Monday, March 28, 2011

Should Your Kids Get An Allowance?

Most money experts agree that children should be given an allowance in order to learn financial skills at an early age. I disagree. Children should earn money just like we do. And, most importantly they must be taught what to do with the money once they receive it.
I speak on high school and college campuses monthly and to my astonishment, I meet young people who have never worked a day in their lives. At the age of 21 years old there are people in this world who still believe for some reason that money either really is grown on trees or that it magically falls from the clouds. There is a distinct disconnect between young people and the concept of earning money.

We have created a sickly bunch of young people. Their ailment? A false sense of entitlement. They’ve been poisoned by privileges afforded to them by parents who “don’t want their kids to go through what they went through.” If that be the case, we should use our experiences to empower our children with the tools and resources that will help them successfully navigate through this world; not give them a false sense of reality.  Duh. That's what reality TV shows are for. Doing this doesn’t help them. It enables them. And, it robs the world of the efforts of someone who will approach life’s challenges with independent creativity; not be complacent with the comfort of knowing that mommy and daddy are always just a phone call away.

Related Post: How To Hustle While You Work

Allowance VS Earning

A majority of the students I meet understand that they are in college to hopefully become productive citizens who earn a decent living.  The problem is, however, they really have no idea of how that whole process works. Why? Because for their entire lives they’ve been given money for things they should technically do any way (i.e. be respectful, clean their bedroom, empty trash, and earn good grades). On top of all that they receive annual raises for simply getting older. Eh, let’s see. . . When’s the last time you got a raise for keeping a tidy office, showing up to work on time or just having a birthday? . . . Oh, okay. Just checking!

What happened to just being good for the sake of being good?

Why should anyone be paid to keep their room clean? You live there, don’t you?

Pay for good grades?
(Well, I got paid for good grades, but the reality is, I would have gotten them anyway. I was just that kind of kid. So, thanks, dad! All the money wasn’t necessary, but definitely appreciated!)

Here’s the deal with paying for stuff your kids should do anyway. Once they have other streams of income, like a part-time job or birthday money from grandma, they’ll draw a blank when you expect them to do chores at home. Why should they clean up for you when they just got “free money” for doing nothing? Duh.

Kids should earn money, just like you do. Sorry kids. Basic household chores are just your contribution to the family. It goes like this:

I feed you. You do the dishes.

I drive you to school. You wash my car.

You walk around my house. You vacuum.

You asked for a little brother or sister. I gave you one. Now, you babysit.

See where I’m going with this?

Now, any task over and beyond doing basic household chores is where the earning potential comes in. As parents we take on the burden of having to get so many things done in any given week. What can your kids help with? Need someone to come in and help file papers? Do you need a closet or drawer organized? Are you doing some spring cleaning? Have your teenager take pictures of items for sale and list them on Craigslist. They’re on the computer all day anyway. Get creative. What do YOU need? We know they need money, but how can you teach your kids a valuable lesson AND get both party’s needs met?

Related Post: 5 Ways To Jumpstart Your Savings This Spring

Make Kids Responsible

Another downfall of this entire allowance thing is that many parents implement an allowance with no expectation for how the child should manage the money or what responsibilities they will have. In the real world, we don’t earn a paycheck and then still have the luxury of someone else paying our bills.

As parents we may be responsible for the basics, but kids who earn money should become responsible for the frills. Let me tell you how Marie used to do it. (Marie’s my mom, by the way.) Marie would tell me upfront how much she “believed” something should cost. I’m still not quite sure how she came up with her numbers. My assumption is they were based on her own budget, but nevertheless, if she believed it that settled it! Negotiations weren't really allowed.

I digress.

So, let’s take a common item like a pair of jeans. Marie felt she could buy good quality jeans back then for about $35. Well, in my day, Calvin Klein and DKNY jeans gave you the “golden ticket.” Unfortunately, Mr. CK and Ms. DKNY were not giving up those goods for less than $70 a pop. So, when we got to the counter, Marie would put up her $35 and politely walk away. I’d have to shell out the rest. Talk about lessons that last a lifetime! This method quickly taught me how fast money could go when I was buying things just to keep up with the Joneses'. After every trip to the mall, Marie was fine. She spent what she wanted to. Nothing more. No hard feelings . . . on her part, at least.

The same principal applied when I wanted a pager. (I am so shamelessly dating myself right now.) Marie thought pagers were for doctors. I didn’t even have a diploma much less medical degree.  So in her mind, no pager necessary. I saved for my pager and paid the monthly bill. No mula? No paging. It was that simple. If my pager got cut off, my mom never “put something on it” or felt bad for me. I should have budgeted better. Period.

