Should allowances be in exchange for chores?

Allowances are a great tool that can help you teach your kids money management skills. A child that handles money tends to have a regular and hands-on opportunity to learn the basics of budgeting, saving, etc. Practice makes perfect they say. Giving an allowance in exchange for chores might be a bit challenging with respect to finding age-appropriate chores and ensuring that your child does them before you can ever get around to the money management lessons. If your child doesn’t get round to performing the chores like he or she should, there comes your number one obstacle in the way of teaching the relevant lessons. The other issue is that as a part of the family, each member should be responsible for something. For example, daddy and mummy ensure the bills are paid, mummy ensures the meals are fixed and daddy ensures that the car is in good shape. The kids should also be responsible for something. They shouldn’t be paid for their own contribution to the family. After all, daddy and mummy don’t get paid either.

On the other hand, it is a very important for a child to learn that there is a deep connection between the work they put in and the money they earn. If you don’t work, you don’t get money to spend in the real world. How then can we get our kids to understand that they need to work to make money? This is particularly relevant in this age as almost everyone wants to make a lot of money without doing much.

An idea is to fuse the two points above together. You can give your child a little weekly allowance that is not tied to anything. Then you can give them some opportunities for extra tasks that are really challenging for them, that will enable them earn a little more. That way they can connect hard work with earning money. This will be different from the regular things they have to do around the house at their age. Another point that is also very important is that you need to create time to teach your child about money as soon as you disburse it to them. Children are clean sheets and only become what they observe or learn from others in their surroundings. Don’t make the mistake of giving them allowances if you are not ready to follow it up with lessons and also do as you say yourself. Remember that kids will always do what you do and not what you say most of the time. Giving allowances without proper training will be of no value to them, rather it might destroy things further.

What’s your take on giving allowances in exchange for chores?  What have you tried and what works for you? Let’s hear you.

Don’t let it go unnoticed!

I am sure as adults we know that there is always a consequence for right or wrong. We may not know what the consequences are or have an idea of how it will come about but every action has an end result. As you teach your child(ren) about money management one of the things you shouldn’t take for granted is providing consequences, whether positive or negative, for their ability to manage money properly.

When you child works hard to make money, stick to a budget or save, provide lots of praise and positive support. Don’t ever let their hard work go unnoticed. Also ensure that there are negative consequences for mistakes as well. Sometimes it makes sense to allow kids to experience natural consequences. Don’t always cover their backs or provide a soft landing for them. Maturity is developed when we are able to struggle through the challenges we come across in life and that is what you are doing for them. If you give your child pocket money for the week and he or she decides to spend it all in one outing, don’t give him or her more money. Instead, the effect is that he won’t be able to have fun spending money the rest of the time. You can also take away privileges as a consequence. If your child keeps disobeying, lying or even steal then there should be a lot more serious consequence. You can discipline by depriving with what will hurt him or her to have a rethink about the bad behavior. Most especially, study your child to know the right thing to do but don’t let any behavior with respect to money or otherwise go unnoticed, whether good or bad.

Money management lessons for kids

After your child gets an allowance or begins to make money, the next step is to ensure he or she knows how to manage the money. For example, your child has a handful of Naira notes and is eager to go to the shopping mall for the afternoon. What do you do? Do you let him do as he or she wishes with that money? There is no hard and fast rule. It all depends on the age of the child and what he or she has been taught about how to manage money.

 As soon as you start to dispense an allowance, you should match that act with direction on how to use the money. If you don’t, your child may waste money on frivolous things and be short on cash for the things he or she really needs. More importantly, he will develop poor spending habits that will be hard to break as he grows older. I know of a child who used to immediately spend all the money that came into his possession on whatever he wanted – usually comic books and fun places. Today, that kid is a highly successful professional who still spends his money without any restraint – now on cars and gadget. He’s constantly short of cash for the things he needs, and he even had to borrow money from his brother a number of times. The solution to his problem is that he needs to learn to gain control over his money. He needs to know how to save for the future while spending the balance wisely now. The same way bad habits last for a lifetime, so does good spending habits. I know of another child who had limited allowance and learned to spend it very carefully. He had enough each time to borrow his fellow mates and he usually will charge interest on it. As an adult, he has maintained these skills and is able to manage his money properly.

