Childrens' Allowance

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Childrens' Allowance

Postby RenoJay » Tue Apr 02, 2013 11:01 pm

Questions for Bogleheads with kids in the house:

1. At what age do you think it's appropriate to start an allowance?
2. How much should it be?
3. Should the allowance be based on chores, housework, attitude, etc. or is it a unconditional income?
4. What else should I consider?

My kids are currently 5 and 3, but definitely show interest in money and I'm tired of them asking me for hand outs and/or grabbing change from my change drawer. I'd like them to learn that money is scare and that it equates to the stuff they want.
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Re: Childrens' Allowance

Postby jsl11 » Tue Apr 02, 2013 11:08 pm

The amount should depend on the ages of the children. It should also depend on what they are expected to buy with it. For example, if they are to pay for their own clothes, the allowance should be more than if the parents pay for the clothing. Similarly, this would apply to school lunches, gifts for others, and anything else that they will need. Also, since you want them to appreciate the value of a dollar, the allowance should not be too generous. The exact amount is a judgement call.
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Re: Childrens' Allowance

Postby Niko » Tue Apr 02, 2013 11:13 pm

jsl11 wrote:The amount should depend on the ages of the children. It should also depend on what they are expected to buy with it. For example, if they are to pay for their own clothes, the allowance should be more than if the parents pay for the clothing. Similarly, this would apply to school lunches, gifts for others, and anything else that they will need. Also, since you want them to appreciate the value of a dollar, the allowance should not be too generous. The exact amount is a judgement call.
Jeff


+1

Also, allowance shouldn't be based solely on chores. That will lead to "Nah, I don't want to mow the lawn this weekend -- go ahead and keep my $5 this week." Chores should be a given, whether allowance is given or not.
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Re: Childrens' Allowance

Postby Bacchus01 » Tue Apr 02, 2013 11:21 pm

We've been putting this off far too long and want to do this too. Great thread.

I've read a lot of parenting advice that is $1 per age per week. I look at my 11 year old and think "$11 a week?" No way.

We're going to start with 1/2 their age per week. They also get a HEALTHY bonus for good grades. Our 11 year old has straight A's. A's are the expectation in our house. We had a discussion when a couple classes had fallen to B's and one was a B-. He got them to straight A's and he got something he wanted that was worth about $70 this last semester.
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Re: Childrens' Allowance

Postby mhc » Tue Apr 02, 2013 11:24 pm

RenoJay wrote:Questions for Bogleheads with kids in the house:

1. At what age do you think it's appropriate to start an allowance?
2. How much should it be?
3. Should the allowance be based on chores, housework, attitude, etc. or is it a unconditional income?
4. What else should I consider?

My kids are currently 5 and 3, but definitely show interest in money and I'm tired of them asking me for hand outs and/or grabbing change from my change drawer. I'd like them to learn that money is scare and that it equates to the stuff they want.


1. I started when my kids were 3.
2. $1 for age 3, $2 for age 5, $5 for age 7 (basically pocket money to be spent at their discretion)
3. The allowance should not be based on chores. Chores are based on being a part of the household. Everyone contributes.
4. You could teach them to save some of the money, donate some church and/or charity, ...
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Re: Childrens' Allowance

Postby backofbeyond » Wed Apr 03, 2013 12:26 am

My father gave us an allowance equivalent to what it costs to go to the movies each week. He was from the Greatest Generation, and the "show" was how they got their news as well as entertainment. I've continued this practice with my daughter.

It seems to be a great way to keep up with inflation/standard of living in the local area.

Agree, allowance is seperate from chores.
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Re: Childrens' Allowance

Postby jsl11 » Wed Apr 03, 2013 1:25 am

We told our kids that they could spend their allowance on anything they wanted...except candy.
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Re: Childrens' Allowance

Postby pdc3610 » Wed Apr 03, 2013 1:44 am

We do not tie our children's allowance to chores though they are required. Our children receive $0.50 per week per year old. However, half of this goes into a savings account and a portion to tithing as well. We distribute their allowance weekly and I keep a spreadsheet accounting for the income/output for each child. I expect each child to have the right amount to the penny each week. (this often does not happen but when it does there is high praise) Each month if a child decides to take additional spending money to put into their savings account we match 50% of whatever they put in (along with a description of what a 401k company match is periodically). This strategy has worked great for our family but each should find one that works for theirs.
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Re: Childrens' Allowance

Postby HardKnocker » Wed Apr 03, 2013 7:56 am

I never gave allowances.

I paid $5 for each A on report cards and gave Happy Meals for certain athletic achievements.

If they need money for logical reasons i give them money.
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Re: Childrens' Allowance

Postby SamGamgee » Wed Apr 03, 2013 8:41 am

I never received an allowance and I won't give my children one.

As a kid I don't remember ever hurting for money. I walked dogs, delivered papers, and so on. I spent far too much of it on hoagies. When I got into high school, I got a real job standing in front of a cashier and went on kind of a CD buying binge.

If I had an allowance, my spending habits would have been even worse.
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Re: Childrens' Allowance

Postby lwfitzge » Wed Apr 03, 2013 9:06 am

[quote="RenoJay"]Questions for Bogleheads with kids in the house:

1. At what age do you think it's appropriate to start an allowance? I started w my two boys around age 8
2. How much should it be? generally $5/week
3. Should the allowance be based on chores, housework, attitude, etc. or is it a unconditional income? based on household chores and event-based rewards for excellent grades/honor roll
4. What else should I consider? I started saving accounts at the same time so they learn about banking and saving (and about the crappy interests rates)
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Re: Childrens' Allowance

Postby bigirish » Wed Apr 03, 2013 9:15 am

In my eyes Allowance = Welfare. Giving money for no reason other than breathing isn't something to teach children. I would tie the money to chores. The harder they work the more they get. Kind of like real life! I agree with others on performance based bonuses for good grades and matching savings.
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Re: Childrens' Allowance

Postby Grt2bOutdoors » Wed Apr 03, 2013 9:33 am

Never received a performance based bonus or allowance for school grades - turned out fine.
Never received an allowance - I'm still here, had food, shelter, clothes.
I did have a sweet gig walking my neighbors kids to school - $4 a week back then, real money for a whole school year.
Today, there is too much helicopter parenting to ever get a gig like that again.

