This is such a great topic, and one in which I have spent a lot of time discussing with my wife over the years. Last week, I was interviewed by the Globe and Mail on this very topic and the article can be found here:
I have included the article below, so please have a read of the pro-side and the con-side and let me know your thoughts. I’m curious as to what other families do regarding money, specifically teaching children about the value of money.
The phrase “the value of a dollar” is misleading. The truth is, there are so many values contained in a buck it’s hard to count them all. It’s these values we are trying to impart when we give kids an allowance – that money has to be earned, that not every desire can be instantly gratified, that it’s important to give to those in need. Perhaps the biggest point of contention is whether to pay kids to do chores. Dan Lieber argues against it in his new book, The Opposite of Spoiled. Parents don’t get paid for housework, so neither should children, according to Lieber. But a strong case can be made for the other side of the debate as well. We asked parents on each end of the debate to explain their allowance philosophy.
Kids should do chores to help the household and learn to take care of themselves, not to pocket cash. “Let’s fast-forward to when your child goes to college. Is he going to want to be paid to take out the trash and keep his room neat?” says Kristan Leatherman, co-author of Millionaire Babies or Bankrupt Brats.
Lori McGrath, Vancouver-based blogger of The Write Mama
Kid’s age 6
Allowance $3 per week: $2 goes into his wallet, $1 goes into a piggy bank.
The lesson “I want him to learn how to be independent with money. I want him to feel empowered about it, and to learn how to make good decisions about money.”
Why it’s not tied to chores “He does have chores, but [the allowance] is just to teach him financial responsibility. We don’t want it to be an emotional thing – ‘You’re being a good boy, here’s money.’ We want it to teach him about making his own decisions and saving for things.”
Warren Orlans, Toronto-based tax consultant @ inTAXicating and blogger @UrbanDaddyBlog
Kids’ ages 10, 8, 5
Allowance $5, $4, $2 per week, respectively.
The lesson “The value of money. Money is not something you throw away, but it’s not the be-all, end-all. You can do without money. You don’t have to buy everything you see. But if you see something you want, you can save up and purchase it.”
Why it’s not tied to chores “The kids have to do chores as part of being members of the household. … I’m a big sports fan, and there’s nothing worse than having a player on your team who’s only in it for the contract.” But if Orlans has to clean up after the kids after two warnings, he makes them buy back the items, whether socks or comic books, from their allowance.
Denise Schipani Huntington, NewYork-based author
Kids’ ages 12 and 10
Allowance $12 and $10 per month, respectively.
The lesson “That money has worth. And it has consequences.”
Why it’s not tied to chores “The very idea of that turns me off completely. None of us [in the family] pay each other for doing what needs doing. But they get an allowance so that they can decide what they want to do with money. We presented it more as a way to help them understand how money works.”
TIED TO CHORES
Paying kids to do chores teaches them about working for what they want. “Having the feeling that the money comes from your effort appears to be related to the notion that money doesn’t grow on trees, and that you’re not entitled to any money,” says Lewis Mandell, an economist and financial literacy educator.
Tibetha Kemble, Edmonton-based consultant in First Nations relations
Kid’s age 6
Allowance $10 after a full slate of chores is completed, usually every two weeks.
The lesson “That there is a direct connection between doing work and getting something for it … and that things are expensive and if you save up your allowance you can afford to buy it – that it’s not just about immediate gratification.”
Why it’s tied to chores “It was really the only way that we could tie money to something without it seeming arbitrary or punitive or behaviour-related.”
Jen Kern, Toronto-based events and business development director
Kids’ ages 6, 3
Allowance No allowance for the three-year-old. Older son has a chore chart with various amounts (25 cents for making his bed, for example) with a weekly maximum of $7. His parents match whatever he saves.
The lesson “That money isn’t free … linking savings to that was really important. Neither my husband nor I were ever taught that, and as result we were really crappy with money for a lot of our late-teens, early 20s. We’re trying to explain to him that if he puts his money away, it will be there when he needs it. He’s saved $85 already.”
Why it’s tied to chores “There was going to be no free ride.”
Danielle Riddel, Calgary-based real estate assistant
Kid’s age 14
Allowance $70 per month ($10 has to go into savings)
The lesson “Nowadays I feel like kids get money all the time for everything. I want her to learn that you can’t have everything as soon as you want it. You have to work for it. You have to save for it.”
Why it’s tied to chores “She doesn’t get allowance for cleaning her room or taking care of the dog. She gets it for doing all the floors in the house and cleaning three bathrooms. I wanted her to have money because I want her to learn to spend and how to save money, but I didn’t want to just give it to her.”