Pay Or Not To Pay
All about allowances
Sharon Goldman Edry
were sort of a hit and miss thing for us," says Chris Yellin,
a New York City-based father of two girls, aged 8 and 10. "More
often than not, we would
forget to pay them and later, forget that we forgot," he says.
"There was no discussion about what the allowance should cover
and we had frequent disagreements. Eventually, we realized we had
to do better."
Remember the joys of getting your allowance? At
the end of the week, Mom or Dad opened up their wallet, fished for
a few coins or a small bill and flipped it your way. Off you skipped
to spend their hard-earned dough, or if you were especially thrifty,
you stuffed your treasure into a shoebox or piggy bank and tried
to forget it was there (so you could save up to buy that bright-green
bike with the striped banana seat).
So why is handling allowance matters so confusing
now that you're a dad? Well, it's certainly no fun anymore - now
it's you emptying your pockets - and as with every other aspect
of parenting today, suddenly there are so many daunting questions:
"What is the right amount?" "How should my children
use it?" And the ever-important, "How do I keep them from
robbing me blind?"
When you stop hyperventilating, take heart - experts
say that you should keep in mind one bottom line: An allowance should
help your child learn to manage money. "It's not about a handout,"
says Elizabeth Lewin, author of Simple Ways to Help Your Kids Become
Dollar Smart (Walker & Company) and a book on family finance
to be published in August 2001. Instead, make your child responsible
for certain things in his daily life and give him enough money to
cover them - school lunches, for instance. Five or six years old
is a good time to start, says Lewin, since by then kids have a concept
of numbers and can tell the difference between, say, a dime and
a quarter. As your child gets older, you can increase the amount
of financial responsibilities. By the time he's a teenager, for
example, he can be in charge of buying his own clothes or gas for
Many experts recommend helping your child divide
his or her allowance into three parts: Spending, Saving, and Charity.
Some of the money is used as pocket money, but right off the top
a percentage is put away for savings and another amount is set away
to donate to a good cause of your child's choosing - the local animal
shelter, perhaps, or a food bank.
So how much should the allowance be? That depends
on you, says Dr. Sal Severe, author of How to Behave So Your Children
Will Too (Viking 2000). "I tell parents, a quarter is probably
not enough, but fifty dollars is too much," he says. Keep in
mind your own financial situation, what you're asking the kids to
be responsible for, and how much weekly pocket money they really
might need. An ongoing Web-based survey at www.kidsmoney.org reveals
that the most common average weekly allowance amount is $5.00 for
the 5-13 age group (but the range is from around $3.00 to $10.00
Ready to step into the allowance fray? Here are
- Tie allowance to real work. The old "I
never get paid for making my bed," works wonders here. Chores
such as cleaning one's room or taking out the garbage are generally
considered "part-of-the-family" (aka unpaid) jobs. But
tying earnings to work can help children understand the value
of money. Consider letting them earn a few extra bucks by doing
other things around the house, such as washing the car, mowing
the lawn or cleaning the garage.
- Stay hands-off - as much as it hurts.
One of the hardest things about this whole allowance thing is
to stand by when your child spends his entire wad on a silly toy
that you just know is going to break in a week. But not stepping
in, letting him blow it all by himself, will teach him some valuable
lessons about money that words just can't teach. And if Tuesday
rolls around and he's already spend his entire week's worth of
lunch money, there's always the old standby, PB&J.
- Be consistent. How would you like it if
your boss didn't pay you on a regular basis? You wouldn't, so
be consistent and accurate when paying your child's allowance.
Don't say you don't have enough change or that you'll get it to
him next week. And if you are paying him for an extra chore, give
him the money right then and there. That way you can reinforce
the connection between work and money.
- Help your child learn to save. In an era
of out-of-control credit card debt and a roller-coaster stock
market, it can be difficult to model the benefits and importance
of saving. But even your short-attention-span kids can learn to
put away part of their allowance for something they want in the
future. Have them take a photo of what they'd like to save for
and put it on a jar. They can take the jar with them when you
go shopping so they can fend off temptation by reminding themselves
what they're saving for.
Above all, say experts, be honest: Talk to your
children about money, be forthcoming about your finances and let
your child see what the real world is like - in your checkbook,
at the A.T.M., and in your household. "Your kids are listening,"
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