I know that there are some people out there who aren't big proponents of paying kids allowances. I'll admit, there can be downsides, and our family does our best to ensure that our children still know that they should also do things out of caring and kindness for others. However, if handled in the right way, we feel that an allowance can be a valuable teaching tool when it comes to kids and money, and therefore, we do it (on a small scale). In the process, we tend to find that there are a number of benefits for the kids.
They Start Saving for College…Even if We Don't
While our second child isn't old enough to know anything about college or saving money, our oldest son is. He is almost six; and he is darn good at saving his pennies…literally.
Therefore, I like know that even if we're currently putting the majority of our earnings toward things like car repairs, health insurance, property taxes, and similar costs, our son is at least putting a little bit away for his future, because the way things are going with college costs, he's going to need it!
They Learn Work Ethic and Responsibility
Our six-year-old has defined chores that he is responsible for on a daily and weekly basis. From helping take out the trash, to clearing the table for dinner, he has a written list posted on the refrigerator to help him remember his jobs.
Of course we remind him as well; however, if he doesn't complete his work, or doesn't do a good job, he isn't paid. And yes, there have been a time or two where he has earned less than his standard amount or not received it at all based upon performance. There have also been times where he has received a bonus for great performance though. We hope that such tactics work to start building his work ethic and responsibility.
They Learn about Structured Pay for Work
Some people don't like paying kids for work. They feel it sends the wrong message and that kids should do their chores because their told to. I agree to an extent; however, they're likely going to have to learn about structured pay for work sooner or later, and seeing as how I had my first paycheck in hand at age 15, that time often comes sooner than later.
I think getting a little practice ahead of hitting the working world is a good thing, especially when it is conducted by way of parents who can make it a learning experience where the children won't be fired if they screw up.
They Make Financial Decisions with Their Own Money
It's easy for our son to make money decisions with someone else's money -- like mom and dad's -- but it's not so simple when it comes to his own hard-earned cash. This is another benefit of paying our kids allowances. It not only teaches them about money, it teaches them about their money.
I know that with our son, it's easy for him to give answers to hypothetical situations regarding money, but when it comes time to make a money decision with his own dollars, sometimes it's a different story. I like him to see the difference between spending his parent's money or birthday or holiday cash on stuff, and spending the money that he has worked hard for to earn on his own.
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The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.
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