Kids should not have money

[Kaplin261]

I don't understand the hole allowance thing, give your child money so they can persue materialistic items. I here that argument that it teaches them to budget for bigger items, but in the end its just going to be a bigger toy.

Am I missing something here?

[ender]

I don't understand the hole allowance thing, give your child money so they can persue materialistic items. I here that argument that it teaches them to budget for bigger items, but in the end its just going to be a bigger toy.

Am I missing something here?

Sure, your kids could never touch money until they are 18 and out on their own and have literally no practice with it, so you can throw them to the wolves of society which has billions upon billions trying to convince them to buy things.


There are two questions here, first is related to an allowance - ie money for breathing. The second is related to giving children spending power knowing they will likely make bad decisions.

I don't think an allowance is a good idea. I really like how Dave Ramsey approaches this. Instead of an allowance, have some sort of chores. This is additional to normal chores as part of the household. Tell kids they can do these if they want money for X (especially as they get older in their teens).

You have to teach your children how to spend well. I think what would be a great way to do this is slowly ease them into it. Perhaps give children a clothing budget at say age 14 (the amount you'd spend on them).  Start going to stores with them and helping guide them spending choices. You are the parent, you get the ultimate say, but they can choose. If they want to buy a really expensive name-brand thing then they get fewer clothes than buying on sale, less "flashy" things.  You can parent them through this, helping them to see the decisions. But them making the ultimate decision.

Slowly you can give them more and more autonomy in their decision making until they are ultimately determining all of what they spend. Even though it's your money, it's the money you would have otherwise spent on them anyways but it can teach them how to make decisions in a very controlled environment.

[swick]

I think you are missing out on being able to teach your children a lot of life lessons. Allowances can be given in a lot of difference ways. I Feel very strongly that allowances/spending money should not be taken away as a punishment. I have seen how this creates a scarcity mentality that can last into adulthood.

Money is a tool, the sooner you teach your kids how to use it the better off they will be. They will not learn money management in school (at least where I live) - so if you don't prepare them, they will have rough time and it is better to learn and make mistakes when you are younger instead of waiting to an adult with credit cards and too big loans that can affect their adult lives forever.

Also, I'm not sure you are giving the kids enough credit.  Sure there are kids who will go out and buy the bigger latest and greatest toy, but where do they learn to do that? It might be because they have seen this behaviour modeled by a parent or another adult they look up to. There are also the kids out there who raise money for a charity they are passionate about - the SPCA is a popular one - or who are naturally savers, or who have been taught and guided about money, and see it as a tool to accomplish bigger and better goals.

Ender's got some great ideas! Also, my latest blog post covers this topic exactly, it's in my signature if you are interested in reading more.

[cerebus]

I don't see much wrong with them budgeting for materialistic items. They're just kids, and their friends have all the XBOXes and stuff, and they have to live in a mustachian household with frugal parents who don't just chuck money at them, so they can start to feel bitter about it which also isn't good.

If they have their own money they learn very quickly what it's worth, instead of having you just swipe your own card. I know someone who gives their kids money for birthday instead of toys because the kids get very stingy with it, and then they tell them, well if you won't pay for your rubbish, why must I? They learn good lessons about deferred gratification and the hierarchy of wants (not just getting whatever their eyes see).

[Kaplin261]

My son is only 18 months old so I have some time to figure this out. I understand there are valuable lessons that can be learned from children budgeting there own money,hard work earns money and even investing money to watch it grow. All great life skills.

How ever it opens a door for desire for material, hard work earns me more material. It even resembles adults living paycheck to paycheck budgeting just to make it to the next paycheck.

Clothing, just like a car is a tool not a fashion statement(I have a boy,this may not be a problem in the teen years). It is the parents responsibility to provide clean,safe and adequate clothing. Here is a chance to teach a life lesson about money, you don't need to have what billy up the street is wearing to be happy.

Toys... As a adult I have toys,not the latest and greatest. If my son needs a toy, we will discuss how to meet his needs, I could even let him do the research on craigslist. But the biggest thing is, the amount of money in his piggy bank is not a determineing factor if he gets to buy the toy.

Social outings.. Again my child's piggy bank size should not be the determining factor if he gets to go to the movies with his friends. Instead of letting money determine when he gets to spend that hard earned cash on movie date with friends, how about we determine the frequency he gets to go out.

If your kid needs something for his/her well being, discuss it with them. Set limits, but don't let there budgeting skills determine what they get or do.