I opened a savings account with zero interest (cheap banks) - month 1.
I would start out with a $1 a week in coins now. Try and make it fair - the $0.50 routine leads to unfairness with the 3 year old getting $1.50 and the 5 year old getting $2.50, might cause some resentfulness.
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Re: Childrens' Allowance

Postby BuckyBadger » Wed Apr 03, 2013 9:58 am

I know this isn't really helping to answer the question -- but I kind of think that the question is unanswerable. It's so dependent on the personality and strengths and weaknesses of the child. It's foolish to treat children the same simply because they are children. They are individuals and must be treated as such. What's reasonable for one could be pointless and disrespectful for the other.

Case in point: my brother and me.

My brother was something of a terror. He had to be bribed to get good grades. I got good grades anyway, so I didn't need the incentive.

I got a monthly allowance - maybe $50-$75 a month by the time I was 13 or 14? That wasn't for chores, since I was expected to do those. I did have an additional job mowing the lawns of my dad's rental properties. I got extra money for that. I walked the dog next door and got some money for that. I spent all weekend and a couple of days after school, and all of the summer usually working off lessons at the barn where I rode. I got a modest yearly budget for horse shows and anything extra I had to work off through my trainer. My dad matched anything that I invested and he opened a mutual fund for me when I was finally old enough. He gave me the minimum needed to open the account and then matched everything that I put in it going forward.

My parents spent a lot more on my brother because he needed it. He went to boarding school and the private school. He got in trouble a lot. My parents gave him money for grades. If my parents had given him the same freedom that I had he would have self destructed. They gave him money on a case by case basis based on what he wanted it for. if they had given him money monthly, or god forbid given him a yearly budget for something it would have been a disaster. On the other hand, if my parents had treated ME like they treated HIM I would have resented it.

They treated us how we needed to be treated -- they didn't treat us the same.

And now we're both doing great, just in different ways. I have a PhD and work in a technical field. My brother barely scraped out an AA in 4 years but is a very successful chef.

Only you know what your kids are like, so only you can determine what is best for them.

Good luck!
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Re: Childrens' Allowance

Postby RobertAlanK » Wed Apr 03, 2013 10:41 am

We started an allowance for our daughter when she turned six at the beginning of this year. The initial amount is $6 per week. While the amount matches her current age, I don't think we'll increase it every year but as it seems appropriate (maybe every 2 or 3 years during elementary school?). It's not tied to her completing her chores for the reasons that have already been mentioned.

We have followed a plan to encourage her to understand the different uses for money. Each week her $6 allowance is split in thirds - 1/3 for fun, 1/3 for savings, and 1/3 for sharing. This seems to make good sense to our daughter and it's allowing me to teach her some simple math skills (e.g. how can she divide a $5 bill and $1 bill three ways?)
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Re: Childrens' Allowance

Postby MN Finance » Wed Apr 03, 2013 11:06 am

Not a lot to add to the good posts, but can tell you what we do. We have 4 young kids (2 through 7). We started with each of the them when they were 3 and have always given them a dollar per week for their ages (but we do ages for a lot of things because trying to set expectations with 4 kids is hard - for ex: you have to eat 4 spoonfulls of carrots because you're 4, etc). I have no opinion if $7 / week is too much for a 7 year old, but it's all relative and if it were a couple dollars too much or too little, it's hardly going to change their development.

I'm glad we started around 3. Some of them don't get it, but my oldest for one, got it right away. They each have piggy banks and can take their money to the store when we go. I remember my son, at 4, lamenting that he didn't have any money left for the toy he wanted because he spent it all. He learned pretty quick and spent the entire year between 6 and 7 saving for a WII. It was great to see him understand the value of saving and delaying gratification. Another daughter saves and saves and must have a couple hundred bucks, but won't spend any. Another spends everything she gets right away.

As most people said, we don't link the allowance to other expectations; those are expectations. But we do generally pay them a quarter for helping with extra things (at this age that's mostly housework). When one of them gets the bug for money, suddenly all the trash is emptied, tables dusted, etc. My son also soon learned that he could pay my daughter a quarter to make his bed (making beds being an expectation). I don't know if it was right/wrong or which one was smarter, but I enjoyed every minute of it.

We also set the expectation that they need to give 10% away (we do church) and 10% for long term savings. Every Sunday they take money to church and understand why, and then I log into their 529s (or whatever) and show them the other 10% going into their accounts.
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Re: Childrens' Allowance

Postby investingdad » Wed Apr 03, 2013 12:06 pm

We just started an allowance for our kids last month. They're almost 8 and almost 6. It's tied to chores. We hung up a 'chore chart' on the fridge and they mark off each one as complete when it's done. Simple stuff...set the table, make your bed, clothes in the hamper, collect trash on trash nights, empty your bookbag when you get home.

All chores complete is $2 a week. Partial chores is $1 a week. Payday is Sunday. My son is a big fan of payday :happy .

So far it's been working really well. My daugther is especially concientous about collecting trash from upstairs bathrooms on trash night. This was a trial run. If it continues to go well, we intend to increase the chore complexity and payments.

My wife and I talk about money often with them, taking time to explain how we earn it, what we use it for (flushing the toilet, turning on the heat, buying cereal bars, living in our house, and going on vacation all cost money every day), and what it means to invest it. My daughter has asked several times how we invest our extra money and I've explained in very simple terms the concept.

