On December 27, 2011, this article written by Paul, “Allowance teaches child what money is about!” was printed in full in the Vancouver Sun. In it, he argues why allowances and chores should not be tied together, explaining that allowance is a tool for teaching a child about money the same way a book is a tool for teaching reading.
Unfortunately, this Op/Ed piece is no longer available for non-subscriber readers, so we’ve re-issued it here in full.
Why parents should give allowances without tying them to chores
Ever notice how children seem – almost magically – to go from not being able to read to reading? One day we are teaching them the letters of the alphabet with a board book or iPad app, and the next, it seems, they are reading Harry Potter from cover to cover.
We started them off with picture books, slowly moving them into primers, and finally graduating them into easy chapter books before they were finally ready to tackle exploring the Hogwarts School of Witchcraft and Wizardy. We read to them, and we spent time showing them the letters, helped them practice matching the right sounds, and even laughed at some of the silly quirks in the English language.
Along the way, they started to care about learning to read for themselves because they discovered that reading is fun, and they enjoy the stories and interesting information they learn. They eventually realized they didn’t always want to wait for Mum or Dad to be ready to read to them: they could wait a long time for the bedtime story to begin! They became motivated to learn to read for themselves.
Bring on Harry Potter.
One thing we know for sure: it would never have happened if we had not given them lots of books to read!
Learning money management, or financial literacy, should be done the same way. Before our children can understand the value of money, and the importance of working hard to earn it and making wise decisions on how to spend it – or even appreciate the pain of not having any – they need to learn the basics of what it is, first, and why they should care.
They can’t do this without having money to begin with, to learn with. It’s the same as needing books to learn to read.
Allowances are a great tool to help children learn what money is, how to count it, how to “collect” it, how to trade it in for something they want, how to save it, and what happens when they don’t have enough of it. Tying allowances to chores before the children are ready for this advanced, abstract notion of understanding the connection between work and pay, is like asking them to read Harry Potter before they can read The Hat in the Cat. They’ll look at the squiggles on the page and go do something else.
After they’ve received their allowance for a little while, they’ll begin to understand that once a week they get some more money. They’ll begin to see it collect in their piggy bank. They’ll start to learn that they can buy something they want with it. They’ll discover one day that the thing they want desperately to buy costs more than the amount they’ve collected in their jar. So far.
The only way they can learn all this is to have money to learn it with in the beginning. Meanwhile, they still need to pick up their socks and do their homework. Just don’t link the two together… at least, not yet.
When they are older and they’ve experienced the fun and disappointments of having, saving and spending their money, once they understand the basic financial principles they need to get along well in life, then they will be ready to start earning extra money by doing additional jobs for the family and, eventually, for their neighbours.
I recommend that parents start giving their children their first allowance at the age of five, and that their allowance be equivalent to half their age: at five, they receive $2.50 per week. Allowance should never be missed, or the lesson starts to break down. It’s as important as the nightly bedtime story!
If you have children between the ages of 5 and 12, they are ready to begin learning lifelong money management skills. Begin by giving them a weekly allowance that is not tied to any form of chores, grades, music practice or other work/reward or work-not-done/penalty system. They will be ready to start learning the importance of earning their money later.
First, they have to learn what money is and why they should care.