Picture this: As you race to put the final touches on dinner, you notice that your daughter has voluntarily bagged up the garbage and taken it outside. It’s a small but welcomed gesture — one you’d like to encourage to become a habit, not just a one-time act of kindness. But is instituting an allowance the right approach?
According to a study from the allowance app RoosterMoney, most parents — 69 percent — would say yes, paying kids age 4 to 14 an average of $9.06 a week.
The argument against allowance, however, is simple: chores are expected to be completed because doing so benefits the entire family. Striking a balance between rewards and expectations can be a tricky feat for busy parents, which is why there’s no one-size-fits-all approach to allowance. Instead, consider strategies that ensure Junior is walking away with the money values you’re trying to instill.
In this post we’ll cover:
Types of allowance
Chore-based allowances are focused on having your kid earn their rewards. This, as Kara Stevens, money coach and creator of the blog The Frugal Feminista, explained, is a great system for teaching kids the importance of hard work.
“The idea of working and earning something becomes tangible — it helps you set goals,” Stevens said. “Allowance also comes with a conversation about money, and it gets kids started understanding the process of time in exchange for money.”
One downside of the chore-based approach is that it can send your kids the wrong message; not everything they do deserves a reward. It also implies that chores are a choice — not doing them simply means they won’t get paid that week (possibly leaving you to pick up the literal mess).
Consistent allowance is exactly what it sounds like — just giving your kids a set amount of money each week. No matter what, they get a small cash deposit. Meanwhile, they are expected to do chores and help out around the house. The upside of pure allowance is it gets kids in the habit of doing chores without expecting a cash reward. Your kids will view chores simply as something that must be done because they benefit the household community.
However, as you might be guessing, pure allowance can also be a slippery slope to entitlement. If your kids get money no matter what, why follow the rules or behave?
A hybrid approach
The hybrid allowance is a combo of the first two strategies. You give your kids an allowance every week, while also expecting them to complete chores around the house. Tell your kids that they can earn additional money when they go above and beyond the normal. The hybrid is an effective way to avoid tying chores to rewards, while also showing an appreciation for your kids’ extra efforts.
“Maybe your kid decides to improve how quickly the garbage can be taken out each week,” Stevens suggested. “Perhaps he adds a garbage bag and improves the system. That’s helpful and could be rewarded.”
How to decide which approach is right for you
If you’ve made the choice to implement an allowance, take some time to determine which approach is the best fit for your family.
Consider your goal. Make it clear to your child exactly why you’re giving an allowance. “Communicating about why you’re doing it is very important,” Stevens explained. “What’s the message behind the allowance?”
Stevens added that sharing the “why” behind the allowance gives kids a sense of empowerment.
“When you share the rationale, even if they agree or not, it signals a level of respect and inclusion,” Stevens said. “Children respond to this level of regard and will eventually apply this way of thinking to their own decision making.”
Your financial situation. You should also think about which method is right for your budget. An allowance shouldn’t be something that puts a strain on the family finances. If things are tight already, perhaps a chore-based approach is best for your family, as it allows you to limit the amount of chores that earn a reward.
Money lessons you can teach your kids
Now that your kids are earning money (possibly for the first time), it gives you the chance to instill valuable money lessons that can benefit them their entire lives. One common approach is using the jar method, where you have your child deposit money into three separate jars: one for saving, one for spending and one for donating. How much of each deposit you think your child should put into the jars is up to you, but you can consider having them divide the amount equally or tie specific percentages to each goal, like 10% to donating, 30% to savings, and 60% to spending.
Saving. To help make the concept of stashing their cash truly resonate with them, give a concrete example of how you saved for something — perhaps the bike they got for their birthday. If your kids are a little older, you can talk about saving for big purchases like a car or college (and how saving now can help them avoid getting buried by student loans — the average debt for a 2018 college grad was $29,800).
As their savings jar fills up, take them with you to the bank or have them sit with you as you set up an online high-yield savings account in their name. It gives you the chance to talk about interest and long-term goals.
Spending and budgeting. The excitement of having money in their pockets may cause your child to make impulse purchases or blow all the money on a bad deal. Now’s the time to teach them about comparison shopping and making smart spending choices. One of the best ways to manage this conversation is to introduce them to the concept of budgeting. Start by discussing the family budget, and then help your kid create their own mini-budget. The earlier your kids understand the importance of tracking how much money comes in versus out, and what it’s spent on, the better.
Donating. Sharing (especially for young kids) can be a hard concept to grasp. However, introducing charitable giving at a young age is a great way to teach your child about the importance of helping others. Work with them to find a cause they care about — maybe donating to a local animal shelter or program that helps neighborhood kids have access to healthy foods. Finding something they’re passionate about will make them excited about the idea and engaged in the process.
Tools you can use to keep track of chores and payments
There are many different ways you can track chores and allowances. You can take the tech route and use apps like RoosterMoney, Current or PiggyBot. Each of these apps allows you to input chores, track tasks, determine allowance rates and more. Like it or not, kids live online, so using an app or website is a good way to engage with them in their world.
If you’d rather not use an app, you still have plenty of options. You can go the DIY route and make your own chart — consider using stickers to help kids track their progress. You can also use a cookie sheet and magnets with pictures of chores for non-readers. Kids will enjoy making their own chart, and getting them excited about the process is key.
Don’t have the time to make a chart? No worries. You can easily purchase a premade chore chart online.
The bottom line
Ultimately, deciding to give or not give an allowance depends on your beliefs and goals. It’s a deeply personal choice that only you can figure out.
Take some time to consider all the pros and cons of each strategy before going through with anything, and be transparent with your kids about your choice. Your thoughtfulness about allowance will carry over to them.