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Kids' Allowance: How Much Should You Pay?

I'm completely befuddled when it comes to allowance. I want my kids to learn about money. And I want them to help out more around the house with chores. But should those two problems be linked?

Last fall, without any thought whatsoever, I started our 5-year-old on a 75-cents-per-week allowance. Whenever we were at Target, she kept pleading for art supplies and Princess junk. Why not give her a little pocket change? So 75 cents it was. Plus, that was easy enough to divide into thirds to teach her about charity and saving: a quarter for the collection plate at church, a quarter for college, and a quarter for her to do with as she pleases.

It was a little passive-aggressive, I know. By giving her only a quarter, it would take her awhile to save up for things she wants - things that inevitably end up lying on the floor of our living room. And before you guffaw at the paltry sum, realize she has additional income from the Tooth Fairy and relatives. Generally she seems to have plenty of loose change. Her room jingles, in fact, every time a big truck rumbles up the road outside.

At first, we didn't link her allowance to any chores. I wanted her to buy her own stickers - and maybe start to learn about how much toys cost. Then I got annoyed by her bellyaching when it was time to help out around the house, so I threatened to withhold her allowance. Which helped ... some. But is this the right way to do it?

Other families run the gamut. My buddy Noreen has completely given up on what she terms "a productive household economy," though she's tried a few times. "It usually dies out due to our negligence at getting a well thought-out system in order and our daughter's (age 7) lack of truly wanting the funds," she says. A second mom I know has a successful plan for her four kids - giving allowance for walking the dog, bringing the laundry basket upstairs, and taking out the trash - and she docks pay for missed chores. My friend Sandy, who might just qualify to be the next Supernanny, doesn't pay a cent in allowance, but her 7- and 5-year-old help with everything from putting laundry away to emptying the dishwasher. "It may be old-fashioned," she says, "but I think it helps them learn that not everything needs to be rewarded with something material."

And on the other side of the allowance-philosophy scale is a dad, our friend David. He gives his 12-year-old $2 per week. His 10-year-old gets $1.50. No chores attached. You give them allowance, he says, because you're sharing the resources of the family. It's family money, and that's their portion of it.

Hmmm. Interesting concept. He consciously avoids paying for jobs (which, he says, his kids are good about anyway). "You don't want to confuse a workplace with a family," he advised me. "Your children are not your employees. If you pay them a salary, you're going to wind up with strained employer/employee relations."

His only rule when it comes to allowance has to do with saving: Before his kids can make a purchase, they must have saved $10. "What we wanted to avoid was our children spending money as soon as they got it, so we told them that they need to have $10 on hand before they spend anything," he explains. For example, if they save $12, they could buy an $8 toy, leaving them with $4. The next week, they might want to buy a $2 item. Although they have enough money to afford this, they aren't allowed to buy it until their holdings build up again to $10. (By that time, of course, they probably don't want the $2 thing anyway.) They can spend all their money, or they can spend down so they have $10 left, but if they dip below $10, they must save it up again before their next purchase.

Well, maybe David's the next Supernanny. Except he hasn't solved the problem of my three loads of laundry, waiting to be folded, and a dishwasher that needs emptying. I know just the person to help with those jobs. But I still need to figure out a way to get her to do them.

How does your family handle allowances and chores? Please sign in below and let us know.
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