For the OP, I'd say it's age and child dependent. My wife and I are being pretty cheap right now with what we pay them but we want to see if this sticks first.
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Re: Childrens' Allowance

Postby Calm Man » Wed Apr 03, 2013 12:52 pm

Bacchus01 wrote:We've been putting this off far too long and want to do this too. Great thread.

I've read a lot of parenting advice that is $1 per age per week. I look at my 11 year old and think "$11 a week?" No way.

We're going to start with 1/2 their age per week. They also get a HEALTHY bonus for good grades. Our 11 year old has straight A's. A's are the expectation in our house. We had a discussion when a couple classes had fallen to B's and one was a B-. He got them to straight A's and he got something he wanted that was worth about $70 this last semester.

\
Bacchus, this is a very good plan with a few serious unintended consequences IMO. First, what about a child who simply is a C+ or B student no matter what? Second and worse, I think a child should not be rewarded for getting a good mark in terms of $. It sets up I believe a flawed value system. Better that the child receives satisfaction and motivation rather than $ IMO.
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Re: Childrens' Allowance

Postby spartanlaw » Wed Apr 03, 2013 3:22 pm

bigirish wrote:In my eyes Allowance = Welfare. Giving money for no reason other than breathing isn't something to teach children. I would tie the money to chores. The harder they work the more they get. Kind of like real life! I agree with others on performance based bonuses for good grades and matching savings.


I completely agree. If kids want money they need to work for it. I also think that children should be rewarded for good grades and matching savings. I make a great living because I worked my butt off. I want my kids to learn to do the same.
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Re: Childrens' Allowance

Postby investingdad » Wed Apr 03, 2013 3:45 pm

Calm Man wrote:
Bacchus01 wrote:We've been putting this off far too long and want to do this too. Great thread.

I've read a lot of parenting advice that is $1 per age per week. I look at my 11 year old and think "$11 a week?" No way.

We're going to start with 1/2 their age per week. They also get a HEALTHY bonus for good grades. Our 11 year old has straight A's. A's are the expectation in our house. We had a discussion when a couple classes had fallen to B's and one was a B-. He got them to straight A's and he got something he wanted that was worth about $70 this last semester.

\
Bacchus, this is a very good plan with a few serious unintended consequences IMO. First, what about a child who simply is a C+ or B student no matter what? Second and worse, I think a child should not be rewarded for getting a good mark in terms of $. It sets up I believe a flawed value system. Better that the child receives satisfaction and motivation rather than $ IMO.


I hear what you're saying and since I have little ones myself, I sympathize with the potential dilemma.

But, on the otherhand, we do live in a meritocracy based socity (mostly, sorta). Hard work PLUS success in a field that has high barriers of entry is what divides living income from high income.
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Re: Childrens' Allowance

Postby Rodc » Wed Apr 03, 2013 4:00 pm

1. At what age do you think it's appropriate to start an allowance?

When the child is old enough to more or less understand the concept of money. Allowance should be small enough that the value is easy to grasp. Young children are mostly pretty concrete thinkers. I was started around age 5 maybe, and given enough to buy one Popsicle from the Good Humor man once a week. I could decide the day. My daughter was started around the same age with enough for one video a week. Allowance and scope should increase with the child's ability to handle money. The scope of what the allowance is for also creeps up; could include they need to save, give to charity, save to buy presents for family members, or whatever. By high school allowance had morphed into a clothing allowance; they had to think ahead to what they would need, did they want one expensive item or did they want greater variety of less expensive things. By then spending money had moved to be something they earn out side of the bank of mom and dad.

2. How much should it be?

Depends on the child and what it is supposed to cover. Enough to be meaningful, but well below the level at which they are loaning you money. :) It also depends on how much they get from relatives at birthdays and holidays.

I don't remember what we topped out at for our now grown daughter. Our current 12 year olds get $5 week. That seems more than enough for spending money as they save quite a bit of that (enough for example to chip in $100 each along with Christmas money and birthday money, and a little mom and dad money to get laptops last Christmas season).

3. Should the allowance be based on chores, housework, attitude, etc. or is it a unconditional income?

My personal feeling is you do chores to help the family because that is your responsibility as a family member. Mom and dad don't get paid to make dinner, do the laundry or mow the lawn. I also do not believe you get paid for grades. You learn because that is the right thing to do, you do it for its own sake. Never bribe someone to simply behave properly. You want to the extent possible for yoru kids to grow up to do the right things because they are the right things, not merely because they think they can make a buck. Too much of that in the world.

4. What else should I consider?

No matter what you do, at least half the world will think you did it wrong. :)
Last edited by Rodc on Wed Apr 03, 2013 4:03 pm, edited 1 time in total.
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Re: Childrens' Allowance

Postby l2ridehd » Wed Apr 03, 2013 4:01 pm

I set mine up with a "bank of dad" checking account. I used an old check book and used a permanent marker to block out the account number. They had to keep a check register. Each week a deposit of allowance went in as a direct deposit. Amount was $5 a week at 6 rising to $10 a week when they turned 12. If they worked any funds earned had to be deposited in the checking account. If they needed money they wrote a check to me. Incentives for good grades were given and money went in the account. A real bank savings account was also established and any money that was put in this account was matched by the "bank of dad", however only unmatched money could ever be withdrawn. Any savings withdrawal had to be for a pre identified items that they were saving up for. Any time they needed money for anything they wrote me a check noted on it with what they were buying. I NEVER once questioned a purchase. They could have given me a check for beer and cigarettes and I probably would have cashed it.