 Schools generally do a focus on teaching about money, so as a parent it’s primarily up to you to educate your child in this area.

The future to a young child may mean the arrival of summer at the end of the school year; it’s impossible to think about growing up, going off to the university, and even moving out on his or her own. This, however, does not change the fact that the future is closer than he or she thinks. As adults, time seems to go more quickly than it did as a child—what seemed like years away now passes in the blink of an eye.

Your child needs to learn the importance of saving for the future, including the following:

• What he or she is saving for

• What he or she has to put away to get there

• How long it will take him or her to reach the savings goal

For example, if your 13-year-old wants a tab that costs N40,000, he should know that if he puts N1,000 a week toward this wish, it will take him 40 weeks (or about ten months) to reach his goal. He can probably handle the math himself, but you’ll have to encourage him to do it.

If your child sets a goal that would realistically take her years to reach, there’s nothing wrong with agreeing to match her savings or contributing to her savings fund. For example, if your 10-year-old wants to save up for a bicycle that’s going to cost N10,000, you might suggest that she save N500 each week for two months (eight weeks). He would have saved N4,000, and you can pay the difference, which is just roughly half the cost of the bicycle.

We will still look at setting goals for saving in more details. The important thing to note here is that your child should get the idea that saving is a part of being grown up enough to have money.

How Much Allowance is good?

I believe we all agree that our kids need some form of allowance to help them get a grasp of how to handle money. Now we move on to discuss how much they can get. There’s no one amount that’s appropriate for all kids. The amount you decide on should be sufficient to provide your child with some extra money so he’ll learn how to handle it. There’s no educational benefit in setting an allowance at an amount that you have already pre-determined how it will be spent.

Many factors go into fixing an allowance. The four main ones are as listed:

– Your child’s age: Obviously, the older your child, the bigger the allowance (up to a certain point, at which your child may become too old for an allowance). I know it is possible some families give the same allowance to all their kids even though they’re of different ages while most give more money to the older kids compared to the younger ones. Using a rule of thumb to set an allowance is only a starting point. An allowance of N500 per week may be okay for a 10 year old, but N750 may not be enough for a 15 year old. Defining what is realistic is really a function of what you want the allowance to achieve for them.

As your child gets older, you’ll have to adjust the allowance. Part of this adjustment is simply because of added age. Because your child is older, he or she must pay for more things and needs more money to do it. For example, being in the university means your child will begin to pay for many of the things you used to buy when he or she was at home. You should also consider things like inflation and the economic situation in your environment so that your child’s buying power isn’t eroded.

What if your children are of different ages? Generally, you’ll want to give them an allowance appropriate to their age. If they’re close in age—say, two years or less apart—maybe you’ll give the same amount. A child may complain that it’s not fair that her older brother gets more than she does. Fairness doesn’t mean that everything has to be equal, though. It’s fair to base allowance on several factors, with age being an important one.

– Your family income: Only you know how much your family can afford to allocate to allowances. Your head and your heart may want to pay a generous allowance to your child but your family’s limited resources may dictate otherwise. You have to be realistic about what you can afford to pay as an allowance and work around what is possible.

– Where you live: Maybe keeping up with the Joneses isn’t high on your list of priorities and you frequently tell your child, “I don’t care that Ife, Musa or Adaobi has this or does that.” But, realistically, the neighborhood you live in can certainly influence how much allowance you give your child. What your child’s best friend receives may not be a deciding factor, but it’s a factor nonetheless. You can bet that the kids who live in VGC, for example won’t receive the same allowances as the kids in most other places. This sounds like another way of saying that a family’s income should influence the allowance, but there’s more at work. Peer pressure is at work here. It’s your call to decide whether your environment should be a factor or not.

