Child Allowance: Good or Bad?

I never received an allowance growing up.  I suspect it’s because I started working at age 10 at a vegetable stand.  I would strap the cash box to the back of my bicycle and bike down the highway to the stand.  It was less than a mile away but it was on the highway.  (Shocking I’m alive to tell the story.) Any money I needed for the year came from those awful 100 degree days, cleaning out rotten vegetables and getting swarmed by biting flies. 

I don’t want my kids to feel like they deserve an allowance just for breathing AND I don’t feel like they deserve it for emptying the dishwasher or putting away their clothes.  Those are household duties that need to be done to be a contributing member of our family.  I do believe a child should have their own money, so they can start negotiating their own financial path.  So how does one navigate through this parenting conundrum?

My kids are learning about saving very, very slowly. They both have a piggy bank that has gift money in it.  I hear them coaching each other… “you could buy something better if you wait and save it.” They have NO concept of a rainy day because living with us, they’ve never seen what a rainy day looks like. 

So, are they finally old enough to start working for their money? Should I implement a rainy day fund or label it college? Washing my car in the driveway spurned this mental debate. This is the first time we have washed our car in the driveway instead of paying a car wash to do it. (A long time ago I read that washing the car in the driveway wastes more water than the car wash .) Should I pay my son for washing it?

If I pay my little guy the $6 I would have spent at the car wash and he invested it… At a 7% return with a monthly $6 deposit adjusted for inflation he will have. $1,100 saved when he graduates from high school. This is for 1 hour a month washing his mom’s car. $2,200 if he washes dad’s car too. 

Thinking broader, several years ago when the kids were babies and I was working full time, I paid a house cleaner. (Don’t judge.)  I paid $150 every 6 weeks.  I felt like I “deserved” it. Now that we’ve moved off of the dirt road and started minimizing, cleaning the house isn’t too bad.  If I paid my son $100 a month to clean the house and he invested half and spent half he would have $9,300. (7% rate of return, adjusted for inflation, after 13 years.) I am absolutely not paying a 4 year old $100 to do a crummy job cleaning my house, but the numbers have really gotten me thinking…

Plan:

  • Deposit the kid’s gift money into their bank accounts and start from scratch.
  • Type up and laminate chores outside of what they are expected to do with a price tag.
  • I.e.  Mop the Kitchen $1 to spend + $1 to save for the future (car, college, or house) = $2
  • I’ve tried paying them in the past for extra work but I would have to stand over them yelling to finish the job.  Those days are over.  Now it will be available without any expectation that it will actually happen. To receive the money I must check the end result and they aren’t allowed to ask for my help completing the task.
  • When they ask for things, I will encourage them to check the chore list.

I will keep you posted!

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