I used this method as a teaching tool to show how a checking and savings account would work I tried to figure a way to include an ATM card, but was never able to do so. They had to do a monthly reconciliation and I paid interest at the same rate as my bank. The only challenge I had was to always have enough cash to cover any check they might write.

When they went to college we opened a real bank checking account and they were excellent at using it wisely.
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Re: Childrens' Allowance

Postby Rodc » Wed Apr 03, 2013 4:06 pm

bigirish wrote:In my eyes Allowance = Welfare. Giving money for no reason other than breathing isn't something to teach children. I would tie the money to chores. The harder they work the more they get. Kind of like real life! I agree with others on performance based bonuses for good grades and matching savings.


Same reason I don't buy my kids clothes or feed them.

If they have trouble in school they can just live in rags and go hungry. Serves them right too.
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Re: Childrens' Allowance

Postby stoptothink » Wed Apr 03, 2013 4:20 pm

Rodc wrote:
bigirish wrote:In my eyes Allowance = Welfare. Giving money for no reason other than breathing isn't something to teach children. I would tie the money to chores. The harder they work the more they get. Kind of like real life! I agree with others on performance based bonuses for good grades and matching savings.


Same reason I don't buy my kids clothes or feed them.

If they have trouble in school they can just live in rags and go hungry. Serves them right too.


Hmmmm, shelter, food, clothing...for some reason in the least of necessities I seem to have forgotten allowance.
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Re: Childrens' Allowance

Postby lightheir » Wed Apr 03, 2013 4:33 pm

Calm Man wrote:
Bacchus01 wrote:We've been putting this off far too long and want to do this too. Great thread.

I've read a lot of parenting advice that is $1 per age per week. I look at my 11 year old and think "$11 a week?" No way.

We're going to start with 1/2 their age per week. They also get a HEALTHY bonus for good grades. Our 11 year old has straight A's. A's are the expectation in our house. We had a discussion when a couple classes had fallen to B's and one was a B-. He got them to straight A's and he got something he wanted that was worth about $70 this last semester.

\
Bacchus, this is a very good plan with a few serious unintended consequences IMO. First, what about a child who simply is a C+ or B student no matter what? Second and worse, I think a child should not be rewarded for getting a good mark in terms of $. It sets up I believe a flawed value system. Better that the child receives satisfaction and motivation rather than $ IMO.


I've struggled with this idea for years now, and after being fed this line (in bold above) for over 35 years, my personal conclusion is that it's hypocritical to expect students to find all the satisfaction and motivation they can get simply from the "joy of taking classes."

I was a straight-A honors student throughout my whole life, and never got any financial incentives from my parents. My upbringing and results make me look like a poster boy for the no financial-incentive for grade parents out there. However, despite my academic success, I never felt it was fair to myself or other students to ask us to get the best grades possible within our ability with no financial incentive. Would you, as an adult, show up at work and give it every last ounce of effort you had, including weekends, nights, and early mornings on a regular basis if your workplace didn't pay you? I'm aware that a job isn't a class in that in the job you're expected to deliver services where in the class you're acquiring services, there's much more blurring of this at the schoolage levels including high school; in most cases, your school work IS your job at that age.

For sure though, I personally didn't get those As just for the joy of learning. Not even close. I basically did it for a very long-term financial incentive - I knew full well that if I didn't get good scores, I'd be compromising a potential higher paying career down the road, or at least making it significantly harder to open the door to those careers. Without that incentive, there is no way I would have worked so hard on subjects that meant so little to me both back then, and now.

Getting solid grades in today's diverse school system means you can't just pursue what you love. It means that you have to apply yourself MOST hard to the subjects you like the LEAST. Almost nobody is naturally interested simultaneously in math, physics, chemistry, US and European History, physical education, and musical arts, yet that's the pretty typical makeup of a diverse JHS/HS curriculum. I think it's quite unreasonable to ask kids to excel in all of these just by finding their natural interest in them. What usually ends up happening is that a very small percentage somehow do manage to excel for whatever reasons, and the majority learns very little, often to the point of uselessness.

While I don't think throwing money at them alone will remotely come close to solving the motivation problem, I now think it's likely shortsighted as well as hypocritical to disavow including some sort of financial incentive without good data showing that it really doesn't help. I'm more than happy to add financial incentives to grades for added incentive as long as they're not so large that they overwhelm all the decision making. (Unfortunately, you could make the argument that a lot of Wall St and corporate CEOs could use a similar lesson...)
Last edited by lightheir on Wed Apr 03, 2013 4:38 pm, edited 2 times in total.
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Re: Childrens' Allowance

Postby Rodc » Wed Apr 03, 2013 4:33 pm

stoptothink wrote:
Rodc wrote:
bigirish wrote:In my eyes Allowance = Welfare. Giving money for no reason other than breathing isn't something to teach children. I would tie the money to chores. The harder they work the more they get. Kind of like real life! I agree with others on performance based bonuses for good grades and matching savings.


Same reason I don't buy my kids clothes or feed them.

If they have trouble in school they can just live in rags and go hungry. Serves them right too.


Hmmmm, shelter, food, clothing...for some reason in the least of necessities I seem to have forgotten allowance.


Is that more hyperbole than allowance = welfare? Allowance is merely for breathing?

It all seems like silly hyperbole to me.
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Re: Childrens' Allowance

Postby stoptothink » Wed Apr 03, 2013 4:39 pm

Rodc wrote:
stoptothink wrote:
Rodc wrote:
bigirish wrote:In my eyes Allowance = Welfare. Giving money for no reason other than breathing isn't something to teach children. I would tie the money to chores. The harder they work the more they get. Kind of like real life! I agree with others on performance based bonuses for good grades and matching savings.


Same reason I don't buy my kids clothes or feed them.

If they have trouble in school they can just live in rags and go hungry. Serves them right too.


