LEARN
Allowances for kids
By Adam Frost
Making Allowances
Often, the start of kindergarten or elementary school coincides with decisions about allowances. It’s crazy to think that a minute ago you were trying to get them to use a toilet regularly and now you’ve blinked and are thinking about giving them their own money to spend! If you do a quick internet search, there will be hundreds of entries about how to start an allowance for your kids that discuss the benefits of teaching them about saving and earning, appreciating the value of a dollar, etc. I know this because I’ve read about a hundred of them (it felt like 100 anyway). So, I thought I’d save you some time by sharing my own experience and highlighting what worked for us. Of course, every situation is different and what worked for us might not be right for you, but I hope you find it helpful nonetheless.
My kids are 10 and 12 years old and we started giving them allowances when my daughter started first grade. My son’s allowance began a year later, in kindergarten.
Cashing in
Most blogs, websites and the like suggest beginning with $1 multiplied by the age of the child per week. For us that meant starting at $5 and $6 respectively but it really depends on your family’s budget. That said, having allowances has actually resulted in our having to spend less on our kids. As it turned out, my kids were far less likely to ask for things when they knew they would have to pay for it from their allowance.
“As it turned out, my kids were far less likely to ask for things when they knew they would have to pay for it from their allowance.”
I didn’t really have to explain the concept of saving to them. The first year or two we worked in cash and our kids did not like letting go of it. To be honest, this development alone made allowances worth doing.
By the time my kids reached the ages of 8 and 10, we had moved from cash allowances to fund transfers into joint bank accounts that I had set up for them. I set up automatic transfers and would update them periodically on their balances. I would make purchases or withdraw cash on their behalf when asked and transfer the cost back into my own account. They always had a rough idea of how much money they had and a sixth sense on when they felt like they’d saved enough to buy themselves something. This has been especially helpful with limiting in-app purchase requests. One of the most gratifying experiences along the way was finding my son crying in the middle of the living room floor and exclaiming, “I can’t believe I wasted $40 on this thing!”
“I can’t believe I wasted $40 on this thing!”
Upping the Ante
It was also around 8 and 10 that I decided to increase their allowance significantly but make them completely responsible for all of their spending. Up to this point my wife and I were still purchasing gifts on their behalf and some spur-of-the-moment purchases. I estimated how much money we were still spending on birthday presents for family and friends, Father’s Day, Mother’s Day, Christmas, etc. and divided that number by 52 weeks. I felt that if they were invited to a friend’s birthday it should be their responsibility to purchase the gift, same goes for activities that I wouldn’t choose.
“it should be their responsibility to purchase the gift, same goes for activities that I wouldn’t choose.”
Now, the only thing I pay for directly are necessities like food and clothing or activities that are my idea. It is their responsibility to ensure they have enough money in the bank to cover gift giving, vacation spending money, etc. Sometimes we’ll negotiate what is or isn’t a necessity especially when my oldest wants new clothes (she’s grown too big for Hatley, sadly).
There’s an app for that
I am now considering moving to an allowance app that includes a debit card they can actually use for making purchases in stores or online. I’m a little nervous that I will no longer be the first line of defence in a bad purchase decision but I feel that allowing them to make a few mistakes will be a good lesson learned. A quick online search resulted in a number of programs that are available that seem pretty similar. Generally, they allow for balance transfers, tracking purchases and managing chores. This might be something I’ll start with my oldest first.
For chores or not for chores – that is the question.
My wife’s philosophy was that if she and I do not get paid for cleaning up around the house, neither should our kids. I didn’t agree at first, and I know plenty of people who tie their allowances to chores, but I’m happy she won out. On a few occasions, I made the mistake of threatening to take their allowance away when they didn’t do their chores but I soon found out that the threat of losing their allowance wasn’t the best motivator.
When they were younger, taking away screen time, play dates, or even losing dessert have been much more effective. As our kids have gotten older, I sometimes make side deals for special projects in exchange for payment, but I consider these tasks over and above regular responsibilities. If chores are something you want to include, check out our chore list ideas here.
“By being able to discuss these subjects with our kids early on and very openly, I’m hoping they will make better decisions about money when they are older.”
Crime doesn’t pay
On a number of occasions, I have tried using “fines” as a deterrent or as a punishment for bad behaviour. Mainly all I managed to accomplish with this was to escalate temper tantrums and generally make situations worse. As mentioned above, I have found that there are more effective levers to pull on when it comes to correcting behaviour and a few times, I could literally see my son evaluating whether he could “afford” the punishment to get back at his sister, so for the most part, I leave their allowance alone. Finally, the greatest benefit for us in having an allowance system in place for our kids is all the discussions that we have had about money, budgeting, the cost of things, needs vs wants, charity, etc. By being able to discuss these subjects with our kids early on and very openly, I’m hoping they will make better decisions about money when they are older.
About the Author: Adam Frost started working for Hatley right out of university 20 years ago. Along the way he got married to his wife of 15 years Annie and they have two kids: Emalyn and Henry. Both children have played integral roles as Hatley product testers and enjoyed short but successful modeling careers back when they were cute and well- behaved.