Do not give your children an allowance
5 reasons not to give your kids an allowance
Many of us received an allowance back when we were kids. This is often the main reason many of us pay an allowance to our own children. But is tradition really a good reason to give our kids money? In fact, there might be some very good reasons for not giving our kids an allowance.
There are some good reasons to question the conventional wisdom in this area.
Should kids get an allowance?
Like anything in life, this decision might not be as simple as a yes or no. You’ll see from the reasons not to give your kids the money below, as well as the reasons we might consider it, that it’s more a matter of how we do it and how we use that allowance to help build good financial habits.
1. An allowance might not work as intended
There are good reasons to give our children an allowance, and done correctly, it might help create some good money habits, but it also might not work as well as we think.
Consider it this way: when is the last time someone paid us for cooking dinner or cleaning up after ourselves? If we give our kids an allowance for cleaning their room or helping out around the house, does that mean we will be inspecting their student flat room every week when they’re older and paying them to keep it clean?
Kids need to learn that there are some things you do around the house just because they need to get done. That’s what any capable member of a community, society, or a family does. A family works together even if the rewards aren’t as tangible as getting paid. If everyone pitches in, the work is done much faster and more fairly.
If one person never learns this rule of working together, then the rest of the family will constantly have to pick up the slack.
Of course, there’s a difference between our work outside the home and the chores we do as a family. Kids should be encouraged to be entrepreneurial, create ways of earning money, adding value to society, and doing work beyond their family chores. Encouraging this kind of extra work with a weekly allowance might not be a bad idea but do it on a performance or results basis. Our kid’s allowance should be relative to the amount of work they did, or results they achieved, not just a flat allowance they get every week.
Perhaps we can be the spark that ignites our child’s entrepreneurial spirit? Perhaps we can help them get started in an online business? Perhaps we can provide them a lawn mower, or some gardening tools and they can take care of neighbours lawns and gardens? Maybe they can sell arts or crafts on Trademe? Could they walk neighbours’ dogs while neighbours are still at work? Could they help elderly neighbours with chores? The list is nearly endless.
2. Allowances don’t mean financial responsibility
If our kids are receiving an allowance but have no financial responsibilities such as bills to pay, are they really learning anything about budgeting or saving? Forcing them to save some of their allowance only makes saving a punishment and alternatively, is it fair to charge them for food or other necessities that we as parents should be providing?
A different approach is to be more open about our own finances and teach our kids about financial responsibility by sharing ours. No, that doesn’t mean make them pay for watching Netflix, but it does mean talking to them about what it means to manage your money including the hard decisions, the trade-offs we all have to make when making a spending decision.
This can help our kids get in the habit of saving, not because it’s forced but because those savings give them more opportunities and choices in the future. Help them see what they can do on $25 each week and then how to save it and turn it into an amazing experience every few months.
Show your kids the power of making their money work for them!
3. Allowances don’t reinforce concepts of sacrifice or hard work
Children may have no concept of money or sacrifice if we are just paying them an allowance every week.
Money may not even work as a reward for some children. This topic comes up on one episode of The Simpsons. Marge threatens Bart and Lisa by withholding their allowance until the garden work is done. After a quick attempt, the kids give up and go back to watching TV and wonder why they’re even bothering when everything is paid for anyway.
4. Better reward ideas
There are better rewards than giving a child an allowance. Maybe let them pick the family outing for the week, what to have for dinner, or just tell them how proud you are of their accomplishment.
This relates back to the first reason in the list. We shouldn’t feel like we have to reward our children for doing things they should be doing anyway.
5. Better financial ideas
There are better ways to teach our kids about money, including with budgeting games and saving. Perhaps we can ask them to help us plan the family’s budget, or there are plenty of free online games such as the author of bestselling book Rich Dad, Poor Dad’s game called CashFlow Classic. That makes it just as real to them as saving a few dollars a month for some intangible goal.
The bottom line: should you pay children an allowance?
There are good reasons to give our kids an allowance as well and paying them a little regularly isn’t the worst thing if time is still taken to reinforce good money ideas and concepts.
In our humble opinion, probably the biggest problem with a regular allowance is that busy parents just don’t make the time to talk to our kids about money. The allowance just becomes something the kids expect, and the parents don’t take the time to talk about good financial habits or what the allowance is supposed to achieve.
Instead, we can teach our kids good money habits by demonstrating them ourselves and talking and working through important topics like budgeting, saving and investing. We can even be open about where we’ve made mistakes with money, and the family’s financial goals.