How to give your kid money if you don’t believe in allowance

How to give your kid money if you don’t believe in allowance

Giving an allowance is a time-honored tradition. But it doesn’t sit right with some parents.

“We don’t agree with, ‘Here’s $5 for living in our house every week,’” said Megan Srsen, an elementary school teacher I met during a recent trip to St. Louis. She points out that she and her husband don’t get paid to live in their home. They have to work hard. They want their son, who is 5, and their daughter, 4, to get that same message, and perhaps grow up to be entrepreneurs someday.

Many parents do make an allowance system work for them. (I suggest following my Five C’s). But as I’ve long said, allowance isn’t the Holy Grail when it comes to raising a financially savvy child. What’s important is giving kids the experience of handling their own money.

So what are some other options for putting cash in your kid’s hands besides allowance?

Srsen and her husband hit upon a smart solution I can get behind. They set up a “work-for-hire” sheet, with tasks like cleaning the baseboards in the house, which will net her kids $2, or vacuuming, which earns them $1. If her kids want something like a pack of Pokémon cards from Target, or if one of them deliberately breaks something like a clothes hanger, Srsen directs them to the work-for-hire chores that might help them pay for the item they want or the damage they’ve done.

Whatever money system you use, make sure that you clearly lay out the rules

I like this plan. Just be sure that the tasks you pay for aren’t everyday household chores. There should be some tasks that kids are expected to do simply as part of being in the family. Besides, giving an allowance to motivate your kids to do routine housework can backfire. Sara Borja, another mom I met at a St. Louis event, knows that from experience. She and her husband pay their 13-year-old son $1 a day if he makes his bed and his room is clean, with his clothes stowed in their drawers.

“This works really well if he has something in mind that he really wants, like a video game,” Borja said. “But if he doesn’t have something that he desperately needs, he is not very good about it.”

If you pay kids for things you want them to do anyway, you’re setting yourself up for a negotiation every time they decide it’s worth more to them not to do it. Instead, teach them the power of earning by paying them to do things above and beyond these everyday tasks—say, washing the windows, raking the lawn during fall leaf season, or clearing out the basement.

Another way to provide your kid with cash is to give him a choice when it comes to an optional expense. Srsen’s son recently had a birthday, and she gave him a choice: Have a party and invite over a couple friends, or get $100 cash. (She knew she would end up spending more on the party and a nice gift than the amount she offered her son.) Her son chose the money.

Whatever money system you use, make sure that you clearly lay out the rules—how it is doled out or earned, plus what the money is to be used for and what is off limits (say, toy guns). For instance, Borja and her husband cover the basics for their son, but if he wants an upgrade—like a Vineyard Vines belt rather than a plain one—he is expected to pay the difference out of his own pocket. 

Also, make sure you pay your kids in cold, hard cash. Research shows that adults spend more when we use credit or some other form of online payment, since paying is abstract and therefore less painful. If that’s true for grownups, how much truer is it for kids? Of course, you will need to “launder” some of this cash if your kid needs to make an online purchase, but make sure your kid has some physical money to hand over when you do.

It’s worth noting that both Srsen and Borja say they still struggle with the best way to teach their kids to value money and hard work. Neither feels like they have a perfect system. But that’s true of most parents I know. Money management, like life itself, can be messy, and the real world presents situations that pat rules don’t always address.

If you’ve come up with a system you like, please let me know!

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