The other day, I posted a story about Beth Kobliner’s new book about money management for kids. One of her top tips? Don’t give your child an allowance.
One reader, Lisa, had strong feelings about that suggestion. She wrote a counterpoint, below. What do you think? Is allowance a positive incentive that helps with money management or a negative form of manipulation?
“My name is Lisa. I receive the JewishBoston emails, and want to respond to your article, ‘Why You Should Stop Paying Your Kids an Allowance.’
“I disagree with your assessment that it’s best to stop giving the allowance. In your article, the allowance situation was predicated on the kids doing chores in exchange for the allowance. That’s not an allowance, in my book. That’s payment for work done. The allowance is an enormously useful tool for teaching children the basics of money management: counting, saving, tzedakah, balancing, spending. In fact, lacking the allowance ‘tool,’ I don’t know how I would convey these lessons to my children, and then I wouldn’t be attending to one of the hugely important parent tasks of teaching my kids how to deal in the real world of money.
“My spouse and I spent a lot of time talking over the allowance thing before we started. We began when our oldest finished first grade (she is now 17 years old). Our reasoning was that in first grade she had learned math with money, so she had at least a beginning concept of how the coins and bills were related to each other, mathematically. We continued when our twins (now 15) finished first grade.
“We gave a very large allowance (for an entering second-grader!). We haven’t given a cost-of-living increase, which is a bit of an issue. Anyway, our kids get $3/week. Period. Other consequences apply for not doing their chores (loss of screen time, computers, phone, outings with friends, etc.). We’ve never held back the allowance for any reason.
“With the $3/week, they put 10 percent in tzedakah, and 10 percent in savings. With the allowance came costs, because that’s how it works in real life. So we gave them the responsibility of sharing in the cost of buying school supplies in the fall. We asked them to share 50/50 with us in buying birthday gifts for their friends when they were invited to a party (and we capped the gift amount at $15). And we said they were now responsible for paying for their candy when we go on vacation (that’s a longer story, but it worked!).
“Whatever money is left over is theirs to spend, or not, as they wish. Because they have money, I’m in a stronger position around some of the clothing issues that arise: ‘Do you need this item, or do you want it?’ We’ve had enough practice that the difference between need and want is usually obvious, and I can say, ‘If you want it, buy it. It’s your money.’
“We’re in the process of changing the 10 percent savings to 15 percent, based on some recent learning we’ve done. We taught our kids to keep track of the allowance on paper (similar to a check register) so they understand the concept of a ‘balance.’ Using the paper register, they could wait several weeks and collect a larger amount all at once, since we could count the weeks since they’d last collected allowance. They learned how to count their money, and how to balance their register.
“Now two of my kids have student bank accounts, with a debit card. They are learning how to manage their money in a new way. Student accounts have a parent jointly on the account, so I can log in and check their spending and saving. My oldest, who earns money babysitting, is still putting money into savings with reminders from me. We’re slowly stepping into a process of teaching our kids what ‘investing’ means and how to do it.
“We have used the allowance to teach money skills: how to save, how to set aside tzedakah money, how to keep track of a balance, etc. Also at Chanukah, the kids empty their tzedakah boxes, count the money and decide where to give it. I give it in their name whenever possible so that they receive the thank-you note, if there is one.
“My kids used to ask me, ‘But what are the savings for?’ My oldest is now in Israel at the URJ Heller High School (formerly EIE) program. What’s that savings for? She wanted to participate in this program; it wasn’t our idea. She’s paying a small portion of the cost of the program. We asked her to pay an amount small enough so it’s manageable for her and big enough so she feels she’s making a real contribution to her education and the special program.
“We’re fortunate to be able to afford to give our children an allowance. We’re fortunate to have the money management skills to pass along to our kids.”