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Why Paying Your Kids for Allowance May Be Teaching them The Wrong Lesson

By: Daniel Wood, PA-C

Annually children will visit their medical home for a well check. In addition to checking height, weight, and a physical exam, the pediatric provider will discuss anticipatory guidance. The topic of chores often occurs in these discussions, such as when to start an allowance, how much to give each child and when to increase the allowance. Often, parents will marry a child’s allowance to chores. The intent is to teach children to have a work ethic; however, it may be sending the wrong message.   

Most parenting books recommend that allowance should be for learning the how to manage money, not necessarily as a tool to teach work ethic. Dr. Spock is known as a legacy voice in pediatrics and parenting. By the late ’90s, in his book “Dr. Spock’s baby and childcare” he commented that “An allowance is a way for children to learn about handling money… An allowance shouldn’t be used for routine chores.”    

Does this mean that we should not pay a child an allowance? Many parents hope that chores teach the idea of positive reinforcement for a job well done and negative reinforcement for not completing chores. However, paying children for chores makes the relationship transactional and should be educational, according to Jane Nelsen, who is the author of parenting books.   

Thus, if you do decide to pay children for an allowance when is the right time to start paying children an allowance? Many experts in parenting argue that children need to be helpful around the house because it is the right thing to do instead of an effort to make money. Like many answers in parenting, it really depends. Children can begin to help in chores as young as 3. Rudy Barrera, a long-time pediatrician in Austin, recommends starting paying children for an allowance when they show an interest in money. This will usually occur around the time the child has the tooth fairy visit. Children should have routine chores by the time they reach 7 to 8 years old.   

If an allowance is started, then how much should you dole out and how often. Most parents pay elementary and middle school children on a weekly basis for chores. However, once high school arrives some parents will dole out money monthly allowing them to practice basic budgeting. Deciding the correct amount of money to pay a child can be tricky. A common rule of thumb is to pay a child ½ to equal their age on a weekly basis. The age-based formula has the advantage that it provides raises with an increase in age and avoids disagreements amongst younger siblings for fair pay.   

Once the allowance is paid, Dave Ramsey, a well-known radio financial expert, recommends that children separate allowance into three envelopes: spend, save, and give. As children age, another way is to have children open a custodial bank account with a debit card. Most major national banks and some credit unions offer these accounts.   

Pediatric providers often offer advice at well children’s exams. Frequent questions revolve around chores and teaching children to save. Pediatric providers can be armed with the most current knowledge on chores and allowance.   

See Daniel Wood, PA-C speak at a 2021 Skin, Bones, Hearts & Private Parts CME Conference in Myrtle Beach, Pensacola Beach, Orlando, or Las Vegas.