[DecD]

We decided to start giving my son an allowance at age 7.5 (he's now almost 8, so it's been going on a few months.)  We decided to start because the topic of money was causing him a lot of frustration- to tears, sometimes.  We don't buy him things in between Christmas and birthday, so if there's something he wants (usually a game) he has to save up his money and buy it himself.  But....how can he save up money if he has no way to make income?  He felt helpless and frustrated any time the topic came up. 

It has given us a chance to teach him some good lessons, as well.  I explained to him how, as a kid, I never spent my allowance, saved it instead, and had enough to buy a car by the time I was out of college.  So he has chosen (his idea, even if I led the witness a bit) to save a set portion of his allowance every week.  We use YNAB to track his money, and he gets excited to see the savings value grow.  He also thinks long/hard before spending any of his money in the discretionary portion.  We teach him about finding the best deal, about waiting until you're sure you want something before buying it.  About budgeting- if he wants X game that's $15, when will he have enough to purchase it?  And he learns to consider if he REALLY wants that game/toy if it costs so much.

So in principal I agree with you- kids don't need money or an allowance.  But for my child, NOT having access to money was causing an issue, and HAVING access to a small amount of money is teaching him some good lessons about how to manage it.  In a perfect world he wouldn't desire stuff- games/toys.  But he's a normal kid, and finds stuff he wants.  This solution is working for us.

[Logic_Lady]

If you want children to understand how to budget and save, they need an allowance.

I presume that parents who don't give their children an allowance pay for stuff themselves. For example, kids need clothes--if they don't have an allowance the parents are buying the clothes. Or if the kid wants to go to a movie with some friends the parent pays. If the kid gets a toy the parent pays.

If you pay for everything your kid gets yourself, whether you are frugal and buy them very little or are spendy and buy them a lot, they will not internalize how to handle money.  For example, let's say the kid wants an xbox. There are two scenarios--the kid who gets an allowance and the kid who doesn't.

Scenario 1: The kid asks for an xbox, parent says "you can have one if you buy it yourself." Either the kid has enough money to pay for the xbox or they don't and they have to save. Then the kid has to decide whether they want to spend their saved up money on the xbox or not. If they do spend it, they have less money for the future. So they learn about delayed gratification (from saving up) and basic budgeting (if you spend money on one thing you have less money for other stuff). If they decide not to get an xbox there is a reward--they get to keep all that saved up money. Then the kid has learned about frugality and saving. Either way, the whole process has taught the kid about being responsible and managing their money.

Scenario 2: The kid asks for an xbox. The parent either buys the kid the xbox or doesn't. If the parent refuses to buy it, the kid hasn't learned anything about money--as far as they're concerned they didn't get the xbox because their parent is mean, not because the kid spent their money on other stuff. If the parent refuses to buy the xbox the kid doesn't get to keep the money, so there's no incentive for the kid to deny themself and be frugal. The kid learns nothing managing money. Or, the parent does buy the kid the xbox, and the kid learns that the best way to get stuff is to convince their parents (instead of saving up their own money). In addition, the kid doesn't have to sacrifice any of their own money for the xbox, so they learn that stuff is free for them. Either way, the focus is on whether the kid can convince their parent to buy something, not on whether the kid can save up money to buy something themself.

My parents gave me an allowance from when I was about 5 years old. It started out just a quarter, which I used to buy candy (my parents never ever bought me candy). Once it was a bit higher (a few dollars) my parents required me to divide it into three categories--long-term savings, charity, and spending. The long-term savings went into a bank account that I didn't touch (I also put gifts from relatives into this account, along with earnings from lemonade stands,and  when I was older, from my part-time job). The charity money went into an envelope until it was enough to donate (I got to pick the charity). The "spending" money was mine to do whatever I wanted with. I could spend it right away, or save it for later. I mostly used it to buy books (in addition to the many library books I checked out every week). If I wanted to buy something, rather than my parents buying it for me or refusing outright, they would just tell me to buy it myself if I wanted. This taught me to take responsibility and really consider whether I wanted something enough to buy it.

That bank account was enough to buy a (cheap) car when I was sixteen. I used up all the money but since I had a job by then I quickly saved up a lot more money, which I could put in a Roth IRA. All those years of saving made it easy for me to just stick my paycheck into a savings account (and then transfer to the Roth) instead of blowing it on unnecessary stuff. If my parents had always bought stuff, or refused to buy stuff, for me, I probably would have spent all my earnings on clothes or starbucks or whatever, since I would never have learned that savings paid off.

