The average child in America receives about $800 in allowance each year — but that’s not the reality for all kids. In fact, some kids are expected to help around the house without any monetary compensation. They might earn fun outings or other rewards, but they simply contribute because it is the right thing to do for their families.
Parents on either side of this divide staunchly defend their position, providing excellent arguments on why they made their decision. At the end of the day every family must decide for themselves what path to take. Exploring whether giving your child an allowance is really the best can help you make the right decision for your kids and family.
Allowance for Chores
In families that give their kids an allowance, many trade those funds for the completion of chores around the house. The kids may receive their pay weekly or less often, allowing them to buy toys, games, and sweets — or sock it away for a rainy day. In fact, many families will make charity and savings part of the deal by having their kids separate each payment into spend, save, and give categories.
Families without an allowance for their kids still tend to have chores, but do not provide a monetary incentive to get them done. These kids are simply expected to contribute to their households without expecting something in return. They may occasionally have opportunities to earn money by doing extra tasks, but not for their regular daily chores, which need to be completed no matter what.
Benefits of Giving Kids an Allowance
When you give your child an allowance for a job well done, positive reinforcement kicks in, giving them a boost in motivation to get their chores done each day. And who doesn’t like chores getting done without a fight?
The benefits go beyond simply easing your day, however, to helping your kids learn lasting life lessons about money. With each pay day, they are tasked with effectively managing their funds to the best of their ability. Whether you have a set system or let them create their own budgets, they must accurately count and delegate funds to accomplish their financial goals.
As they manage their funds and work toward big purchases, they start to learn the value of money as well. They can see how long it takes to build up a savings fund and purchase the big ticket items, helping them respect household finances in a whole new way.
Reasons to Skip the Allowance
In many cases, skipping the allowance is motivated mostly by limited household income. For others, they may simply do so to teach their kids about the value of contributing to the family without outside rewards.
When kids do not receive rewards for completing their expected tasks, they have many opportunities to learn about intrinsic motivation. This type of motivation comes from the internal rewards that come after completing the job right, such as pride in their work and feeling good about helping their families. Then, when the time comes, they can apply those lessons to managing their adult households and other important aspects of their lives.
The Compromise: A Push to Separate Allowances from Chores
While kids without an allowance are learning important lessons about contributing to their household and families, they are also missing out on direct experience managing their finances. On the other hand, kids who receive an allowance improve their financial literacy but miss out on other vital lessons, such as work ethic and familial responsibilities.
So, how can parents meet in the middle with a compromise that will benefit all their kids? By simply dropping the link between chores and allowances, parents can teach both lessons at the same time. With this disconnect, kids can receive an allowance to learn financial literacy while simply completing chores for the good of the household.
Even receiving a few dollars each week can make a big difference in how kids value and manage money, which is great news for families with tight budgets. Give a small allowance a try and make sure to keep it separate from the completion of their daily chores to have the biggest impact on your child. If need be, you can link it to good performance in school or simply tell your child it's so they can learn to manage money.