The purpose of an allowance is to help teach children about money. Most people can agree on this point. From here on out, though, the topic of allowance can be a minefield of disagreements between kids and their parents, between parents themselves, and most definitely between adults and other parents.
What's the right amount to pay for allowance? How early should you start giving out an allowance? Should compensation be tied to chores around the house? Should allowance be used for punishment? And the list goes on and on and on.
The real answer is there is no ‘right' answer. The decision to pay an allowance and how your kids should earn it is very personal and will vary by family, depending on a multitude of factors from your own beliefs to your financial situation.
Chores Are Good for Kids
Whether or not you decide to pay an allowance, one thing that researchers have determined is that chores for children are a good thing. Check out our blog post on How Chores Are an Essential Part of Childhood
to learn more about The Harvard Grant Study and its conclusion that one of the best predictors of professional success in life comes from having done chores as a child.
So, if you want to pay your children an allowance and you want them to do work to earn that allowance, household chores may be a great option.
Household Chore Ideas:
- Loading and unloading dishwasher
- Folding laundry
- Making the bed
- Cleaning the toilet or sink
- Putting clothes in the closet
- Keeping toys put away in the toy box
- Feeding a pet
- Cleaning up after a pet
- Pulling weeds
- Watering flowers
- Put away groceries
- Make your lunch or breakfast
- Mop floors
- Taking a pet for a walk
- Do laundry
Requiring Chores to Earn Money
For other parents, however, household chores are something that you do because you are part of the family, not because you get paid for them. These parents may choose another route: making certain household chores mandatory, like keeping your room picked up and cleaning your bathroom, but allowing children to earn money for allowance if they go above and beyond their regular household duties.
Ways for Children to Attain Money:
- Babysitting a younger sibling or neighbor
- Mowing the lawn
- Giving the dog its bath
- Cleaning the windows
- Washing the car
- Helping prepare a family meal
- Tying allowance to grades received at school
When Chores Aren't Necessary for An Allowance
There is a third school of thought as well that frequently shows up in discussions about allowance and that is simply giving children a set amount of money each week. There is no work or chore required. The allowance is offered strictly for learning about financial management. The key to this approach seems to be setting parameters around how the kids must allocate it.
When kids are younger, this may mean telling them that a set amount must go to charity, a fixed amount to savings, and the rest they are free to do with as they like. As the kids get older, the responsibilities for managing this allowance increase. They may be required to allocate what they are given to pay for school sports or other extracurricular activities, for example. Advocates of this approach say it teaches children to budget and think carefully about how to spend their money over a longer period.
Kids may still have chores to do in these families, but the allowance is something separate from their household responsibilities.
No matter which approach you take, it is important to make sure you and your spouse are on the same page about allowance and how it is to be earned, and to enforce whatever decision you make consistently.