As for chores, my parents didn't tie the base allowance to completing chores because they wanted to teach us that doing chores was a necessary part of contributing to the household, not a way to earn extra cash (so there was no option to refuse to do chores and forgo the allowance). We could do extra chores for more money, but we had to do our regular assigned chores no matter what.

[KCM5]

Parenting isn't really about what kids "deserve." It's about teaching them to live successfully in the world independent of you. If you start looking at the purpose of parenting differently, then you'll see that obviously kids should have money (either given as an allowance or earned through work).

[sallyanne]

I don't give my kids allowances yet (oldest is 10) but I imagine I will start at some point. They do have their own money from birthday and holiday gifts, there are always relatives who gift $ instead of actual gifts.

Clothes - I buy. That means I get to make the decision about what qualifies as a need and fill that need.

Toys, games, "wants" - If they want something, they know when their next gift is coming up, birthday or holiday season, and about how much value they will get. So if they want something for about $20, they know their grandparents will be willing to buy that. $50, maybe if they ask multiple family members to join together to send them a gift. More than that, it will have to come from their own savings. However, I have veto power over their savings. When each daughter has inevitably decided to spend >$100 on an American Girl doll, I nix it.

Candy - once per year I give them $1 to spend in a store for candy to bring along on a trip. By their birthdays I give them a set budget for gift bags they will give out to their friends. Their choice to give more to less people or less to more people. They also get $2 each in the summer to spend at the never-ending lemonade and popcorn sales the kids in our neighborhood love to make. (They also get to make their own sale, with all proceeds to charity, so no income source there)

I think they are building good budgeting skills and savings muscles without feeling deprived. And as I often tell them when we're shopping "We're rich (actually not yet true), but that doesn't mean this item is worth spending this money on!"

[tthree]

I don't understand the hole allowance thing, give your child money so they can persue materialistic items. I here that argument that it teaches them to budget for bigger items, but in the end its just going to be a bigger toy.

Am I missing something here?

My parents would agree with you.  They never gave us an regular allowance, and they were adamant that we not get paying jobs until we left home.  The idea being: (1) for most kids this money becomes 100% disposable income (not a "real" world situation), (2) there is a ton of shit you could do around the farm for FREE.

When we got older they would give us X number of dollars to buy clothes for back to school, and we were able to figure it out on our own.

Anecdotally, both my brother and I are hard workers.

I can see the merits of this system, but I am still unsure of how I am going to handle money with my own kids.

[SuperSecretName]

my kids are 9 and 11.  they each get $10 a month.

the 11 y/o is a natural saver.   the 9 y/o is a natural spender, but starting to learn.  I am pretty frugal, so the allowance allows me to say "you want it, you spend your money on it."  This is worth a lot more then $20/month, and stops many fights in its tracks.

[Rage]

I'm not sure calling an allowance "money for breathing" is quite accurate.  As was pointed out up-thread, there are certainly things that everyone who doesn't give an allowance buys for their kids that the kids could be buying for themselves.  Clothing, toys, hobby stuff, activities.  Take the money you would spend on that stuff and give it to them instead, allocated weekly.  They will probably fail spectacularly but with guidance will eventually learn money management. 

[La Bibliotecaria Feroz]

Sure, they might waste some of it, but there are plenty of relatively wholesome choices even quite young children could be making with an allowance. Do they want markers or paint brushes or do they have enough for both? Go to the movies with a friend or watch a library DVD? Buy one really nice pair of jeans or several T-shirts? Or just sock the money away? (This is what I always did. I had a part-time job, too, even though I spent virtually no money at all. I spent all my weekend evenings watching rental movies with either my mom or my high school boyfriend.)

Disagree about making them do chores for money. Sure, you might pay them a little extra for taking on big projects, but the reason you set the table or take your turn at dishes is that you are a member of the household. You don't get paid for doing the dishes when someone else has cooked the food.

[DecD]

Here's one example of why the allowance thing works for us-

My 7 year old is notorious for losing goggles.  He's on our neighborhood swim team, so goggles aren't optional, he must have a pair to participate.  He got a new pair for the summer.  He's had them less than two weeks.  He lost the goggles at a friend's house on Saturday, and they simply can't find them. 

So- we agreed that he's buying the replacement out of his allowance.  I guarantee he'll pay more attention to where he sets them down knowing that he's buying the new pair if he loses them.  In fact, as we were leaving the pool tonight, he remembered he'd left his crummy backup pair by the diving boards and ran back to get them.  That, I assure you, is a first.

