Kids and Money: The Allowance Debate

In the United States, April is Financial Literacy Month. Whether or not you live in the States, it’s a good time to review your own financial practices — and consider the type of financial education your children receive.

When it comes to kids and money, there is no replacement for the allowance debate. As you consider how to approach allowance with your children, here are some things to think about. There’s no right or wrong answer; instead, think about what philosophy you best agree with, and what works best for your family.

Give Your Children Money to Manage

Most of us agree that it’s a good idea to give our children money to manage. After all, how will they begin to learn good money habits if they have nothing to practice with? Providing your children with money to manage is a way to help them learn how to budget, as well as how to save up for bigger purchases. They also learn to make hard choices with their money, and even to make mistakes. It’s possible to start providing children with money to manage when they are as young as three or four, but many parents wait until their children are five or six.

No matter when you start, the important thing is to talk about money with your children and to talk about money decisions in the home, from the time they are young. My husband and I have never hidden money talks from our son. We have always let him hear us debate the merits of different purchases, and we let him see that we pay tithing, donate to charity, and use money for other purposes. This sets the tone for money in your home, and it gives your children something to emulate.

Money for Chores?

While almost no one disagrees with the idea that children should have money to manage, the means of getting that money to them is the subject of debate. This is where you need to use your own judgment and consider how you feel about teaching your child about getting money.

One of the common ways for children to receive their allowance is to “earn” it in some way. Perhaps you require your child to perform certain chores, and dollar amounts are attached to the jobs they do. Many parents like this approach because it requires their children to work for their money.

On the other hand, there are parents who worry about paying their children for all the chores they do. After all, there are things that we do in life that aren’t about money — things we do because they are the right things to do. This view holds that chores are things we do because we’re part of a family, and everyone should help out, even if they aren’t being paid.

It’s possible to use a hybrid method, which is what my husband and I did with our son. We weren’t comfortable with the idea of paying our son to clean his room, unload the dishwasher, and tidy his project area. These are things he should be doing anyway. My husband isn’t paid for doing laundry, and I don’t receive money for vacuuming. We identified some “extra” chores that come with greater difficulty, such as working in the garden, washing the car, and scrubbing the bathroom tubs. These are chores he could choose to do for extra money.

We did give him a base allowance, but we explained that it was for him to start learning how to manage money. We told him that it would step down in amount as he aged and was capable of earning more of his own money, disappearing altogether by the time he turned 16 and could get a “real” after school job.

Encourage Entrepreneurship

Another tactic is to encourage entrepreneurship. My son has opportunities to work in my home office, performing administrative tasks. He can also earn money by participating in 4-H and working hard to do a good job and earn ribbon money. Finally, we encourage entrepreneurship. We’ve allowed him to run lemonade stands (classic) as well as sell his origami creations. He even took picture of some of his origami to use as “advertising” to drum up business.

It’s not easy to decide how to approach allowance. The key is communicating with your children about your expectations for them, and being clear about what you will provide for them, and what they are expected to use their own money to pay for. If you can make sure that you are all on the same page, the situation will be more pleasant, and your child will learn valuable lessons.

How do you approach allowance?

6 Conveniences We Forget to Be Grateful For

Gratitude is good for you.  It makes you healthier, happier and yes, even wealthier.  But there are some things most of us take for granted, unless they are taken from us.

Here are six conveniences we forget we have, because they are so much a part of our lives.

 Hot and cold running water, with indoor porcelain.

Indoor plumbing didn’t take hold in America, even in the White House, until the 1830’s.  Prior to 1885, no US city had a large scale sewage system.

Not until the 1930’s did rural American homes (for the most part) have access to indoor plumbing.

Why I’m grateful.

In my family, indoor plumbing was not a fact of life until the 1950’s at home.  I have vivid memories of going outside to the outhouse to do my business.  My grandparents didn’t have indoor plumbing, nor hot and cold running water until the 1970’s, so a visit to their farm was always an adventure.

As kids at the farm, Grandma condescended to put out a chamber pot so we didn’t have to trek outside at night.  I’m sure that was no fun for her in the morning!

Why it matters financially.

Sure, you spend money on the water, electric (or gas) and sewer bills to ensure your access to indoor plumbing, but can you imagine the time you would spend trying to drink, cook, bathe, and dispose of sewage if we didn’t have these things.  Time is money.

 Electricity.

Until the 1930’s most of the world did not have electricity.  In rural areas, only 10 % of homes had electric lights then.

Why I’m grateful.

