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Ask Dr. Sue
ALLOWANCES
Dear Dr. Sue:
I'd like to start giving my five-year-old son an
allowance, but my husband and I can't decide on the
proper amount. Also, we hear some people that say
children should receive their allowance for chores that
they do around the house, and others that say the two
issues should be kept separate. What do you think?
Dear Mom,
Not all children receive an allowance, but I believe
they should. Far too many adults in our society
are lacking the most basic money-management skills, and
too many of them have developed attitudes toward
spending that will have a serious impact on their lives.
What do we want for our children in terms of money?
We want them to be self-supporting, needing neither
family nor the state to sustain them. We want them
to be able to own a home someday. We want them to
be able to provide for their own children, when the time
comes. And we want them to have security in
their senior years so that they can stop working someday
and still have enough money to provide for all of their
needs. All of those goals require the ability to
manage money.
Kindergarden is a fine time to begin that education.
Children of this age have certainly learned the
connection between money and things that they want, and
they have begun to want things quite intensely
sometimes, helped along by the TV ads that accompany
Saturday morning cartoons.
A properly set-up allowance plan helps to teach your
child to plan his spending in advance, to live within
his means, to spend carefully, to distinguish between
"wants" and "needs", and to prioritize his "wants."
Most experts feel that allowances should not be tied to
chores around the house, to behavior, or to school
performance. Since the goal is to teach a life
skill - money management - it is important to have a
predictable amount of money for your child to work with,
whatever that amount may be. Besides, paying for
everything your child does around the house can lead to
a child who refuses to help out in any way without
dollar signs being attached. On the other side of
the coin, a child who doesn't feel any need for money at
a particular moment has no reason to perform his chores.
You want him to realize that the things the family does
to take care of each other are not optional. (It's
not unreasonable to pay your child for an extra job that
is outside the routine, however. Teaching your
child that he can get things that he really wants by
working harder than usual is fine.)
Similarly, don't tie money to behavior or grades.
Don't take away part of his allowance as punishment.
It's much more appropriate at this age to remove a
privilege (like television time).
Don't fall into the trap of buying good grades, either.
You want your child to learn to do well for his own
feeling of accomplishment and for your approval.
The message you want to send is that you EXPECT him to
do his very best in regard to behavior and school
performance. Paying for
those things makes them business transactions rather
than character traits. What will his behavior and
performance be like if no one is looking?
Deciding how much to pay for his allowance is a process.
You need to take into consideration the area that you
live in (New York City versus Longview, for example).
Consider what his peers are being paid, although you may
find an immense range. (Many people feel that 50
cents per year of age is adequate, while I know one
five-year-old from a family of modest means who gets $25
per week!) Consider what your child will be paying
for with his allowance. What needs, if any, will
come out of his allowance? He might pay for his
own school lunches when he's in first grade, or lunch
money might be separate, for instance. One money
management specialist advises having your child be
responsible for a necessity like toothpaste, so they can
learn to budget for such things. I'm afraid,
though, that many children would decide that toothpaste
was an unnecessary luxury!
Other tips:
-
Have your child physically divide his
allowance into four containers. One is for
spending on anything he wants, right now or anytime
over his allowance period. The second is for
saving up for something that costs more than his
weekly allowance. The third is for sharing,
whether he tithes in your church, buys gifts for
family members on their birthdays and Christmas, or
donates to a worthy charity. (Or perhaps all
three.) The fourth is for really long-term
savings, like his college education. You can
decide what proportion goes into each container.
Consider paying interest on the two savings
containers, just like the bank would, so your
child can literally see that money that goes unspent
makes money. You don't need to calculate an
interest rate, simply hand over a few cents to a
dollar depending on the amount in the jar and tell
him "this is interest that your money has earned."
Be sure the interest gets added to the savings
containers, not spent.
-
Pay him on time! This sends the
message that financial obligations are not flexible,
as well as allowing him to plan his spending.
If, like many busy families, you have trouble
remembering to hand out those allowances (and maybe
even forget whether you already paid or not), set up
a system that makes it easier to keep track of them.
An inexpensive small calendar can
be cut into weekly strips. Then paperclip the
weeks of each month together and put them all into
an envelope. Your child can trade the proper
strip in each week when he claims his allowance.
Now all you need to do is figure out a system for
yourself so that you'll have the right coins or
bills around the house when allowance time arrives.
It may help to start
putting your change and one-dollar bills into a
container of your own and allowing them to
accumulate.
-
To avoid debate, write down what
things your child will now be paying for, including
video rentals, game rentals, presents for non-family
birthday parties, a candy bar at the grocery store,
and whatever else you can think of.
-
Discuss with your husband what
situations would qualify for an "emergency" loan.
Remember, your child will learn nothing if every
time he's out of money but would like to spend more
someone comes to his rescue. On the other
hand, unexpected situations arise in everyone's
life, so a small loan doesn't have to be absolutely
forbidden. Don't loan more than one week's
allowance, though, and require the amount loaned to
come out of the next allowance, or in equal portions
out of several allowances. (Some experts
advise charging interest, even if it's only pennies,
to teach your child that borrowing money does cost
extra.)
For more information, check out the following resources:
The Totally Awesome Money Book for Kids, by
Adriane G. Bert; Newmarket Press; $10.36 through
www.amazon.com
A Penny Saved: Teaching Your Children the Values and
Life Skills They Will Need to Live in the Real World,
by Neale S. Godfrey with contributions by Tad Richards;
Simon and Schuster; $12.00 through
www.amazon.com
Simple Ways to Help Your Kids Become Dollar-Smart,
by Elizabeth Lewin, C.F.P., and Bernard Ryan Jr.; Walker
Publishing Co. Inc.; $8.95 at
www.amazon.com
Kids Allowances--How Much, How Often and How Come, A
Guide for Parents plus The Allowance Workbook for Kids &
Their Parents; by David McCurrach; $11.90 for both
at www.amazon.com
(Your local bookstore could order these, also.)
 
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