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Some people have cut their parental payouts or allowances for children because times are tough. Others do it because they believe allowance is just an insidious form of welfare for children. They argue children who receive an allowance will develop a sense of entitlement. A friend of mine with a small child said she was upset because connecting allowance to chores backfired. Her daughter asked, "How much am I going to get?" when asked to help her younger brother tie his shoe.
We decided to cut our parental payouts years ago in an effort to stay within our family's monthly budget. We did not want to become the ATM of Mom and Dad. We did not give them a set allowance because we thought allowances are just too old school. We found alternatives to teaching our children about money and financial responsibility.
Include children in budget meetings
We have a family budget meeting every week to talk about any upcoming major purchases, how we are doing on financial goals and sticking to the budget. We included our children in our brief budget meetings.
Watch what we say about money
When we talk about money, we are careful about what we say. We don't use cliches such as "Money doesn't grow on trees," or "We can't afford it." Instead we talk about how we can eventually purchase what we want by saving, investing and working smarter.
Think out loud about spending
We also set an example in the area of budgeting. I think out loud by reminding myself about spending limits. I might say to myself that I plan to only fill up the gas tank one more time that week to "make budget."
Earn money outside the home
Although my son could have mowed our lawn for money, he was more enthused about the idea of working for other people. He started a lawn mowing business when he was in middle school. He made business cards that he distributed to neighbors and kept a client list.
Set up financial accounts
As soon as our son had earned income, we included him in the tax preparation process. We also helped him open a Roth IRA with his earned income. Since relatives and friends often give money as birthday and Christmas gifts, it made sense to open savings accounts in their names even if they weren't getting an allowance.
In the end, our teens stepped up the plate by earning their own money, but we attribute their willingness and strong work ethic to years of financial "training."
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