The following is a special post from our brand new parent blog, The Money Talk. Consider this a sneak peek, then bookmark www.bkmoneytalk.com to read all of the parent-minded posts moving forward!
Allowance. As with every corner of parenting, it’s a controversial one. Opinions on the topic run the gamut. Give your child an allowance? You enabler, you! Don’t give your child an allowance? You fool! Today we’re giving ear to all sides of the debate that’s funded movie tickets, ice cream sundaes, and soccer balls for generations.
A Dose of Real Life
In his New York Times bestseller, The Opposite of Spoiled, Ron Lieber essentially argues to make allowance as close to a real job as possible. His main points: nix “chores” for more legitimate family contributions. A half-hearted wiping of the table? Not good enough. Helping to regularly prepare dinner? Better. But he’s matching that tough talk with generous spirit, imploring parents not to skimp. Lieber says to establish a set budget for things as important as clothing, then let your kids decide how to spend it (and likely fail to cover their bases.) If they spent the funds unwisely, don’t bail them out; this is their chance to learn how to manage their finances before the consequences are more severe.
Be Hands-On About This One Thing
While some see it as being too much of an allowance micromanager, our money-minded friends MoonJar and Money Savvy Generation are big believers in the spend/save/share breakdown of kids’ allowance. Both companies create banks designed to contain the three categories of cash and coin. Parents can either dictate the precise amounts of each, or empower their kids to make the decision on their own. Either way, the spirits of saving and giving will gradually become a part their money mindset.
Time recently featured an entertaining profile of an Arizona family with a whimsical approach to allowance. In a word, it’s a negotiation. Jake Johnson (a.k.a. Dad) puts this ball in his 9-year-old’s court, allowing him to make proposals of potential chores around the house, and set the price. Obviously, such a method could lead to steep earnings and might eliminate the concept of serving the family good, but it comes with a valuable trade-off: mastering the art of negotiation.
Don’t Do It
Personal finance guru Dave Ramsey has a different approach to allowance: don’t. “Allowance,” Ramsey argues speaks of entitlement. Kids learn that they’re owed a set amount of money each week, and that their wants are important. Instead, Ramsey recommends a “commision system,” paying them fifty cents for making their bed, a quarter for cleaning up their toys, and so on. The goal? Eradicate entitlement.
For engaging video content on the topic of kids & allowance, check out the Biz Kid$ episode, Where’s my Allowance. Want a sneak peek? Hit it, Lady Nana!