– What the allowance is supposed to cover: If you expect your teenager to buy all his own clothing from his allowance, then the amount paid to him each week or month must be sufficient to allow for this extensive purchase. If you supplement an allowance with spending money, then a less generous allowance may be in order. 

It’s possible you can’t afford to pay an allowance or set it at the amount you really think appropriate. If this is so, be honest about it. Explain to your child that family finances is what is preventing you from giving your child the amount you’d prefer. This will also help you teach your child that one lives within one’s means without compromising on important things like savings, giving, etc.

More tips on allowances for kids

The reason why kids need allowances is to help them prevent money issues later in life. Therefore as parents we need to be available to ensure that the allowance is accompanied with discussions that will help them manage it properly. In order to do this you need to be financially literate and intelligent as a parent so as not to pass down a lot of wrong information. Giving allowances without guidelines and the proper training is ineffective and eventually will be detrimental to their financial maturity.

Here are some more thoughts on allowances:

• As soon as you decide on giving your child an allowance, be clear about how much the child will get. Also communicate it to your child.

• Decide on what you want your child to be responsible for upfront and let it be the basis for the allowance. Don’t give allowances without any financial duty that you want the child to take on. For instance, if you already buy a particular number of books per month for your child, you can decide to include the amount in the allowance and make it clear that he or she will have to take on the responsibility going forward.

• As soon as this is done, stand back and let your child make his or her own decisions about what to do with the allowance. Ensure you teach basic money management skills before this though. If he then goes ahead to overspend on snacks and does not have enough for a movie, he will begin to understand the repercussion of not planning properly. That lays a foundation for valuable lessons.

• Ensure you set up rules in advance about borrowing. If he she encounters an unexpected expense and needs more money before her next allowance, use the situation as an opportunity to teach her about borrowing and interest. You don’t have to charge much interest, but let her know that it costs money to borrow money.

• Always pay the allowance on time. If you don’t hand over the allowance when it’s due, you’re telling your child that it’s okay to be late with your financial responsibilities. If you sit back and think, you will realise that much of what you know about handling finances were learnt as a child, mostly from what you saw adults around you do and not what they told you. Be the example you are meant to be!

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Kids, allowances and chores

When it comes to how children get the money they can manage, allowances are the answer. However, some parents give allowances with no requirements on the child’s part while others make performing chores, good behaviour or good grades a condition for getting an allowance.

This is a really controversial issue as child experts too hotly disagree on whether allowances should be a condition for performing chores, good behaviour or good grades.  Each side believes strongly in its position. On the one hand, requiring work for an allowance prevents a child from having an entitlement mentality. It helps them understand that there’s value in doing work and being rewarded for it, and it’s good training for getting a job and for the future.

On the other hand, others believe that chores should be required just because a child is part of the family. I also agree with this because just as Mummy and Daddy are not paid for shopping, cooking and fixing the car, a child should be required to contribute his time and effort to help with the family work load. Conditioning the receipt of an allowance on performing work can lead to disaster. A child may think that all jobs around the house should be monetarily compensated. A child who continually tries to negotiate and renegotiate his workload and allowance may be in perfect training for a job with a union as an employee relation officer :), but he can cause endless friction on the home front. Another child might also forfeit the allowance as he is not keen on doing any work at home or do well in school. It is your child’s responsibility to do his or her best in school so it might not make sense to tie that to allowances too.

There’s another thing that some parents do with with respect to allowances – they make good behavior count. If a child fights with his brother, breaks a plate or talks back, a parent might threaten to keep his allowance for this bad behavior. I don’t agree with this, so also some child experts. This habit might not necessarily create a good behavior. It just punishes a child without any benefit. However, if you think otherwise, decide on punishment for bad behavior upfront and ensure compliance. 

The decision of whether to attach chores to an allowance, therefore, comes down to what you think is best for your family. You may, of course, be influenced by whether you were required to perform chores when you were a child and how you felt about that at the time. Whichever way you come out, make sure that the rules are clear—and be consistent. Think through which alternative you’ll use, and then follow through.

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