[Alabaster]

Just chiming in...

Allowance isn't necessarily a terrible thing. I had a few chores to do around the house the little bit of money I was given to allocate. I saved the vast majority of it and bought computers (which my career ended up being in) with the part that I did spend.

I didn't want much. If I had a big long list of "do this, get $x", I wouldn't have done chores and would have done without. I was way too tired after school (which I took a bit too seriously in hind sight).

That having all been said, I can manage my money just fine, thank you. I don't have any debt and am on track to be FI sooner rather than later. I love my job now, get good reviews and feel appreciated at work. I think myself a productive member of society.

[shelivesthedream]

It seems to me that an allowance is a much better way of teaching children to moderate their material desires than having to ask their parents every time they want something. In the latter case, the parent makes the choice about whether it is a want or a need, and then about whether or not to satisfy that want. The child can therefore keep wanting things and only ever be frustrated by external forces. With an allowance, they have to look inside themselves and see how much they really want Item X, or rather they'd like to save their money for something else instead. I think the trick is to balance how much money you give them with what they are responsible for, and both will increase as the child ages. I had a PAYG phone at school and my parents would top it up every month and aid have to make sure I didn't run out of credit by the end of the first week. You can give your child an allowance/budget for all sorts of things, not just toys - clothing, treats at the grocery store, music lessons... You just tend to start with toys because that's what they're interested in at a young age, and so that's what they have to decide is worth the money (or not). And believe me, spending a month's pocket money at once on some plastic toy that breaks the moment they get it home will do more to counter materialism for life than eighteen years of a parent saying they won't buy it for them!

[Kaplin261]

My question to the parents who give their children money, What bills do your children pay with there allowance?

The money is used 100% for pleasurable activities.

Maybe a child is ready to manage money when he or she has real life expensives life car insurance,maintance bills for car and payback of a loan from mom and dad.

Not letting your child do his own money management  would not be to prevent them from having things. Just like other life lessons we want to teach  our children when there old enough and money management is one of those things I feel for my child should be when real life lessons are at play and not when that new toy just came out.

If my child wants something its my responsibility to genuinely listen to his needs, and talk to him about his need. Teach him how to overcome this need or compromise for something else that would meet this need. There are ways to teach about materlistic needs with out using money. In my adult life the amount of money i have does not determine if I buy myself a toy and the price of the toy does not determine if I buy it but factors like depreciation, frequency of use and do I have space for it are often thoughts I have for weeks before making a unneeded purchase.

What is the purpose of working for money as a adult? To have enough money that our money works for us instead so we can retire and do things we enjoy? A child already has this lifestyle.

[Emilyngh]

My question to the parents who give their children money, What bills do your children pay with there allowance?

The money is used 100% for pleasurable activities.

Maybe a child is ready to manage money when he or she has real life expensives life car insurance,maintance bills for car and payback of a loan from mom and dad.

Not letting your child do his own money management  would not be to prevent them from having things. Just like other life lessons we want to teach  our children when there old enough and money management is one of those things I feel for my child should be when real life lessons are at play and not when that new toy just came out.

I disagree that the lesson I want to teach my children is that money is only for "bills."   Bills are not something to aspire to, but something to try to attack and get rid of with close to the same intensity as one would debt.   Money is for spending on things that we truly value and that truly bring us enjoyment, and it's rare that a "bill" fits this description.

I hope my child never has a car "bill" in her life, why would I withhold money until she has such a ridiculous thing?   

While I do believe that we should try to align our spending with our values and will teach my child this.   People (my children) are allowed to value frivolous things.   Frankly, I think that childhood is a great time for them to practice valuing different things and for me to be there guiding them as they try things out and figure out what they truly value.

I believe in an allowance, but a very small allowance.   I will take care of their basic living expenses (food, basic clothing, etc) and then give them a smidge of money so that they can practice deciding whether they value buying junk food with it, or saving it up to have when a friend wants to go to a movie, or saving it up for a larger purchase.   The allowance is small enough that they're not going to be able to use it to fill the house with toys or anything close to that, but if they want to save it to buy a toy now or then, so be it.   

DH and I both have money that we can spend on "100% pleasurable activities" and so will our children.

[Kaplin261]

My question to the parents who give their children money, What bills do your children pay with there allowance?

The money is used 100% for pleasurable activities.

Maybe a child is ready to manage money when he or she has real life expensives life car insurance,maintance bills for car and payback of a loan from mom and dad.

