Are You Setting Your Children Up For Failure?
My wife and I are nowhere near having a child ready for an allowance yet, but recently we have been talking about it quite a lot! It is something many millennials are having to think about when planning their monthly budgets. How much do we give our kids? Is it smart to give an allowance? Does it affect us financially?
The wife and I strongly believe in not spoiling our son, and we were both raised in a house where you worked for what you wanted. Life was not handed to you on a silver platter. And this is how we intend to raise our son.
According to a recent survey of 1,000 parents done by The American Institute of Certified Public Accountants seven out of ten kids were given an allowance. On average, these kids were given $815 a year for doing chores!
THE LIST OF CHORES COMPLETED FOR MONEY IS CRAZY TO ME!
- Mowing the lawn
- Making their bed
- Vacuuming
- Taking care of a pet
- Doing dishes
- Cleaning their bedroom
- Helping with laundry
- Setting the table
- AND …The list goes on
These are things that are part of being a human being and part of a family! Why do we pay our kids for basic training they should be doing already?
What Is An Allowance For And How To Earn One?
An allowance should be used for teaching your kids about money skills and money management. This way they can learn about giving, taxes, savings, and investments from an early age. Hopefully, then, they do not grow up to be money illiterate and can be a contributing member of society.
I think they should earn this money one of two ways:
One, going above and beyond on a chore. For example, doing something extra such as cleaning out the garage, decluttering a closet or helping (if old enough) shampoo the carpets. This would be like a side hustle: doing something above and beyond that which is generally required for the purpose of earning extra cash.
Second, being given a set amount of cash each month and being responsible for managing that cash. What would this look like? Your child will first need to divide his or her money into investments, savings, giving, etc. and then, whatever is left could be used for any extra events they wish to attend or any extra toys they may want. Maybe even give them the responsibility of buying any extra clothing they may desire. This teaches children the art of a budget!
Pro’s and Con’s for giving an allowance
There are obviously valuable benefits to giving your child, or children, an allowance. These may include:
- Developing valuable budgeting skills
- Discovering how to manage money
- Learning real world concepts- such as the fact that nothing is free
- Discovering that some monetary choice are good and some are bad
- Developing independence and personal responsibility
However, there are also things that your child can pick up on that are bad when giving an allowance.
- They will think less about the value of money if they did not earn it.
- They may develop an attitude of entitlement.
- It encourages them not to work outside the house.
- They begin to believe that money is always there regardless of work!
How Does This Affect You As Millennial Parents?
Don’t have the extra money to give your kids an allowance?
While an allowance can be a good thing, you might just not have the extra money to make it happen right now. This is when talking about money as a family is crucial. What better time to have a conversation with your children about money, then when there is no money to currently give! Even if you cannot afford to give an allowance, never neglect this opportunity to intentionally pursue these important conversations with your children!
Giving an allowance can have an affect on your budget, but it doesn’t have to wreak havoc on it!
What Do I Plan To Do?
I love and plan to do, the method of giving my children a set amount of money, but they have to manage how it is used after they complete their core functions.
They will first be given a slip of paper that shows how much they will be given. Then, they will see the taxes that I take out of that amount. They will need to set aside an amount to tithe, some for investments, and last some for a savings account. After that, the rest is theirs to do with what they want.
I want them to understand the value of choices, and that the choices you make with your money are important.
Final Thoughts
Now, I am sure my opinion is not the norm for the millennial culture we live in today. Many millennials rely on their mom and dads for financial assistance or manage their money poorly. But I think it is time to change this monetary ignorance. This is why I am committed to helping people discover their own financial freedom and independence!
I think the conversations that stem from the idea of an allowance are probably the some of the most crucial aspects of parenting and teaching your kids good money habits!