Most of my life, I took electricity for granted.  Then one cold early March day, we had an ice storm that took down our neighborhood power lines for more than a week.  I was a stay at home Mom with two small children, no nearby relatives and no excess money for motel rooms.  We were cold!  We were without our  normal entertainment options (lights for reading, television, etc) and our gas furnace didn’t work because the house fan was powered by electric.

Why it matters financially.

Many of us work from home these days.  Without electricity, we can’t get our jobs done.  If it is really cold (or really hot), you may elect to spend funds for a temporary place to stay – so you don’t freeze or overheat.  You might hop in the car and eat out more often, especially if your home stove is electric and you have.

 Central heat.

Before 1900, most American homes did not have access to heating other than space heat (fireplaces, and stoves).  From the Civil war through around 1900, many different furnace manufacturers started to produce usable home products.

Why I’m grateful.

In my family, we used a coal stove (space heat) until I was 7 years old.  Dad or Mom would take a bucket outside to fill it with coal, bring it in the house, load it into the front of the stove and start the fire.  Until the fire reached a good flame, there was no heat.  I would get up after that, and tip toe (the floor was cold) to the stove, warm my backside, then turn and warm my front side.

At my country grandparents home, they used propane stoves, but they only heated one or two rooms of the house.  I slept in a bedroom that was piled high with homemade comforters, but the temperature dipped below freezing at night.  We had to warm up our clothes by the fire before we would put them on.

As a young married couple with a new baby, we rented a farm house that had one propane stove to heat the entire ranch house.  Although we didn’t have to get up to start the fire, the heat didn’t reach the bedrooms or kitchen.  The baby slept by the stove.

Why it matters financially.

Today we have a central gas powered forced air central heating system.  Natural gas is a lot cheaper than propane.  With the smart thermostats we now use, it costs us a lot less to heat a larger home.

 Fast communication.

Until 1861, in America, there was not a systematic way to send a message rapidly across the country.  In that year the Western Union Telegraphy Company laid the first transcontinental telegraph line.  Pioneers crossing the country prior to that in wagon trains waited months to send and receive mail.

Why I’m grateful.

I reached adulthood (indeed, middle age) before we had the internet.  Being able to sit on my couch and send an instantaneous email message, or look up something from an ever increasing pool of human knowledge and experience seems almost a miracle to someone who grew up when the telephone had no dial or buttons.  We just picked it up and an operator asked us who we wanted to call.  We had party lines too, and you could listen in (and be listened in) on any conversation with the folks on your line.

Why it matters financially.

Most of my life accomplishments could not have been achieved without fast communication.  From grade school book reports (when I called different states to get travel information for the report), to publishing and selling my own book on the internet, fast local and long distance communications have made many inventions and industries possible.

 The microwave.

Although invented after World War II, home microwave ovens weren’t much of a thing until Amana introduced a countertop model in 1967.  Even in the mid 1980’s only about a fourth of US homes had one.  It wasn’t until the late 1990’s that most of us were able to get one.

Why I’m grateful.

Until 1989, our household was among the have-nots on the microwave front.  I did most of my kid raising (and meal fixing) prior to 1989.  It required planning ahead.  If I forgot to take the hamburger out of the oven for supper, I either had to change menus or cook it frozen and chip away at the sides until it thawed and cooked.  If we wanted baked potatoes, I had to start dinner 45 minutes prior to serving time, just to cook those taters.

Now I can leave the meat in the freezer until 10 minutes prior to prep time.  I can cook an entire meal in the microwave (from frozen to done) in under half an hour.

Why it matters financially.

In households where adults are generally involved in work activities for 8 – 10 hours a day, taking time out from work to come home and start a meal so it can be ready in time for dinner could cause issues at the job.  In our home, there is less waste because we have the convenience of the microwave – to thaw, cook and reheat food.

 Our road system.

Until President Eisenhower signed the Federal-aid Highway Act in 1956, there was no interstate highway system.  The nations roads were primarily 2 lane, 2 way mostly paved roads which followed the hills and dales, curves and included multiple stops in small town America.

Why I’m grateful.

Limited access, high speed highways made possible many cross state trips for us, first to visit parents, and now to visit grown children.

Why it matters financially.

Although I complain mightily about the big wheel truck traffic when I’m traveling the interstate, it provides the opportunity for my grocery to carry fresher fruit, more variety and at cheaper prices.  Because of superhighways throughout my city, I was able to take a job more than 50 miles from home and still have a reasonable commute.

What conveniences do you think we forget to acknowledge?