Not letting your child do his own money management  would not be to prevent them from having things. Just like other life lessons we want to teach  our children when there old enough and money management is one of those things I feel for my child should be when real life lessons are at play and not when that new toy just came out.

I disagree that the lesson I want to teach my children is that money is only for "bills."   Bills are not something to aspire to, but something to try to attack and get rid of with close to the same intensity as one would debt.   Money is for spending on things that we truly value and that truly bring us enjoyment, and it's rare that a "bill" fits this description.

I hope my child never has a car "bill" in her life, why would I withhold money until she has such a ridiculous thing?   

While I do believe that we should try to align our spending with our values and will teach my child this.   People (my children) are allowed to value frivolous things.   Frankly, I think that childhood is a great time for them to practice valuing different things and for me to be there guiding them as they try things out and figure out what they truly value.

I believe in an allowance, but a very small allowance.   I will take care of their basic living expenses (food, basic clothing, etc) and then give them a smidge of money so that they can practice deciding whether they value buying junk food with it, or saving it up to have when a friend wants to go to a movie, or saving it up for a larger purchase.   The allowance is small enough that they're not going to be able to use it to fill the house with toys or anything close to that, but if they want to save it to buy a toy now or then, so be it.   

DH and I both have money that we can spend on "100% pleasurable activities" and so will our children.

Sheltering your children from debt does not sound like a good idea. Eventually he or she will have a mortgage or rent.

[bogart]

My question to the parents who give their children money, What bills do your children pay with there allowance?

The money is used 100% for pleasurable activities.

At 8, my kid pays for things he wants that we are not willing to buy him and for gifts he gives to other people (family members on gift occasions if he chooses to give a gift, friends if he goes to their birthday parties).  Mostly he doesn't spend his money, and thus he's saved up about $260 on an allowance that was $2/week from ages 4-8 and that is now $4/week.  Thinking about the things he has spent money on for himself, he bought a razor scooter (we paid half, he saved half), several toy guns (a Star Trek "fazer" (sp?), a nerf gun), some books (when the school has a book fair we give him an extra $20 to spend and then tell him any extra comes out of his allowance/savings  -- I'm a fan of the library, but he likes to own some books), some marbles, a toy rocket.  He may have bought some Lego sets, I cannot remember.  There's a gourmet food store in town and he sometimes likes to buy himself a chocolate covered pretzel when we're there.  The pretzels are sturdy and delicious, but as they run about $2, I'm usually not willing to pay for him to have one, though I don't mind him buying one for himself.

As he gets older, we'll expect him to be responsible for more stuff, likely a fraction of the cost of activities he wants to participate in (sports, etc.) and some clothes and car expenses (when he's old enough to have a car).  As I did growing up, he'll get a base allowance and have the option of doing chores (or working outside the home) to earn more money.

I feel for my child should be when real life lessons are at play and not when that new toy just came out.

I feel that seeing and making the decision about whether to buy that toy is very much a real life lesson.

What is the purpose of working for money as a adult? To have enough money that our money works for us instead so we can retire and do things we enjoy? A child already has this lifestyle.

Mine certainly does (though I wouldn't limit "the purpose of working for money as an adult" to ... having "our money work for us so we can retire and do things we enjoy," even though I would count that as being among the reasons I work for money).  But neither now nor ever (unless the future holds things I'm not expecting) will he have access to so much money that he doesn't have to choose between what things he enjoys that he will pursue, and what he won't, whether to enjoy something now or save resources for later, or when to spend on himself and when to spend on other people.  I think that having an allowance can be a valuable part of learning how to balance those competing desires, but certainly there's no absolute right to one -- if you want to use a different system, go for it.

[Emilyngh]

Sheltering your children from debt does not sound like a good idea. Eventually he or she will have a mortgage or rent.

I'm pretty sure that my child could handle paying a mortgage or rent without previous debt "practice."   

The argument that children should have car loans in order to "practice" paying bills is usually just a rationalization for encouraging a consumerist sucka mindset of living beyond one's means, IME.   

[Kaplin261]

Sheltering your children from debt does not sound like a good idea. Eventually he or she will have a mortgage or rent.

I'm pretty sure that my child could handle paying a mortgage or rent without previous debt "practice."   

The argument that children should have car loans in order to "practice" paying bills is usually just a rationalization for encouraging a consumerist sucka mindset of living beyond one's means, IME.

I'm sure the children from the readers of this blog will have a wealth of financial knowledge and will do much better then the average family.