The article “Teens and Their Spending Habits” suggests that parents “make kids responsible for their spending. If your child has a cell phone, require them to earn the money to pay for the extras such as texting and accessories. If your child is of driving age, help teach them responsibilities of driving by having them pay for insurance and other incidentals.”

Related Post: How To Set Financial Goals You Can Achieve

You are not going to kill your kids by teaching them how to be responsible with money. What are you protecting them from? . . . Real life? They need to know the importance of living beneath their means, giving, and saving. We can't wait until they're leaving for college to get the conversation started.

Our job as parents is to prepare our kids for adulthood. You won’t rob them of their childhood; you’ll teach them lifetime lessons that our broken school system will not! If not you, then who? And if not now, then when? Perhaps, when they move back in at 34, you’ll be more comfortable with teaching them how to earn money, budget and be responsible then.

Until Next Time,


Seek Wisdom, Find Wealth & Be Blessed!

Share your thoughts: Do you give your kids an allowance or do they have to earn money? What system have you found to be most beneficial? Do you wish you would’ve learned how to budget when you were growing up?


Drew-Shane said...

I think either practice works as long as you are teaching your child how to budget and save. Allowance or earnings- they should learn how to spend their money responsibly. I encountered the same problem in undergrad. I knew a lot of people who didn't work. Even a little part time job at the GAP made me understand how hard people worked to get money. Not to mention, what about building a resume.

Good post!

TB said...

Ms. Patrice,

I agree that children should earn there money, but that doesn't advocate financial independence either. What is the concern here? Lazy children or uneducated consumers?

Whether a child is given or earns his or her money, he or she must still be taught how to manage it effectively.

For example, when I was about 13 my parents began charging me a small fee for the things I wanted (extending the necessities). I had to pay a small percentage on the price tag. With the money I earned (from ironing my parents' work shirts), I learned how to manage my money. I learned how to save, spend, and give. I learned how to pass up on things and be an overall conscious consumer. Even though I spent my money whichever way I pleased, my parents coached and issued advice on how I spent money, which I must admit helped in a huge way.

If parents want their child(ren) to be financially empowered, they must first be empowered. They must also make money a continuous discussion, not just here today, gone tomorrow, and mentor their kids spending habits.

Great post!

TB said...

Breezing through the website, I realized that there was more to this article! Didn't see the Read More button.

How nice...

Your mom did the same thing my mom did.

Dennis Howell said...

Solid Topic Patrice.

This issue goes back once again to the issue of why Starting Black Businesses is so important in our community. If more parents were business-minded PRODUCERS instead of shopping obsessed CONSUMERS we would stress the need for financial responsibility to our children at an early age.

I already take my sons to my office and take them out in the community to help me with marketing.

In my household, we also live by the "2 Week" Principle which says that if the boys want an item they have to wait for 2 weeks to save their own money and also make sure it's not an IMPULSE item that they really didn't want or need in the first place.

Much Love and Continued Success!

Patrice Cunningham Washington said...

@Drew-Shane - YES! At the minimum, kids NEED to have work experience! We think that sending them to college is somehow enough. Its only the beginning. The world has become far too competitive to have no work experience when you're a Senior in college!

@TB - Glad you found the rest of the post! Haha! And, if your mom did what Marie did, then you learned great lessons, I'm sure! I am eternally grateful for the mom I was blessed with.

@Dennis Howell - I LOVE the "2 week principle." I may have to suggest that for my adult clients too!

Thanks for reading guys!

All the best.

Celia said...

Compared to the allowances some children get today, mine was a mere pittance!! But I was able to save it for some things such as fun clothes and shoes, snacks to buy/eat every Friday night when I hung out with friends and siblings or to pay for things at events in the neighborhood. My siblings and I even created our own bank with a ledger to record deposits and withdrawals - even if the bank folded in a matter of weeks! It was fun doing it! I looked forward to Friday nights when my dad came home and gave us our allowance. As a matter of fact my mother also gave us - from elementary up until high school! Trust me on this again, it was not much! I do believe in giving an allowance for many reasons: It lets the child know that at the end of the week/bi-week, they will get a specific amount of money. This money will not be enough to buy a pair of name brand sneakers - it will take a number of weeks/months to reach that amount! Not instant but delayed gratification will have them appreciating more! This will avoid parents having to buy the latest and most expensive pair when children ask: Can you buy me this, can you buy me that? This also lets them know that money does not grow on trees.

Anonymous said...

i think you should give your child an allowance and they should earn there money. give them an allowance at a young age so they can learn to manage money as they grown older mainly arount that age where they can start cutting grass and washing cars then they can start to earn money. but either way you do it, it is the parents job to educate your child.