Allowances. I cannot remember for the life of me if we got an allowance. Somehow what I remember most is that my dad sometimes paid us in candy bars. Not your normal candy bar, the kind you sell for school fundraisers. He would buy a case (or maybe we had some left over). I distinctly remember the ones that had caramel in the inside. If we ever did get paid (even with candy bars) it was for chores we did around the house. Did doing chores and my parents never following through with an allowance teach me good ideals about working, money management, or spending money? Not really.
I started working when I was nine years old. I babysat, cleaned a neighbor’s house, polished their silver, and had a paper route. Yes, crazy to think I did that at the age of nine. I guess I worked just as hard then as I do now. My parents would have me put my earnings in a savings account, so I guess you could assume that they taught me about saving. The problem? My dad usually “borrowed” from my savings account never paying me back. I did not have the best money role models. Kids should be taught about money early on, and not be graced with everything with no knowledge or conversation that money does not grow on trees. Which is why I especially love this article from Slate.com titled: “You’re Doing Allowance Wrong.”
“Spending is about modesty, thrift, and the prudence to shell out (and even splurge) for things that bring kids the most joy while avoiding mindless outlays for plastic junk they will quickly break or forget. Saving instills patience in a world that increasingly conspires against waiting, delivering television without commercials and movies without Blockbuster. And giving is about generosity as well as gratitude for how lucky you are to be able to help others.”
The article goes into depth about giving an allowance, a budget, and a list of things they want or need and let them make the decisions on what to purchase. It means letting them fail. As the article states: “Better now then at age 24…” It teaches critical thinking skills, how to rationalize why one purchase makes more sense than another one. Many adults today do not have these skills. What if we started early on learning these life skills? We have gone away from being a saving culture, instead we spend, and rarely give. If you have kids what are your thoughts on this article + topic?
“For instance, should kids get an allowance? It seems like a straightforward way to teach them how to manage money. Give them $5-$10 a week, and let them handle their small purchases out of that. Likewise, financial education for high schoolers sounds smart. Given the proportion of adults who live paycheck to paycheck and don’t understand what the interest rates on their credit card mean in terms of payments, it can’t hurt to teach kids about money.”
I take it one step further and ask: Should kids have to work for an allowance? I think growing up, my sister, brother, and I occasionally received an allowance. We definitely had to work for it. I can remember often my father would check our work and if it was not done well, we would not get paid. Honestly I do not think they had the money to truly pay us an allowance, so finding our work not perfect was maybe a way out of paying us. Other times he would find things around the house to give us in payment for the chores we had done. Once I remember receiving a caramel/chocolate candy bar that we were selling for school. So I guess in my house growing up it was more of the barter system. Even with the odd and inconsistent payment system I experienced, I do believe there is a purpose and educational aspect of receiving an allowance for chores or tasks. It starts kids out at a young age to know what it means to work and get paid for it. It teaches the value of money. It could be that if a child was willing to do more, they could get paid more (like overtime for adults, if the parents have the funds to do so). Parents could also institute a bonus system for excellent quality of work or attitude just as some adults may receive a bonus based on performance depending on their company.
If parents give an allowance without having to work for it, what life skills are the kids learning? When they become adults do they receive money without having to work for it? Maybe if they have a trust fund, but for the rest of us, we have to work hard for the money we are paid. I believe that hard work makes us think differently about our money, what we purchase, and how we spend or save. Does working for an allowance teach kids the beginning value of money in their lives? One could make the point that kids can learn the value of money and saving without having to work for it. I agree that it can be taught, however, those kids that have the opportunity to learn about the basics of money and how to manage it, in addition to having to work for it is an even better educational life experience.
I wonder what would financial education look like for high schoolers? I had an economics course in high school where we learned about stocks and bonds. I remember the simulation of our “made up companies” and how well our stocks did, but I never learned about the basics: balancing a checkbook, my credit report, credit score, credit card debt, etc. It was almost as though we went straight to Economics 3.0 but skipped 1.0 and 2.0. If we allow teenagers to drive cars at 16 (in many states), and allow them to be in control of expensive, heavy machinery, then why do we not ever teach them about their financial future? Did you learn what you know now from your parents, or from trial and error as an adult?
What do you think? Should kids have to work for their allowance?