Teaching our children about money

Posted Friday, September 5th, 2014. Filed Under My Daily Dose

I want to share an article from the financial post, National Post Wed. September 3, 2014. The article entitled, If you give your children an allowance, will they still do the dishes? is more of a discussion between a few people. Financial Post’s Melissa Leong, gathered a group of savvy parents and experts to discuss the issue of giving your children an allowance and whether you should pay your kids to do chores. The group includes: Gail Vaz-Oxlade, author of 13 financial books including Money-Smart Kids; Ron Lieber, “Your Money” columnist for The New York Times and author of upcoming The Opposite of Spoiled; and Dr. Denise Cummins, research psychologist, author and contributor to Psychology Today.

I am providing the discussion verbatim and will comment after:

Ron Chores are something everyone does because they are members of the household. Allowance money is a tool for learning and nothing more. You get that money in order to learn how to spend it and save it and give it to causes that you care about. Besides, if chores are tied to money, what happens when the kids don’t want or need the money and then decide to sit out their chore duty? You’re probably going to make them do the chores anyway, and then you’ve broken the connection between chores and cash.

Gail I think an allowance is the money you give your kids so they can learn to manage money and there should be no strings attached in terms of doing chores.
However, if you want to build the work-for-pay ethic, then creating a job-jar or paid-for-chores list is fine. You have to pay reasonably. So “weed the garden for $2/hour” isn’t fair since no one else would do it for $2 and hour. If you would be happy to get rid of having to clean the kitty litter, then cough up some dough and let your kids learn about responsibility, getting the job done and how it feels to earn money.

Ron I like what Gail says, though I might slice and dice it differently. Kitty litter strikes me as a regular thing, year-round. So that’s a chore. Garden work (and snow removal) is seasonal (and snow work is sporadic), so maybe those things are posted on a list in the kitchen with a wage/project fee and a child (or children) can grab those earning opportunities as they see fit/desire.

Denise “There should be no strings attached in terms of doing chores.” Tread carefully if deciding to adopt this strategy. As a professor and small business owner, I have had students and employees who were raised on this system. They develop a strong sense of entitlement, believing that adults or authorities ought to give them what they want simply because they need or want it. They are usually resistant or downright outraged when the professor or boss tells them that they have to earn their grades or their wages through performance.

Ron I have no doubt that there is more entitlement around than there used to be, but I would hesitate before connecting it directly to an allowance that did not require chores. Parents can create high standards for chores – and assign plenty of them – to counteract generalized entitlement. Nothing wrong with taking away all sorts of privileges besides allowance (screen time, car use, going out at all) when chores aren’t done well. On the wants and needs front, parents can hand over a pretty limited budget for clothing needs in a lump sum and let the (older) kids figure out how to spend it over a season or school year or calendar year. No bailouts! They’ll inevitably make mistakes, but better that they do that when they’re younger so they learn.

Denise Ron I understand what you’re saying, but please notice that the system you describe puts parents in the position of taking away something for bad behaviour rather than letting children learn that they themselves can actually create wealth by working a bit harder, better or smarter. As parents, we need to be careful when and how we insert ourselves into our child’s lives.

Gail I define an allowance as the money you would normally spend on your children put into their hands so they can learn to manage it. When my kids were six, they started getting $6/week. They had responsibilities in the home, but that had nothing to do with the allowance. The money was the money. And I set some expectations about what to do with that money: saving, sharing, planned spending. At 12, my daughter assumed responsibility for her clothing allowance. My peers thought I was nuts to hand my daughter $50 for clothes. But I believed that learning to prioritize, to make choices and to defer gratification were important. She’s a killer shopper now, and mad-good with her money at almost 21. My son didn’t get his clothing allowance until he was 17 because he didn’t want it until then.
I don’t believe an allowance teaches children entitlement; I think it that comes from bad parenting.

Comments: First and foremost there is no right answer. I have had this discussion at one of Bank of Montreal’s financial panel discussion between parents and professionals. Being a divorced mom I find that because my children are not with me certain days I am limited to the chores. Yes, of course making their beds, clearing the dishes, putting them in the dishwasher can happen. There are other things that I would love to have them responsible for but they are not home. So as a single or divorced parent this may differ a bit for you or NOT.

As far as tying money to chores or NOT it will depend on your belief system. In the end, the greatest gift we can give our children is to be financially responsible and make good choices. I agree that making mistakes is important and when you are young because, hopefully, the cost is minimal compared to being older and larger issues/items (mortgage/rent/line of credit).

With my boys they are different so you need to know your child/children. I find my older one is more financially irresponsible and I tell him that he cannot spend more than he has. He is learning but it is slow. My younger one is much more prudent and he is learning to save and spend a portion.

Whichever route you take and whatever decision you make about allowance know that you can always alter it if you see it is not working for your child.

Most important is leading by example. You cannot ask your child to be or do something that you yourself are not doing. If you are living well beyond your means there is a chance so will they.

I leave this up to you now…

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