I would never suggest a 16 y/o buy a car that they could not pay off in a couple months of work. I do not see a $4k loan that mom and dad finance with there money and require 50% up front payment a bad thing that would teach a child to be consumerist sucka mindset.

[swick]

Sheltering your children from debt does not sound like a good idea. Eventually he or she will have a mortgage or rent.

I'm pretty sure that my child could handle paying a mortgage or rent without previous debt "practice."   

The argument that children should have car loans in order to "practice" paying bills is usually just a rationalization for encouraging a consumerist sucka mindset of living beyond one's means, IME.

I'm sure the children from the readers of this blog will have a wealth of financial knowledge and will do much better then the average family.

I would never suggest a 16 y/o buy a car that they could not pay off in a couple months of work. I do not see a $4k loan that mom and dad finance with there money and require 50% up front payment a bad thing that would teach a child to be consumerist sucka mindset.

Kaplin - I think you are either splitting hairs for the sake of argument, or using terminology slightly different the the rest of us. When most people talk about "Car loan" unless otherwise stated (which you didn't) most people would assume you are talking about the traditional go to bank/dealership/whatever and get a loan.

Also - I would NOT make the assumption that children of readers here will have a better financial education. It takes a conscious effort by the parents to guide and educate their kids. Some people are just not good teachers, some figure that they will learn it in school, some figure they will learn it when they need to.

A perfect example is my husband, his parents have always made very good money, bought used, invested etc. But he graduated UNIVERSITY with no real understanding of how credit works, how to build and maintain a credit score, how to invest, how to interpret benefit packages....even how to budget. He had the potential to get into serious trouble and only avoided it because he met me - I taught him all of that as an adult. It makes life really difficult if you are starting out and you cant rent an apartment or even get utility bills in your name because you don't have a credit history.

[Rage]

I'm starting to think this is a troll thread, just look at the subject "Kids should not have money."  It's like posting "should I buy a Porsch 911? (no face-punches please, I'm going to pay cash and I'll keep it for a long time)" in the Ask a Mustachian section or "Suggestions for hiring a lawn care service?" in the DIY section. 

[swick]

I'm starting to think this is a troll thread, just look at the subject "Kids should not have money."  It's like posting "should I buy a Porsch 911? (no face-punches please, I'm going to pay cash and I'll keep it for a long time)" in the Ask a Mustachian section or "Suggestions for hiring a lawn care service?" in the DIY section.

Thought had crossed my mind, but it leads to some interesting discussions and points of view so I don't mind seeing how it plays out :)

[Kaplin261]

I'm starting to think this is a troll thread, just look at the subject "Kids should not have money."  It's like posting "should I buy a Porsch 911? (no face-punches please, I'm going to pay cash and I'll keep it for a long time)" in the Ask a Mustachian section or "Suggestions for hiring a lawn care service?" in the DIY section.

I'm kinda going against the current with this post, traditional wisdom teaches us that giving children a allowance and letting them budget there money teaches them life lessons.

I have learned a lot from these posts, still undecided at this point. Either way I don't think I could go wrong.

[swick]

I'm kinda going against the current with this post, traditional wisdom teaches us that giving children a allowance and letting them budget there money teaches them life lessons.

I have learned a lot from these posts, still undecided at this point. Either way I don't think I could go wrong.

The tricky part is there are a million different ways you can follow/adhere to/challenge/adapt "traditional" wisdom. Which is pretty much true of everything for parenting...and in life. The trick is to keep an open mind, consider all the view points and see what will work for your family. There is no one size fits all solution for anything. Life would be pretty boring if there was :)

[tthree]

I'm kinda going against the current with this post, traditional wisdom teaches us that giving children a allowance and letting them budget there money teaches them life lessons.

I have learned a lot from these posts, still undecided at this point. Either way I don't think I could go wrong.

I'm with you in the solidly undecided camp.  I can comfortably provide the the essentials for my children: food, clothing, sheltering and love.  Isn't the rest just wants, that are mostly superfluous cr@p?  I am thinking my most monumental parenting feat will be teaching my children intentional living; giving my children X dollars of "free" money a month + current mainstream culture maybe counterintuitive;)

I strongly disagree with paying children X dollars/chore.  I can see that leading to an unhealthy relationship where tasks are exclusively performed for monetary gain.  I would hate to envision a world where people didn't perform tasks out of love, compassion, or the simple fact that shit needs to get done.

