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To Pay Or Not To Pay
All about allowances

By Sharon Goldman Edry

"Allowances 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 the car.

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 a week).

Ready to step into the allowance fray? Here are some tips:

  • 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," says Lewin.








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