Hmmmm, shelter, food, clothing...for some reason in the least of necessities I seem to have forgotten allowance.


Is that more hyperbole than allowance = welfare? Allowance is merely for breathing?

It all seems like silly hyperbole to me.


I don't agree with the extremity of the quote, but what exactly are they receiving allowance for if it is not tied to chores or grades? Personally, I think allowance is a great opportunity to teach fiscal skills to children, but I am quite sure I am not in a minority here as one who did not receive allowance growing up (but was provided shelter, food, clothing) and turned out fine. Allowance just because doesn't make any sense to me.
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Re: Childrens' Allowance

Postby Rodc » Wed Apr 03, 2013 4:40 pm

lightheir wrote:
Calm Man wrote:
Bacchus01 wrote:We've been putting this off far too long and want to do this too. Great thread.

I've read a lot of parenting advice that is $1 per age per week. I look at my 11 year old and think "$11 a week?" No way.

We're going to start with 1/2 their age per week. They also get a HEALTHY bonus for good grades. Our 11 year old has straight A's. A's are the expectation in our house. We had a discussion when a couple classes had fallen to B's and one was a B-. He got them to straight A's and he got something he wanted that was worth about $70 this last semester.

\
Bacchus, this is a very good plan with a few serious unintended consequences IMO. First, what about a child who simply is a C+ or B student no matter what? Second and worse, I think a child should not be rewarded for getting a good mark in terms of $. It sets up I believe a flawed value system. Better that the child receives satisfaction and motivation rather than $ IMO.


I've struggled with this idea for years now, and after being fed this line (in bold above) for over 35 years, my personal conclusion is that it's hypocritical to expect students to find all the satisfaction and motivation they can get simply from the "joy of taking classes."

I was a straight-A honors student throughout my whole life, and never got any financial incentives from my parents. My upbringing and results make me look like a poster boy for the no financial-incentive for grade parents out there. However, despite my academic success, I never felt it was fair to myself or other students to ask us to get the best grades possible within our ability with no financial incentive. Would you, as an adult, show up at work and give it every last ounce of effort you had, including weekends, nights, and early mornings on a regular basis if your workplace didn't pay you? I'm aware that a job isn't a class in that in the job you're expected to deliver services where in the class you're acquiring services, there's much more blurring of this at the schoolage levels including high school; in most cases, your school work IS your job at that age.

For sure though, I personally didn't get those As just for the joy of learning. Not even close. I basically did it for a very long-term financial incentive - I knew full well that if I didn't get good scores, I'd be compromising a potential higher paying career down the road, or at least making it significantly harder to open the door to those careers. Without that incentive, there is no way I would have worked so hard on subjects that meant so little to me both back then, and now.

Getting solid grades in today's diverse school system means you can't just pursue what you love. It means that you have to apply yourself MOST hard to the subjects you like the LEAST. Occasionally you'll find that painful subject actually becomes invigorating, but more often than not, it won't really improve your interest in that field. While I don't think throwing money at them alone will remotely come close to solving the motivation problem, I now think it's likely shortsighted as well as hypocritical to disavow including some sort of financial incentive without good data showing that it really doesn't help.


One issue that makes this difficult is that children are not adults and school is not a job. There are significant differences.

I will say I know many kids who work very hard at school with no $ payoff. I would start there. If it works it is optimal.

I also know some kids who seem to need to be bribed to do anything. Sometimes you just do what you need to do, even if it is not your personal ideal.

I also know some kids who do not work hard unless they want to and refuse all bribes. (I have one who at times we tried things like sticker charts when little and it did absolutely nothing for motivation. He is still entirely internally motivated. He did not fall far from the tree so to speak. )
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Re: Childrens' Allowance

Postby Rodc » Wed Apr 03, 2013 4:51 pm

I don't agree with the extremity of the quote, but what exactly are they receiving allowance for if it is not tied to chores or grades? Personally, I think allowance is a great opportunity to teach fiscal skills to children, but I am quite sure I am not in a minority here as one who did not receive allowance growing up (but was provided shelter, food, clothing) and turned out fine. Allowance just because doesn't make any sense to me.


When you were young did your parents ever buy you something you did not absolutely need? Because you wanted it?

If so they gave you money (or things that cost money) for nothing. Or when you were 5 did they never buy you something unless you first did chores?

Virtually all parent give their kids money for non essentials. We just choose to call it by different names or do it in slightly different ways.

I have known many who did not get an allowance; they simply got money in more ad hoc ways that likely did less to help them learn to handle money. Most turned out fine by the way. This is not some super critical aspect of parenting.

If someone wants to tie to chores that is fine. Not the lesson I want to focus on, in that area I want to focus on we help each other.

My kids get food, shelter, all the things they need and a few things they want. That seems to be what you should provide for your kids, that is the right thing to do. It is because that is what responsible parents to. I choose to fund some of the wants through allowance. Other things I pay for directly. Allowance is not simply for breathing.
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Re: Childrens' Allowance

Postby sesq » Wed Apr 03, 2013 4:55 pm

We pay 50 cents x age in years, starting at 5. Basically 25 cents goes to church, and the rest is 50/50 between an account they will get when they go to college (not for tuition, just cash to them) and money they can just spend or save. Default is save.

ING Direct, now Cap One has a nice kids account where they get their own log in and can check balances. I set up everything to automatically transfer each week. If they want cash from the non-LT savings I manually move it out and hand them cash. Because I have more than six monthly transfers I had to open a checking account to fund it (they don't like 6+ transfers in/out of a savings account), but you can open a checking account there with no fees or min balances, so I opened one with about $100 in it. It gets replenished when I get random checks using their mobile app.