[ender]

I strongly disagree with paying children X dollars/chore.  I can see that leading to an unhealthy relationship where tasks are exclusively performed for monetary gain.  I would hate to envision a world where people didn't perform tasks out of love, compassion, or the simple fact that shit needs to get done.

.... well how many of us would continue to go to work if they stopped paying us?

The main activities we do for many, many, many years in our lives (work) are primarily the result of choosing to perform tasks exclusively for monetary gain. It's not unhealthy to realize this.

[LiveLean]

The bigger problem is that kids don't work anymore.

My first "allowance" came at 10 when I started mowing the lawn. Ours was a big lawn and my folks gave me $10, which was about right for 1980 and considering they provided the mower, gas, and paid for any related maintenance and repairs.

At 12-13, I started mowing other lawns, at which point parents took the $10 away because I now was putting more wear and tear on the mower, though I now was paying for gas. I now was mowing our yard for the right to use the mower on other lawns.

When that mower died, I bought the next one, at which point parents paid me $12 to mow our lawn, which was still lower than what I charged the neighbors. I'm not sure why I gave a hometown discount, but I don't remember being in a strong negotiating position, maybe because I still needed a lift to the repair shop occasionally for repair/maintenance.

When you realize what it takes to earn $15-$18, you quickly become a strong manager of money and pretty damn frugal. I think of this often when I'm in Chipotle and see teenagers blowing $12 on lunch/dinner, complete with soda.

No doubt part of their "allowance."

[golden1]

My kids get a small allowance based on chores they do around the house.  My daughter feeds and litters the cat, as well as basic stuff like keeping her room clean.  My son empties the dishwasher most days.

It is fascinating to see the kids behavior around money.  My dd is more prone to blow her money on little things like coolatas and snacks, while my son hoards his money and never spends it on anything.  Recently, my dd decided that she would rather give most of her money to charity than just spend it on stuff she didn't need, so we picked a child to sponsor through "Feed the Children".

[GuitarStv]

I saved my allowance of two dollars a week for about a year and a half to buy a Nintendo when I was a kid.  This was the foundation of my whole understanding of finances . . . giving up penny candy and comic books for that period of time really drove home the importance of saving.

[tthree]

I strongly disagree with paying children X dollars/chore.  I can see that leading to an unhealthy relationship where tasks are exclusively performed for monetary gain.  I would hate to envision a world where people didn't perform tasks out of love, compassion, or the simple fact that shit needs to get done.

.... well how many of us would continue to go to work if they stopped paying us?

The main activities we do for many, many, many years in our lives (work) are primarily the result of choosing to perform tasks exclusively for monetary gain. It's not unhealthy to realize this.

We're going to have to agree to disagree on this one:).   I have spent considerably more hours of my life on unpaid work.  As a parent,  caring for and loving my children had provided me with seemingly endless unpaid "work". I want my children to see the joy in this, not the drudgery.

[formerlydivorcedmom]

My kids (5, 6, 9) have a defined list of chores that they HAVE to do as a member of the family (picking up their stuff, folding their own clothes, setting the table, rinsing out their dishes, etc).  They also have assigned chores that earn them an allowance (folding the towels, putting away the clean dishes, feeding the dog).  If they have to be told more than once to do a chore, they lose part of their weekly allowance.  If they volunteer for additional chores, they can earn more money.  We track + and - on a whiteboard on the fridge.

Part of this is to teach them about work - I don't particularly enjoy my job, and I know they don't particularly enjoy theirs, but we have to do it, and do it well, or our pay gets docked.
Part of this is to teach them about priorities and value.  Like others said, we don't buy toys outside of birthday/Christmas.  If they want something, they have to buy it, so they have to choose what is most important to them and what offers the most value.

It teaches them about saving.  They each have a bank account that earns interest.
Before vacations, we implement a "matching funds" program.  Any money they save in the two or three months before the vacation we match at 50%.  They get to decide how much to save, how much to spend.

It teaches them about giving.  All the kids like to put their spare change in the little donation boxes at the grocery store.  The oldest tends to put in more money.

It teaches them that not everyone values the same things, and that's okay.  I won't buy candy at the grocery store for them, because I think it's a waste of money.  THEY buy candy with their own money, because THEY think it's important.

So, yes, most of their money is spent on toys or candy or books.   Some is given away and some is saved.  I'm convinced that less is spent on the kids with our method - they have to buy the toy or treat they want - then if we were to buy things for them.  There are also way fewer arguments/whine sessions because they know it's in their power to buy what they want.

