To allow(ance) or not to allow(ance), that is the question

I’ll never forget the day I decided my kids were ready to start getting an allowance. I heard bickering from the next room and moved in to listen better. It went something like this:

Matt (3): Gracie, why are you cutting the couch? Grace (5): Shhhhh, Matt. Stop. I’m not. Matt (3): Yes, you are. I saw you. Grace (5): Nooooooooooo, I’m nooooooootttttttttt!!!!!!!!!!!!!!!

I considered checking it out, but thought, “No way. She wouldn’t do that. She’s old enough to know better.”

I was wrong.

After I discovered a lovely two-inch gash across my couch cushion, Gracie and I had a nice chat, and I explained that she would need to pay for the repairs. (OK, we didn’t exactly have it repaired. I stitched it up and then flipped it over. It’s still there to this day. Whatever, man. She was 5, and my time is worth something.) She was devastated, but faithfully emptied out her piggy bank.

But as we discussed this consequence, she said two things that really stood out to me: “Now how will I save up for anything?!” and “But no one ever wants to give me their money!” I was impressed that she had given thought to saving up for things, and struck by the fact that she relied on us giving her the occasional quarter in order to do so.

I decided it was time to look into the idea of an allowance, so I took to Google to help me with my research. Do you know what I found? A wide range of opinions. As in most aspects of parenting, experts disagree on whether or not allowance should be linked to chores, what age a child should be to start, how much they should be given, how involved the parents should be in how the money is spent, and on and on and on. Eventually, in this and any other parenting decision, we have to decide “this is what works for us” and just go for it. So that’s what we did. And at the risk of just adding to the online cacophony, let me share with you a few things we learned along the way.

1. Define your expectations. Will allowance be earned as a commission, or will it be an automatic part of family life? (For a good look at both sides of this argument, check out this piece on The Wall Street Journal.) If it is earned, will it be an all-or-nothing endeavor (“You forgot to make your bed twice this week, so you don’t get your allowance”), or piecemeal (“You earned 20 cents a day for putting your clothes in the laundry, and 20 cents on Tuesday, Wednesday, and Thursday for making your bed”)? We decided to keep their allowance separate from chores, so they “automatically” get their allowance every week, although they are expected to contribute to our family at an age-appropriate level. We have, however, given them opportunities to earn extra money by doing jobs that are above & beyond their normal responsibilities—but only when we make the offer. They can’t ask to be paid for a job.
2. Be consistent. How often will they get paid? If it’s weekly, what day of the week? I have to confess, we continue to struggle with this, but life is so much better when we do it regularly. It eliminates many questions about loaning money and whether they are allowed to buy something at the store, etc, etc, etc. If we are 3 (or 5 or 7…) weeks behind on paying their allowance, it is unfair to say, “No, you can’t buy that $10 item because you only have $7.” The poor kid should have enough money, I just haven’t gotten around to giving it to him. But giving him the money right there in the store and trying to remember that when I get around to doing allowance is a nightmare. It really is better to just set a schedule and stick to it. (I’m looking at you, self.)
3. Keep it simple at the start. We started our kids with $3 per week, which we divided evenly between three mason jars, one each for spending, saving, and giving. As adults, we know that everything doesn’t get divided so precisely, but at their age it was more important to teach the concepts than the specifics. If you are doing a commission-type allowance, keep the amounts simple, and consider requiring them to earn a certain amount per week.
4. Teach them about money management. The three jars have been a great tool to teach our kids that they need to think a little bit about where their money goes. We no longer do the even split with our older kids; instead, we have increased their allowance, and encourage (ahem, require) them to put a minimum of 10% into their giving jar and 20% into their saving jar. (Side note: each kiddo also has a savings account at the bank, so we periodically take their saving jar to the bank to deposit the money.) In general, we do not dictate what they can or cannot do with their spending money (although a plan to buy a hamster was put on hold until we felt the level of responsibility was there). We do, though, keep a register of their allowance and how much is in each jar. It helps us to know what we owe (on those days when we sit down after being a few weeks behind…), it helps the kids to see how their money can add up, and it is a good tool for them to have down the road, when they are trying to balance a checkbook or make a budget. Not to mention it’s good for their basic math skills.
5. Grow with them. We started our allowance journey with basic concepts and basic goals, a good fit for a 3- and 5-year-old. As they grow, though, the lessons they need to learn grow too. We have, as I mentioned, changed the amount of their allowance, as well as how it is divided. Now we are getting ready to add to their money responsibilities. While we haven’t traditionally told them what they could or couldn’t do with their spending money, we also haven’t expected much from them. As they get older, though, we want them to learn more about choices and consequences. Their spending money will gradually become their entire budget—for going out with friends, for buying birthday presents, even (eventually) buying clothes and some other basics. They need to learn that buying those $100 jeans (an issue that has not come up yet, thank goodness) means a much smaller overall wardrobe, that splurging on something for themselves might mean missing out on a movie with friends, and that doing something special for a BFF might necessitate a sacrifice (and be worth it).

Like I said earlier, sometimes concepts are more important than specifics. Regardless of how exactly you choose to implement an allowance system for your child(ren), remember you are teaching important concepts about money and responsibility. Following these five tips will help you do to whatever you do well.