Kids and Money
Working for a Dollar
Til Debt Do Us Part host Gail Vaz-Oxlade shares her tips for giving kids allowances.
Before children can learn to manage money well, they need to be able to get their hands on the stuff. Most people have no problem with that concept. But when it comes to what you should ask of your children in exchange for that allowance, the debate rages. Some people feel an allowance should have no strings attached. Others think it should be tied to chores in the home, school grades, or behaviour (“If you don’t smarten up, I’ll cut off your allowance!”).
Other parents debate about whether or not kids should work for their money through part-time jobs. Some parents feel that school is a child’s job, and any other work detracts from potential success at school. Others think that a part-time job is perfectly fine, while still others believe that a part-time job is essential because it begins the development of a good work ethic.
From early on, children receive mixed messages about money. At home they hear one thing, at school and among their peers, another. Mom does it one way, Dad’s the complete opposite. What is consistent is that nobody seems able to agree on the money rules. And often those mixed messages stay with them long after your parental influence has passed.
I believe that allowances should come strings-free and that it’s perfectly fine for children to get a part-time job to supplement their allowance—not to replace it—when they get older.
Think about why you’re giving your kid an allowance. The objective should be to teach him money-management skills. The fact that you work hard for your money will be brought home when your child learns relative value: how many hours he has to work to afford that pair of running shoes.
Money doesn’t work as a reward for good behaviour. Just ask any of the management theorists who have proven that money is not a motivator for adults. So why should it be for children? Good behaviour is based on an understanding of right and wrong, thoughtfulness, caring, and consideration, along with myriad other positive attributes, all of which have to be internalized.
Good grades are your child’s responsibility. School is his primary job and good grades are an indication that he is doing his job well. If you provide financial reward for good grades, you are externalizing the reward. Instead, the reward should be internalized: the self-esteem and pride that accompanies having done well at school.
As for an allowance being payment for chores, who pays you to do the chores in your home? Chores are a part of each individual’s responsibility to the family. Payment for regular chores negates a child’s individual responsibility as a member of the family unit. (Payment for extra household tasks—those above and beyond a child’s normal chores—is fine when they are specifically doing the task to earn some money.)
The biggest problem in tying your child’s allowance to the completion of her chores comes on the day when you must withdraw the allowance. Now you’re teaching your child, “I have the money and you’ll have to do as I say to get some of it!” That’s a straight-out power play. “I have the money, so I have the power.” Ouch, not a lesson I want my children (particularly my daughter) to learn. A far better tack for children who don’t follow through on household responsibilities is to do a like-for-like comparison. “Alex, if you don’t make your bed, I’m going to have to. And I only have time to do one thing, make your bed or make your lunch. Which one do you want to do?”
To learn how to manage money responsibly, children need an income they can rely on—one given at regular intervals. The experience of handling a steady flow of cash will teach many fundamental skills, including how to manage a cash flow, how to plan ahead, the skill of setting goals (both short- and long-term) and how to save to satisfy a goal. With your guidance, this cash flow can also be used to teach important lessons in borrowing and lending, the pleasure derived from generosity, how to be a good consumer, and the importance of considering those less fortunate.
The strings attached to the money you received as a child will have a strong bearing on the strings you attach to your children’s money. We know our money history plays a big part in our money personalities. Perhaps you were never given an allowance and had to work for every penny you got. Or perhaps your parents’ strong work ethic was a point of great pride in your family. If you had to put yourself through college or university working at the local car-wash on weekends, and waiting tables at night, this will no doubt colour the way you look at allowances in general. If your allowance was tied to chores, or you were required to save all the money received as gifts, you may see that as the “normal way to do things”.
Whatever your own personal experience with money as a child, try to put them aside as begin to teach your own children how money works and the role it should play in their lives. To ensure money is not imbued with meanings it shouldn’t have, don’t tie things like self-esteem, power, or love to your money-sharing. Stay balanced when you talk about the green stuff. And, above all, figure out what message you want your children to get from your money lessons. For, like it or not, they are learning from you. What lesson would you like your child to learn today?
Written by: Gail Vaz-Oxlade, host of Til Debt Do Us Part
Print out Gail's budget sheets to use at home and get control of your finances.