Is allowance another form of bribery and reward, or is it a way to teach our children about money management?
It really depends on the intent behind the action.
But let’s back up for a second. Because when we chat about allowance associated with chores and money management, they are really two separate conversations.
What Are Chores?
Core chores are things that we do because we are part of a family - a collaborative approach where we pitch in to care for the house we live in. I may do the dishes, you may take out the trash. And younger kids can get in on the action, too, by doing age-appropriate tasks. Even a toddler can help unload the dishwasher or help feed the family pet. The motivation behind these tasks has nothing to do with money, but rather teaching and guiding the life skills of self-care, empathy, self-esteem, problem-solving, and more. Chores offer children a sense of belonging and teamwork and allow them to engage in traditions that build gratitude and responsibility.
Doing work for the good of the whole helps children understand why connection is important. Julie Lythcott-Haims, who served as Stanford’s Dean of Freshman and Undergraduate Advising for more than a decade, indicates that when kids do chores, they “realize that they have to do the work of life in order to be part of life. It’s not just about me and what I need at this moment, but that I'm part of an ecosystem. I'm part of a family. I'm part of the workplace.”
Chores are skillset all on their own, and the earlier we involve our children, the more they feel positive about their contributions, helping them develop a “can-do” attitude that stays with them into adulthood. Dr. Marty Rossman, the author of The Worry Solution, corroborates this, “The best predictor of young adults’ success in their mid-20’s was that they participated in household tasks when they were three or four.”
Chores Are Separate From Allowance
While tying allowance to chores may have short-term effectiveness, it can also send children counterproductive messages about family, community, and personal responsibility. Suniya Luthar, a psychologist at Arizona State University who studies families, says, “How sustainable is it if you’re going to pay a child a dime each time he picks up his clothes off the floor? What are you saying - that you’re owed something for taking care of your stuff?”
Often, when money is attached to chores, it becomes (either consciously or unconsciously) a reinforcement that is dangled in front of kids to be either given or taken away. This tiptoes the line of a reward/punishment-based tool and shifts the needle from intrinsic motivation (where your child’s motivation to help comes from within) to extrinsic motivation (where your child begins to look for incentives in order to do the behavior). When we motivate extrinsically, we actually shift away from teaching about money and send a different message entirely.
We recognize that every family will do what feels best for them, yet we also want to expand the parenting lens to offer the notion that chores are for learning, not earning. Under this mindset, receiving an allowance has nothing to do with running a household.
What Is Allowance?
Now, let’s chat allowance and money management, a separate set of skills.
An allowance is a way for children to learn about handling money and bolsters traits such as delayed gratification, planning, budgeting, spending, and sharing. Studies cited in Daniel Goleman’s book, Emotional Intelligence, showed that children who deferred gratification grew into teenagers and young adults who were more socially competent, better able to cope with frustration, more dependable, more academically successful, and better at setting and reaching long-term goals.
So, what age is the right age? There isn’t one magic number. This is where a parent’s intuition comes into play. Experts do say, however, to follow your child’s lead. When they start noticing and asking about money, it is often a smoke signal that they are ready.
Once parents do initiate allowance, give it during regular and consistent increments, such as a weekly basis for younger kids or monthly for older kids, teaching them to stretch their funds over time. Another way for children to earn allowance may come in the form of an extra workboard. This is a way for children to choose additional chores (outside of their core chores) for an extra payment, which taps into their intrinsic motivation and can encourage entrepreneurship.
Experts also offer ideas for age-based formulas, giving children either half of their age or their full age in compensation. In doing so, it displaces arguments about the initial amount, provides a methodology for raises, and gives a justification for different amounts given to younger vs older siblings.
How To Use Allowance To Teach Money Management
To learn to ride a bike, you need a bike. To learn to play the saxophone, you need a saxophone. And to learn to manage money, you need money. However you decide to give allowance - whether in timed increments (weekly, biweekly, monthly) or doing extra work from a workboard - you can guide your children in both spending and saving practices. One useful approach in building the skills of money management is called Three Jars, which offers children a visual representation of money coming in and money going out.
During each allowance payout, children decide how much goes in each jar. Let’s take a look at them here:
Spend Jar: This is money that children can use to purchase items they want. If your child wants something that costs more than is in their Spend Jar, then they can choose to save up for it or buy something less expensive.
Save Jar: This is a jar that is attached to a goal. So, if your child is longing for a new game system, LEGO set, or trip with grandma then the amount for the item or experience would be written on the front of the jar, and a portion of their allowance would go towards it.
Donate Jar: Donating is a great way to help your child begin thinking in terms broader than self, and to teach that we are all part of a larger community.
Both chores and money management have their place and importance. We encourage that they remain two separate skills and two separate entities. When we become intentional and get clear on which skills we want to teach, we can better meet our kids where they are. This becomes their foundation. With our loving intent and creativity, we can help unfold these life practices in ways that speak our children’s language. It is then that they learn how to be part of a community and become wise with their money.