You provide your children with a roof over their heads, food on the table, clothes, and all the cartoons they could ask for. So, what could they possibly want with money?
Financial guru Dave Ramsey believes that kids don’t need allowances, citing that such a practice could lead to entitlement. But, this topic is complex, and each situation is unique.
When we think of kids earning money, our minds drift to Stewie Griffin from Family Guy, that inimitable little baby mastermind that always has his bedroom chock-full of gadgets, and high-end tech. All we can wonder is just how much he’s getting in allowance each week—that stuff doesn’t come cheap!
Here’s the truth: only you, the parent, can decide whether your child is ready for or deserves an allowance. If the answer is yes, use our guide to navigate some of the most challenging decisions, you’ll need to make.
Allowances fall into one of two camps: they’re either given as payment for chores or simply given. The latter, of course, might make your kids more susceptible to the entitlement Dave Ramsey was referring to. Still, some parents choose to give their kids money for the simple exercise of teaching them how to manage it—no other strings attached.
The best choice here is subjective. Think carefully about any terms and conditions you want to set, then make sure your kids understand their obligations.
Your parents probably taught you to appreciate the value of a dollar. But let’s face it—a dollar doesn’t get you much these days. So how much should your kids be earning?
Again, this is a subjective question. Some parents base allowance on age, while others assign a value to the work performed.
Another way to approach this is to talk with your kids about their money goals: are they hoping to save up to buy something special? Are they responsible for contributing to the cost of a car or college? Do they need to stock up on costumes, tools, vehicles and even a time machine like Stewie Griffin?
Knowing how they might plan to spend their money can help you set a fair pay rate.
Once you’ve set the terms, conditions AND your kid is keeping their end of the bargain, you’ll want to make sure you pay up on time, every time. Otherwise, they’ll be asking, “Where’s the money?” every five minutes and possibly retaliate if you can’t share the wealth.
Family Guy has taught us there are major consequences when you can’t pay your debts: In the 2006 episode titled “Patriot Games,” Brian makes a $50 bet with baby-turned-bookie Stewie—and loses. When Stewie comes to collect, Brian can’t produce the funds and asks for an extension. Long story short, Stewie resorts to comedic violence and finally collects his dues.
Surely your kids wouldn’t do the same over a $10 allowance. Still, the message is clear: when you’ve agreed to pay someone, you should be prepared to deliver the goods. You’re setting an example for your kids, after all.
Knowing how your kids are spending (or even better—saving) can help you find teaching opportunities that will improve their money management skills.
Let’s go back to Family Guy for a moment: Lois Griffin didn’t bother to ask questions about her man-child husband’s spending when he purchased a personal jester service and even built a moat around his home after receiving substantially more in welfare than he should have.
Or how about that time Peter spent expected tax refund money before he received it, only to find out that he not only wasn’t getting a refund but was actually being audited by the IRS? Your kids could easily fall into a similar pitfall in the form of loans or high-interest credit cards, potentially leaving them no way to repay what they borrow.
It’s never “nosy” to check up on your kids’ spending habits to make sure they aren’t digging themselves a hole they can’t get out of. And though you might not agree with every purchase, the higher purpose here isn’t to make their decisions, but rather to guide them toward better financial know-how.
If Family Guy has taught us anything about money, it’s by serving as an example of what not to do in many circumstances. And sometimes, seeing someone else learn the hard way can be a precious lesson.
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