My seven year old daughter seems to be a saver. At first she was checking the balance daily (like me) despite the fact that allowance only funded weekly, and interest monthly. She once was given $5 cash, spent it, and immediately lamented not having the actual five dollar bill anymore. Her piggy bank now has about 4 or 5 $5 bills (her maternal grandparents throw fivers in for valentines day and the like). She hasn't yet mastered investing as she won't let me deposit the fivers into her interest bearing account.

My four year old hasn't started yet. Should be interesting to see how he rolls.

Its a shame interest these days is so pathetic. I had a 5% passbook as a kid and seeing the interest post was exciting to me.
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Re: Childrens' Allowance

Postby stoptothink » Wed Apr 03, 2013 5:04 pm

Rodc wrote:
I don't agree with the extremity of the quote, but what exactly are they receiving allowance for if it is not tied to chores or grades? Personally, I think allowance is a great opportunity to teach fiscal skills to children, but I am quite sure I am not in a minority here as one who did not receive allowance growing up (but was provided shelter, food, clothing) and turned out fine. Allowance just because doesn't make any sense to me.


When you were young did your parents ever buy you something you did not absolutely need? Because you wanted it?

If so they gave you money (or things that cost money) for nothing. Or when you were 5 did they never buy you something unless you first did chores?

Virtually all parent give their kids money for non essentials. We just choose to call it by different names or do it in slightly different ways.

I have known many who did not get an allowance; they simply got money in more ad hoc ways that likely did less to help them learn to handle money. Most turned out fine by the way. This is not some super critical aspect of parenting.

If someone wants to tie to chores that is fine. Not the lesson I want to focus on, in that area I want to focus on we help each other.

My kids get food, shelter, all the things they need and a few things they want. That seems to be what you should provide for your kids, that is the right thing to do. It is because that is what responsible parents to. I choose to fund some of the wants through allowance. Other things I pay for directly. Allowance is not simply for breathing.


Your statement was far more extreme than the one you responded to, comparing allowance to shelter and clothing. I never received allowance, never received money for grades, and at times did without actual necessities (like shelter and food). That was the reality of being one of 5 children of a single mom who was an underemployed medical assistant. I am in a totally different financial situation and fortunate that I will be able to use allowance as a learning tool for my own children. Your statement was a slap in the face to parents who can't afford it or have other valid reasons for not providing their young children with spending money just because. As an adult, you don't get things you want just because, you have to earn them. If you believe that should be different for children, well I disagree.
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Re: Childrens' Allowance

Postby Rodc » Wed Apr 03, 2013 5:10 pm

Your statement was a slap in the face to parents who can't afford it or have other valid reasons for not providing their young children with spending money just because.


Not intended as a slap in the face to your parents or others without the means to provide basic necessities. If it felt that way to you I apologize.

I only intended to meet over the top with over the top.
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Re: Childrens' Allowance

Postby avalpert » Wed Apr 03, 2013 5:16 pm

bigirish wrote:In my eyes Allowance = Welfare. Giving money for no reason other than breathing isn't something to teach children. I would tie the money to chores. The harder they work the more they get. Kind of like real life! I agree with others on performance based bonuses for good grades and matching savings.


Do you also think feeding them = welfare? A family isn't a libertarian paradise. Chores are part of the responsibility of being a member of the family, providing at an appropriate level is part of the responsibility of being a parent.

Allowances can be a useful teaching tool for kids, but at some extremes what it teaches is not particularly healthy.
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Re: Childrens' Allowance

Postby MN Finance » Wed Apr 03, 2013 6:32 pm

This kind of devolved into whether or not it's a right or privilege to get allowance. Frankly I don't think it will change your kids development either way, but I would much rather teach them how to handle money, than the alternative. And I would much rather see them blessed, than not. They know that if they obey us, do what we ask, honor us, etc that we will bless them as much as we humanly can (within their understanding).

We treat "some" spending money as an inherent right (not that we state how much of it is a right). It's the same as food, shelter, clothing, breathing the air, etc. Because if you say allowance is only earned, then why don't you make them earn their dinner? Or their clothes? Oh, that's different... Why is buying them 5 pairs of pants for school a right... they can get by with 4, or 3, or 2, or 1 can't they? They could probably live ok on 2 meals a day, right? And there's really no reason to bathe more than once a week at this age. No reason to buy honey nut cheerios when the plain ones are 10 cents cheaper. If they want honey nut, they can earn them. Everything is relative, so where's the line. For a kid, having a bat to play ball within instead of a stick is just as much a necessity as getting enough to eat.
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Re: Childrens' Allowance

Postby tadamsmar » Wed Apr 03, 2013 6:49 pm

Calm Man wrote:
Bacchus01 wrote:We've been putting this off far too long and want to do this too. Great thread.

I've read a lot of parenting advice that is $1 per age per week. I look at my 11 year old and think "$11 a week?" No way.

We're going to start with 1/2 their age per week. They also get a HEALTHY bonus for good grades. Our 11 year old has straight A's. A's are the expectation in our house. We had a discussion when a couple classes had fallen to B's and one was a B-. He got them to straight A's and he got something he wanted that was worth about $70 this last semester.

\
Bacchus, this is a very good plan with a few serious unintended consequences IMO. First, what about a child who simply is a C+ or B student no matter what? Second and worse, I think a child should not be rewarded for getting a good mark in terms of $. It sets up I believe a flawed value system. Better that the child receives satisfaction and motivation rather than $ IMO.


There is some evidence that money and other tangible rewards undermine intrinsic motivation. See these links:

http://en.wikipedia.org/wiki/Overjustification_effect

http://en.wikipedia.org/wiki/File:Overj ... vation.jpg

Also, the whole grade thing is complicated. One should definitely not rely too much or expect too much from monetary rewards for grades. Motivation may not be the key to improvement, could be a need for skills training to overcome a learning disability or just plain bad study skills. You need to keep an open mind and stay plugged into what is happening at school. Also, the interval between grades might be too long for any effective behavior shaping. Small steps are key to behavior shaping. Perhaps rewards for daily homework or grades on homework.

