WHY ALLOWANCE?

Allowance for children is a tradition opposed by some. Why should anyone grow up, the argument goes, feeling entitled to financial benefit apart from personal effort? If the kids want spending money, let it come in direct exchange for their share of household chores.

It’s fortunate that people who take that line, rarely progress to denying small children an “unearned” share in the family’s food and housing. But seriously, there are benefits to the allowance tradition.

It Provides a Point of Stability

Certainly, children need to learn that the world doesn’t owe them a living—but they also need the security of knowing their family loves and accepts them whatever happens. If all spending money comes attached to “what have you done to earn it” strings, children may develop the idea that everything their parents give is subject to withdrawal. Or they may start demanding “What’ll you pay me?” on every request from picking up a toy to pitching in on the family yard-raking project.

Likewise, avoid using “no allowance next week” as a discipline method (unless the allowance is being redirected to obvious making of amends), and keep any payments for extra chores clearly separate from allowance payments.

It Teaches Budgeting

Budgeting on a sporadic income is difficult even for entrepreneurial adults. A child who receives the identical amount each week finds it easier to apportion set amounts for set purposes—and, just as important, to understand where the limits are. If a tempting gizmo surfaces once the week’s funds are spent, the child has a ready object lesson in delayed gratification—either do without or wait until the next allowance—that helps build future habits against buying too freely on credit.

Of course, this principle only holds when parents aren’t swayed by pleas for a little more (or an advance on the next allowance) “just this once.” It’s almost inevitable that a youngster, on achieving allowance age, will spend the first several payments on the first impulse purchases within reach—and will be very upset when funds run out, and momentum snaps to a halt, with five days left before the next allowance payment. Stand firm against any tearful wheedling that results; one can’t learn too young that fresh funds can’t be summoned on whim.

It Nurtures Family Unity

Although kids need to understand that Mom or Dad won’t feed every demand for instant gratification, once children reach school age they sometimes are justified in protests that their prescribed allowance isn’t enough. Give them a chance to explain how they are using their money and why they feel they need a raise. A kid’s reasons for wanting more funds aren’t always based on “everybody has one” peer pressure.

Ideally, put “allowance raise negotiations” on the family-meeting agenda at least once a year. This will also provide opportunity to help the kids understand your financial difficulties and priorities. All told, you will grow closer as a family and help the children learn greater overall responsibility.

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