One of the many important decisions faced by parents is whether or not to give an allowance. There are advantages and disadvantages to providing your child with a weekly allowance. Even the experts disagree on the issue of allowances. Some financial experts think it’s a great idea. Others do not. Child psychologists are divided, too.
Each family can develop its own philosophy on the issue. Have a family meeting and make a list of the pros and cons. Determine how your children feel about receiving an allowance.
There are several advantages that giving an allowing provides:
- An allowance provides an opportunity to teach your child about finances. When money is exchanging hands, it provides an opportunity to teach. An allowance can lead to learning about saving, investing, and wise spending.
- Kids learn that money has to be earned. Few things are free in this world. Candy, toys, and videos games are not. Generating any income requires work. It can be healthy for children to learn this lesson early.
- Kids have money to spend on non-essential things. Children feel empowered, regardless of age, when they have their own money to spend as they choose. It helps to build a child’s self-esteem.
- The chores are more likely to get done. The dishes are more likely to be washed and the yard more likely to be mowed. A little money can be a great motivator to a clean house and well-manicured lawn. An allowance is sounding better all the time, isn’t it?
Allowances have disadvantages, too:
- Children might refuse to do anything unless money is involved. Ask your kid to run out to the car to grab your jacket and you might hear, “How much will you pay me?” It can be awkward and confusing when some actions lead to a payday while others do not. Your child still has an obligation to his family. An allowance can cloud this understanding.
- Parents give up control regarding purchasing decisions. Once your child has that money in her little hand, you might not know where it’s being spent. Are you willing to give up that control? Can you trust your child to spend their money responsibly?
It can be useful to have a weekly list of chores. The child receives his allowance if everything is completed. Avoid paying for individual chores. For example, it can be a mistake for mowing the yard to be worth $10 and taking out the garbage to be worth $1.
All the chores are completed, or there’s no allowance. This can prevent the issue of your child wanting to be paid for every little thing. The entire list represents the entire allowance.
Raising a child results in many changes to your finances. Spending and saving habits are altered. Your budget can be turned upside down. The decision of whether or not to provide an allowance is another financial decision faced by parents. The decision to provide an allowance isn’t an easy one.
Have a family discussion on the topic. What does the other parent think? Consider your children. What impact would earning an allowance have on them? Each child and family are different.
If you’re able to enjoy a cleaner house and teach your child positive financial habits, an allowance can be a positive experience for everyone involved. It might be the best money you’ve ever spent.