldn’t we raise our kids to understand and appreciate what they will come to find out anyway? The earlier in life they realize and appreciate it, the faster they can learn the things they will need to know to make good financial decisions as adults.
According to a recent survey of more than 1,000 parents by The American Institute of Certified Public Accountants, 70 percent say they provide their kids a weekly allowance. Nearly 60% of these parents do so because their kids do chores around the house.
There is a great divide in this country when it comes to allowance. No matter which camp you belong to, this can’t be denied - paying a child an allowance for hard work will provide hands-on experience in earning, saving, sharing and spending. All valuable lessons they will need later as adults!
So, if you aren’t paying your child an allowance for helping around the house, where do your children learn these lessons? Certainly not at school! Here are some things I would like for you to consider when it comes to paying your children for helping around the house:
1. Pay On Your Terms!
It doesn’t matter whether a parent gives an allowance for chores that are completed daily, weekly, monthly, or that go above being part of the family. Ideally, every week is best, but the key is to provide an allowance and drive home the many lessons associated with earning.
2. Deduct For Bad Behavior
How many times have you walked through a store and heard a parent bribing a child to behave? Be honest, we’ve all done it. However, maybe more effective is to deduct money from a weekly allowance for bad behavior. Kids learn early the spending power of money, as well as the fact the less they have, the less they can buy. Don’t bribe when you can deduct!
3. Start Young For More Experience
I believe two things are basically true when it comes to kids: 1) If they are old enough to make a mess, they are old enough to clean it; and 2) The younger our kids have something drilled into them, the better it sticks. Whether it’s an instrument, a sport or allowance, the same holds true. The earlier we implement these things, the stronger the foundation.
4. Let Your Kids Make Decisions
Once your kids have earned some money, let them make decisions on how to save, share and spend it. When your children begin to drive, you just don’t let them go out for the first time without you sitting in the passenger seat, do you? It’s very important for our kids to gain experience earning and managing money before we let them go out on their own. It’s ok to be their safety net but there are many valuable lessons to be learned by letting them use their hard earned money.
5. Invest, Invest, Invest
When you give your kids an allowance, you should make them invest at least some of it. A few years ago a survey showed that a majority of Millennials (age 18-34) don’t invest their money because they don’t understand how investments work. Teaching kids about investments from an early age will have them ready for when the time is right. If your investment skills are subpar, learn it together.
6. Don’t Quit
Parenting is about give & take, on & off and starting over. With that said, there will be a time when you’ll want to quit paying allowance and doing all the other things I’ve suggested. Please don't! With our kids learning little to nothing about personal finance at school, it’s up to you to provide them with the background, insight and hands-on experience they will need to confront the millions of financial decisions waiting for them as adults. Without you, it could be a bumpy ride.