Raising Money-Wise Kids by Lisa Malice, Ph.D. An allowance is the most important tool you have as a parent for raising money-wise kids. Even preschoolers can develop healthy money values, with your guidance and a couple dollars per week to spend. The biggest philosophical debate around allowances is not how much to give but whether to tie allowances to chores. Lisa Malice earned her Ph.D. in Organizational Psychology from Georgia Tech. She served as a PTA leader at the local and state levels for ten years. She lives in the Indian Hills subdivision with her husband and two children. Contact her at lisa@ moneywisekids.org.
A “pay-for-performance” allowance system is based on a very simple rule every child can understand: If you DO your chores, you DO get your allowance; if you DON’T do your chores, you DON’T get your allowance. This system is said to reflect the real world of jobs and wages and the belief that people shouldn’t expect to get something for doing nothing. This approach is most successful with children who already value money as something worth spending time and effort to get, but chores must be age-appropriate. This system isn’t without its drawbacks. As one parent once told me, “I don’t pay allowances because my kids won’t do chores.” Therein lies the difficulty with chore-based allowances. When a child states, “I don’t want to do that chore tonight, so just dock my allowance,” frustrated parents often get left holding the broom or dishrag. Such refusals are more common among children who have no appreciation for what they can do with money, or, as likely with older kids, have relatives that frequently slip them money. Additionally, tracking of how much children earn based on chores completed can become a nightmare.
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... try paying a base no-strings-attached salary based on age or grade and extra for completing special age-appropriate jobs around the house. The other option—no-strings-attached allowance—gives kids money to learn how to manage it to meet their wants and needs. Payment is usually based on 50¢ or $1 for every gradelevel or year of age. Chores aren’t part of an allowance system, but simply required of kids as contributing family members; continued on page 68 Around WALTON | July 2012
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