Never, never neglect intangible rewards because you are giving tangible ones. Positive attention is literally rewards like crack, it releases dopamine in the brain. Few parents realize the power of it. Even accomplishing the most mundane chores is an indicator of maturity, reliability, willingness to contribute to the family and take the load off others. Don't neglect to say so frequently.
Last edited by tadamsmar on Wed Apr 03, 2013 8:03 pm, edited 1 time in total.
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Re: Childrens' Allowance

Postby RenoJay » Wed Apr 03, 2013 6:55 pm

Thanks for all the great advice on this thread!! I have a lot to think about.
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Re: Childrens' Allowance

Postby stan1 » Wed Apr 03, 2013 7:12 pm

Re: paltry interest rates.
Bank of Mom and Dad could subsidize rates up to 5%.
Agree its tough for a 7-9 year old to get excited about savings when the interest earned for the month is $.02.
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Re: Childrens' Allowance

Postby Geologist » Wed Apr 03, 2013 7:45 pm

To provide a less serious note: In Dave Barry's book on money, he recommends that you force your children to save part of their allowance that is kept in cash in the house, so you have a place to get money if you need to go buy beer.
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Re: Childrens' Allowance

Postby jon-nyc » Thu Apr 04, 2013 5:16 am

Great topic! We're not there yet with my son but I've been giving it thought, and was going to start this thread at some point. I will give an allowance with a few rules attached, probably requiring him to save a portion.

A friend of mine started allowance with his kids relatively young, his thought was that without the allowance all the kid could do if he wanted something is ask (not to say whine or beg). Once allowance came into the picture the kid had options - he could save for it. And of course it leads to all kinds of teaching moments.

After his experience I've been prepared to start allowance relatively young as well, but so far my son hasn't shown that much of a desire for things - we almost never go to stores together (other than a grocery store) and we don't do TV so Madison Ave hasn't manufactured any wants in him yet. I suspect this will change soon as he socializes more with other kids.


I'm also of the opinion that chores and allowance be disassociated, though I don't think its a big deal to do it otherwise. As for grades, I've read references to academic studies that say its a bad idea, though it can be helpful in the short term. I've not read the studies themselves. At any rate, I personally wouldn't tie payment to grades.
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Re: Childrens' Allowance

Postby z3r0c00l » Thu Apr 04, 2013 6:58 am

Never had an allowance, my parents were willing to buy the things I needed or wanted, and I was willing not to waste their money on junk. Never spoiled by it and gained an appreciation of money all the same. Their trust in me somehow instilled a sense of responsibility.
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Re: Childrens' Allowance

Postby tadamsmar » Thu Apr 04, 2013 8:09 am

This is a really good article on the evidence from studies of the effect of money rewards to improve academic performance:

http://responsibility-project.libertymu ... =keyword_s

Some reward systems were actually counterproductive. One thing that proved to be particularly effective was paying $2 for each book that was read. It improved test scores and the effect persisted into the next year when no rewards were given.

Here's another article on results from giving money for academic performance:

http://www.huffingtonpost.com/2012/06/2 ... 16910.html
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Re: Childrens' Allowance

Postby tadamsmar » Thu Apr 04, 2013 8:18 am

SamGamgee wrote:I never received an allowance and I won't give my children one.

As a kid I don't remember ever hurting for money. I walked dogs, delivered papers, and so on. I spent far too much of it on hoagies. When I got into high school, I got a real job standing in front of a cashier and went on kind of a CD buying binge.

If I had an allowance, my spending habits would have been even worse.


It could be that giving an allowance or giving money for chores at home is counter-productive (assuming the goal is to teach the kid about the work in the real world and money management) if the allowance has the effect of discouraging the kid from going out and getting jobs in the neighborhood.

Getting jobs outside the home is a real world job. You have to satisfy the customer to keep the job, and you are free to quit the job if you find a better opportunity or you don't need the money.

At least, if you give an allowance then you should make an effort to not discourage the kid finding jobs outside the home.
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Re: Childrens' Allowance

Postby tadamsmar » Thu Apr 04, 2013 8:43 am

I have a hobby of learning about evidenced-based/research-based/science-based parenting methods.

I made a quick scan of sources on that and found nothing about allowances. There may have been no study of the matter.

Makes me skeptical about much of this thread. How much of it is evidence-based? Rumsfeld would call this a known unknown. But perhaps it's an unknown unknown for many who think they know something about the matter but really don't have any scientific evidence to back up their beliefs.

Token economies for parenting have been studied a lot. But they differ from allowances in that real money is not used. Also, the goal is behavior shaping, the goal of teaching kids how to manage money is never a focus of study. And they are not really fee for service systems since often the payments are phased out after the habit is established and the habit is sustained using differential positive parental attention with no tangible rewards. The token economy may continue, but the payments are made for a new set of behaviors. In evidence-based parenting the task of getting a new behavior to happen the first time is viewed as different from the task of sustaining or shaping an existing behavior. I think that real money is typically not used in token economies because it gives the parent more control. If you ask a young kid what they value, it's often privileges and services from the parent, like a special trip or more TV time. The parent can require payment in tokens for these and give tokens for a limited list of target behaviors. If the parent accepted money that could be earned by other means, it would undermine the goal of encouraging the specific behaviors on the list.
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Re: Childrens' Allowance

Postby Lilly » Thu Apr 04, 2013 10:32 am

I was born in 1948. As a child, I remember going into town with my parents on Friday nights. We would find a good spot to park on Main street. That was where all the stores were and where everyone hung out on Friday nights. Now came the most exciting part of the night. My dad would dig into his pocket and pull out his change. Us kids would wait in anticipation as he laid a quarter in each of our hands. We were told to be back to the car at 9 o'clock sharp. Then we were set free to do whatever we wanted. I spent that quarter every Friday. As we got older, I am sure we got a little more, but I still remember getting that quarter on Friday nights.

