Kids & Cash: Allowances

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(File image credit: NOAH SEELAM/AFP/Getty Images)

(File image credit: NOAH SEELAM/AFP/Getty Images)

420x316-grad-lee Dee Lee
Dee Lee is a Certified Financial Planner who received a diploma in...
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BOSTON (CBS) – According to a recent study over 50% of kids get an allowance. I do think kids should get an allowance because having money of their own gives them the opportunity to learn about saving, spending, delaying gratification and perhaps work ethics.

Once upon a time I believed allowances should not be tied to work that they do around the house. However, recent studies have shown that this theory has produced a generation of entitled kids with no work ethic.

I’m not sure this is the only reason kids feel entitled to your money but it is a place to start to teach them that you have to go to work to earn your money so you can put it in the bank for safekeeping and then use it to pay bills, save, and buy the things you need.

Children should be expected to help around the house and if you want to give them an allowance you can in essence pay them to help. They can set the table, fold their laundry, and put it away, take out the trash, clean up after dinner, feed the cat. Make out a list that is age appropriate. You can pay them for the extras if they wish to earn even more money.

As they get older they can tackle some of the larger household chores such as raking the leaves, mowing the lawn, washing the car, jobs you would normally farm out to someone else or do yourself.

Make sure your sons and daughters have equal opportunity to learn about all of the necessary chores it takes to run a household. My daughter mowed the lawn and spread bark mulch and my son learned to cook and clean up which lead to a cooking career.

Children need to have money of their own, to spend, to save and to make mistakes with. Yes, mistakes! But as parents we don’t want our kids to make mistakes. We coddle them. We protect them.

We don’t want them to suffer the disappointments we suffered when we did something stupid with our money. The time we bought a toy we wanted so badly that was broken within a week. But allowing a 10-year-old to make mistakes with $30 is so much better than $30,000 at age thirty.

The experts recommend giving a dollar amount to match their age. So a 10-year-old would receive $10 a week. In tight economic times that may be unrealistic. So start with half that amount if you can afford it. Now if you expect them to also buy their lunch at school, pay for entertainment and pay dues to the cub scouts from their allowance you will need to increase it. In my research I found an allowance calculator to help.

But if you are laid off or just took a pay cut then they need to realize that the allowance either goes down or goes away until better times come along for the family.

Now for the hard part, if the kid has more week than money you can’t bail her out. If she spends most of her money on the weekends give her the allowance on Monday. Now she has to plan for the whole week and if by Friday it is gone don’t rush to the rescue. Let her pack her peanut butter sandwich without an “I told you so”.

And when she starts to whine on Saturday that all of her friends have money to spend at the mall turn a deaf ear. Remind her gently that she will get her allowance on Monday as scheduled. And no advances here! In real life if she takes a job at McDonald’s they won’t give her an advance. This is a great way to learn about budgeting.

One more thing:  Pay Jr is an elaborate allowance system transferring money as soon as parents sign off on the website that chores are done.

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