Is Allowance a Bad Word?

Many things we do as parents have been handed down to us by previous generations.  And often we insert those traditions into our family without considering the purpose.  The child allowance is one example.  As parents, we have the opportunity to teach our children how to manage money, and one of the most common ways to do that is through the use of an allowance. You can google “allowance” and find all sorts of instructions on how much to give your child and at what age.  But I want to back up the whole conversation and first ask you this, “Why do you give your children an allowance?”

Look at the following definitions of allowance:

1. An amount or share allotted or granted
2. An amount of something, esp. money or food, given or allotted usually at regular intervals

Essentially, an allowance is free money, money just given to someone and usually given regularly. Wow! Sign me up!  

You may be asking yourself, “What’s wrong with that?  Hey, I’ve worked hard for the money I give my child.  They deserve the best.  They’re MY kids after all.  My parents couldn’t give me what I can give my child.  And they need to know they’re loved.  Man, I’m a generous parent.”

No doubt generosity is to be revered and regular.  But, free money.  That makes most of us irregular.

Some of us have called it “an allowance” when, in fact, our children work for their money, completing chores around the house. In this case, it should actually be called “a commission,” according to Dave Ramsey.

On the other hand, some of us have been giving free money, to our kids, with no strings attached. Maybe you don’t see a problem with this, so let me share something I recently read on usnews.com:

"According to new findings, paying children an allowance can do more harm than good when it comes to their future financial literacy skills. According to Lewis Mandell, a professor of finance at the University of Washington who recently studied more than 50 years' worth of allowance research, "The kids who receive [a regular, unconditional] allowance tend to think far less about money in general." In fact, he adds, those children appear more likely to grow up to be "slackers," since they aren't learning to associate work with money."

As I travel around the country presenting ScreamFree Parenting, I always ask parents this question: What characteristics do you want to see in your adult children? Not once has someone said, “a bum, a slacker, someone who lives off of others.” Without fail, “self-reliant, productive, and financially responsible” are mentioned. If those are the traits that we’re after, then how do we increase the chances that our kids will turn out that way? Well, according to Lewis Mandell, it is NOT by giving them an allowance.  In all probability, Dave Ramsey has it right. We need to be teaching them that money comes their way through work, so giving them a commission for chores they complete seems the most logical. 

I can hear some of you now…”Are you suggesting that my kid be paid for every little thing she does around the house?”  Absolutely not!  I don’t get paid for making dinner, doing the laundry, or making my bed every day. It’s important to distinguish between chores that earn money and chores that don’t. In fact, perhaps different words to describe the two would help. How about “chores” for paid endeavors and “duties” for unpaid? For any household to run smoothly, stuff has to get done. Period. And as I tell my kids, “You get to clean up the kitchen because you live in this house.”

There’s the flip side of the coin as well. Does this mean that we never give our kids money “just because”? Is generosity thrown out the window? Absolutely not! There are certainly times when we want to bless our kids, like giving them some spending money for souvenirs.  That’s certainly a fun part of being a parent.

If we want our kids to grow up to be financially independent and responsible, then we need to begin with the end in mind and look for ways to “allow” them to grow in those traits.