When the children of my parents household started the 9th grade, we were given $25 a month. With this money we need to pay for most everything we needed. Clothes, school supplies, church offering and entertainment. School lunch was about $2 a week. We learned to budget on our own. I also did a lot of babysitting, so I always had $. I saved on my own also.

Best wishes,

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Re: Childrens' Allowance

Postby Rodc » Thu Apr 04, 2013 3:44 pm

How much of it is evidence-based?


Truth in advertizing: for me, none. :)

So thanks for the links.

Frankly, while it would be interesting for some academic to study, children are so highly variable (as are their parents and their families), and this not all that important, that I doubt it would be a high value area to explore. Though I could be wrong.

That said, if it helps someone get tenure they should definitely pursue it. :)

Honestly, most of what parents (myself included) argue about is not very important.

If we really want to get going let's argue [medical topic removed by admin LadyGeek]

(I once moderated a subforum for dads of twins, and watching some of the other forums was interesting)
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Re: Childrens' Allowance

Postby Rodc » Thu Apr 04, 2013 4:03 pm

Never, never neglect intangible rewards because you are giving tangible ones. Positive attention is literally rewards like crack, it releases dopamine in the brain. Few parents realize the power of it. Even accomplishing the most mundane chores is an indicator of maturity, reliability, willingness to contribute to the family and take the load off others. Don't neglect to say so frequently.


That is an excellent point. Starting very young I think it is far more helpful to watch out for when the child does something good and give appropriate praise than to wait until the child does something wrong and scold them. If they do scold them, don't just tell them what they did wrong, guide them towards the behavior you would prefer. There will always be a mix of course, but if you go around all day yelling, "Tommy! Stop that!" you are doing things poorly. Now providing praise for everything little thing can be over done (you don't want to follow an 8 year old around an gush every time they add 2+2 and get 4. :))

[Off-topic medical issue removed by admin LadyGeek]

FWIW: right or wrong this is one argument against merit pay for teachers. The concern is they will work harder and work more collaboratively if they are doing it to help kids, but merit pay may shift to "I only work hard to make an extra buck," which make it less likely they will help each other, and after a couple of years of not making the merit cut a decent but not yet great teacher might just start mailing it in since the incentive has shifted to bonus pay they are not getting.

People do not always take away the lesson you think you are providing.
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Re: Childrens' Allowance

Postby LadyGeek » Thu Apr 04, 2013 4:50 pm

As a reminder, medical issues are off-topic. See: Forum Policy

Medical Issues

Questions on medical issues are beyond the scope of the forum. If you are looking for medical information online, I'd like to suggest you start with the Medical Library Association's User's Guide to Finding and Evaluating Health Information on the Web which, in addition to providing guidance on evaluating health information, includes lists of their top recommended sites in the following categories: consumer health, cancer, diabetes and heart disease. They also provide a larger, but less frequently updated, list called Top 100 List: Health Websites You Can Trust.

Please stay on-topic, which is a child's allowance.
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Re: Childrens' Allowance

Postby money » Thu Apr 04, 2013 4:56 pm

I never received an allowance or money for grades, so those concepts seem odd to me. I am not sure of the pros/cons of using money as an incentive for youth and the impact of their attitude toward work and being productive, however, I do not see it as being necessary. I think kids learn through observation of their parents' behavior more than anything else.

RenoJay wrote:My kids are currently 5 and 3, but definitely show interest in money and I'm tired of them asking me for hand outs and/or grabbing change from my change drawer.


If this is a major reason for starting an allowance, it sounds like they learn to be more respectful and less demanding before getting one.
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Re: Childrens' Allowance

Postby Valjean » Thu Apr 04, 2013 10:58 pm

We have never given our children an allowance but when they were 8 and 10 I set up a Bank of Dad along the lines of a plan that was in some book, the name of which I have long forgotten.

The idea is that you pay them a very high rate of interest -- the author recommended 5% per month, I did 3%. One year when Grandma gave them each $100 for Christmas I told them that the money was going in the Bank of Dad and explained the interest to them. My younger one "got it" quicker than the older one did.

The high rate of interest is very effective at teaching the value of savings. They wanted to know how much interest they earned each month and gave me more money to deposit from chores, other gifts, etc. it made them a little frugal, because they wanted that money in the bank earning them "free" money. When they withdrew money from the B of D, the was a direct relationship to how much interest they earned. By the time they were teens, I had to put a cap on interest earnings and said no more interest after age 18. It does not seem to matter that in the real world you can never get that much interest. By the time they're ready for a real savings / checking account, the value of saving is already in their DNA.
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Re: Childrens' Allowance

Postby tadamsmar » Fri Apr 05, 2013 8:08 am

Turns out there is some research on the impact of allowances on financial literacy:

1. Allowance in general does not appear to lead to increased savings or financial literacy. Children who receive unconditional allowances appear to be less financially literate than those who receive no allowance at all.

2. If you do give an allowance, it should be linked to household chores. Speak with your children about money and the lessons they should be learning, like the purpose and rules of the allowance. Share your family’s financial constraints so your children don’t see allowance as an entitlement.

3. If you do allowance poorly, you’re setting your kids to be worse off than if you didn’t do it at all.


http://www.learnvest.com/2012/01/money- ... than-good/

The research was not a controlled prospective study, so it does not prove that a unconditional allowances caused the financial literacy. I suppose that parents that choose to give unconditional allowances could have a tendency to do or fail to do other things that lead to lower financial literacy.
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