[Kaplin261]

Any one else read MMM's new blog post? Seems like he does it right about teaching his son about money.

[MayDay]

My kids are 5 and 7.  They each get 5$ a week. 

H and I both have discretionary money that we spend on "wants" (not needs) each month.  It's basically the same for the kids.  This way, rather than me having to make a decision about a discretionary treat on the fly whenever they ask/beg/melt down in Target, they have a set budget and they can spend it how they choose. 

When they were 1 or 2 or 3, we chose how that discretionary money was spent on the kids.  We decided if they needed more toys, or could have a sweet treat, or needed a new t-shirt.  But as they get older, at some point it makes sense to switch over to the, deciding what discretionary things they want.  They learn how to save, how to budget, how much it sucks if you spent all your money on junk and now don't have any left.   

My kids are currently saving up for vacation souvenirs, and Dd is saving up for a scooter.  DD has about 200$ in her savings account, DS has over 400$.  Both will likely end up using the money for a big thing in the future, like a class trip in high school, or a car, or towards college.  We treat the money, once put in the bank, as needing mom and dad approval to get out- they can't just blow it all on candy. 

As they get older, we will transition to them having to cover more with their allowance, and earn their own fun money.  They will have to cover a portion of their clothes, their own gas if they choose to drive, expensive extracurriculars, etc.  Obviously we could just pay it all, but the point is for them to learn to manage the money and make the trade offs. 

Our allowance is given regardless of chores, and they also have chores they have to do was part of the family.  They also sometimes can earn extra by doing special chores, and that will increase as they get older and can be more helpful.  The day they can clean bathrooms, I'll pay up every week!

[Sid Hoffman]

I would say you need to do what's right for your own kid based on how your relationship with them grows.  I was always very responsible with allowance money and it was a big motivator to do my chores.  I learned at an early age that if I did work and did it well, I earned money for that work.  I actually got my first job outside my parents' home by the time I was 13, my first full-time job at 16, and really never stopped working or had more than a couple weeks off between jobs ever since.  Allowance worked well for me for the most part.

My own son, however, we went from just taking care of him and being reasonable with gifts to doing a written list of chores and allowance, to seeing that not really working and just discontinuing the allowance in favor of being reasonable with gifts and treats again.  My son is now looking at getting his first paid job outside the home this summer, although I guess we'll see how it goes.

Bottom line is that you do what's right for your kid or kids.  Don't be afraid to try something and admit it doesn't work later, like I did.  Ultimately as long as you are teaching them about money, making it clear that money is genuinely valuable and doesn't grow on trees, you will probably be fine either way.

[cerebus]

This morning's MMM article has some good insights into this question:

 http://www.mrmoneymustache.com/2015/05/20/what-im-teaching-my-son-about-money/

[Thegoblinchief]

There have been quite a few threads on this topic in the past, and the opinions broke down similarly.

I don't ascribe to this one personally, but an additional opinion on allowances represented in the past was that the kids got $X but 1/3 was for spending, 1/3 for saving, and 1/3 for giving.

We've tried many strategies and have yet to settle on one. Currently I'm doing non-chore allowance, not lost as punishment, and spent as they see fit (with input/guidance, mainly to remind them of previously expressed large savings goals they may have forgotten about in the moment of spending on a smaller amount).

[Insanity]

Our oldest is 5.  We are not giving her an allowance, but we are using money as a reward for some tasks that we think are a bit tougher for her and to get her in the habit of doing.

It is no different than a sticker chart.  We want certain behaviors and are not above rewarding her.  We also have no problem punishing her for the behaviors we don't want. 

We also teach her to give things away as well. 

[Sid Hoffman]

I don't ascribe to this one personally, but an additional opinion on allowances represented in the past was that the kids got $X but 1/3 was for spending, 1/3 for saving, and 1/3 for giving.

That sounds like the ThreeJars method.  My sister has been doing that with her youngest and has already seen him demonstrate excellent qualities of seeking to help others rather than just use money for material goods for himself.  I couldn't get any traction with my own son and that system, but it does seem like a good one to try out and see if the kids are receptive to it.  It does align well with the MMM goals and mindset.

[Sibley]

Parenting isn't really about what kids "deserve." It's about teaching them to live successfully in the world independent of you. If you start looking at the purpose of parenting differently, then you'll see that obviously kids should have money (either given as an allowance or earned through work).

Agree. In my (non-parent) view, the job of a parent is simple: raise a responsible, respectable and productive member of society. (The trick is that the parent doesn't get to decide what those things mean.)