Are allowances good for kids?

Financial Peace Junior
Photo by Matt McGee via Flickr

What’s the point of an allowance?

For Ron Lieber, personal finance writer for The New York Times, it’s a tool to help teach values and character traits like patience, moderation, thrift and generosity. And Lieber, who’s writing a book, The Opposite of Spoiled, about kids, money and values, tells Morning Edition host Steve Inskeep there are three basic ways that parents approach an allowance.

No chores necessary.

This is the method that Lieber and his wife use. They give their 7-year-old daughter $3 a week, which she divides in thirds. She puts $1 into a “spend” jar to buy anything that she wants, $1 into a “save” jar for medium- to long-term goals and $1 into a “give” jar that ultimately goes to a cause of her choosing. “She spends a lot of time thinking about that,” Lieber says.

He says this approach has fostered a sense of confidence and empowerment in his daughter, who, on a recent shopping trip, “was so thrilled at the idea that she had the power to make some decisions for herself, and that I or my wife wasn’t going to have anything to do with it.”

No free money.

A second way to approach allowance is to link it to the performance of chores. “The thinking here,” Lieber explains, “is that nobody gets free money in the world, and neither should my kids, and that would spoil them.”

Lieber counters that an allowance is a teaching tool. “We don’t want to couple it to labor, because the problem you run into then is that if your kids decide that they’re not really so interested in money or having money after all, can they then decline to do the basic chores?” he says.

No allowance at all.

Some parents give no allowance and instead take a “reasonable request” approach. In other words, parents buy their kids what they need and then require that for things they want, they must make a persuasive presentation.

“They learn to literally make a sales pitch, and then the parents decide on a one-off basis whether or not the kids ought to have it, or whether they ought to find a way to make some kind of money on their own in order to buy it,” Lieber says.

Today’s Question: Are allowances good for kids?

  • Scott44

    I see nothing wrong with it as long as the child has to preform some sort of chore(s) during the week. It helpped me learn at an early age nothing come free.

    • Hi Scott, what kind of chores are you talking about? I’ve heard from some parents that they won’t pay their kid to keep their room clean, make their bed and routine household chores, but they will pay them for chores like yard work. Does this distinction matter to you?

      • Scott44

        Michael, I was given anything for cleaning my room or normal household chores. Washing, the vehicals, cleaning out dad’s little fishing boat, clean the small slide in camper when dad came home. If I made breakfast, dinner etc, for the family when I was little I got a little something. Cutting the grass was my normal chore but if I groomed our dog, cut his toenails I got a little.

        • Scott44

          Sorry that was ment to be I was not given anything…

  • PaulJ

    There’s no choice, you work for money. And we provide room & board so clam up about OSHA and the minimum wage.

  • Jorda

    Salary plus commission is my preference. Expectations for children are important. Money management is children is also really important. They need to learn to what happens when they run out of money and when they save money. They need to learn what it feels like to give their money away. It is small scale, but the more mistakes and successes you experience at a small scale the better you handle large scale.

  • Balance is key

    I suppose I’d prefer a hybrid of 1 &2. #3 might be a little scary, pushing kids to steal in order to keep up with their peers if they have no opportunity to earn their own money.

    I think it’s important to keep a positive attitude for work. #2 might squelch a natural joy a little prematurely if it’s dogmatic. #1 on the other hand might create a sense of entitlement that hurts kids when they enter the workforce. But there’s wisdom in both approaches. We do have some claim just by being human, just by being a family member on resources. Yet we do have to perform service in order to be a part of the group.

    Ideally kids will grow up really enjoying work. I’m reminded of something I read about FDR’s New Deal CCC program. He designed the work camps for very hard outdoors work at 6 hours a day, leaving evening opportunities for education and self-betterment. He did this because he wanted to train a generation of workers who enjoyed work.

    Balance is key.

  • Jorda

    Work is work. Sometimes work needs to be work and kids need to learn that too. Otherwise they float through life only looking for fun jobs. Sometimes we need to learn to do things we don’t enjoy for an ultimate payoff.

  • JQP

    Well, we tried to pass a wage measure in the House, but the conservatives wouldn’t fund it – calling it swell-fare and the liberals were completely against the assignment of work without respect to disabilities ( I’m too short , I have asthma, I didn’t make that mess…) . We had even worse luck in the Senate… where the negotiation’s got stuck in the Ways and Means committee. A filibuster was attempted, however we had adjusted the rules so that it takes a majority to KEEP it Going … and we couldn’t get the necessary vote so .. that discussion died.

    As of late we are conducting media campaigns and separate town hall meetings. Basically we are running with the wind and we just found out its a tornado.

  • kevins

    I work with oppositional and sometimes aggressive children who are giving their parents fits and may be destined for future difficulties if they don’t internalize prosocial beliefs and values. I see versions of 1,2 and 3 tried all the time but parents tend to be extremely inconsistent and arbitrary about it, and ofter resort to using allowances (or lack there-of) as punishment when the child misbehaves or disrespects. In fact, there are some truly effective ways to use allowance as a teaching and motivation tool, and I am, in general, a strong advocate of allowance if the parents can afford it.