Last week, a reader asked a question about giving allowances to children. I deliberately didn’t answer it at the time because I feel this is an important issue that has a lot of potentially correct answers. I’m going to spend a few posts talking about some of those answers. If you want to share your experience as either a kid or an adult, send me an email at email@example.com. Maybe your experience will help somebody else who is struggling with this issue.
The first stance we are looking at is the one that my parents adopted. They just didn’t pay an allowance. Not no way, not no how. If we wanted to buy something, we had to ask our parents and they would make the decision on whether or not to buy it for us. As a kid, this method sucked! As a parent with a whole gaggle of untrustworthy kids, this was most likely survival.
See, in their minds, they were responsible for us. That meant providing for our needs, and deciding on what wants of ours were worth providing as well. They believed that giving money to kids opened up many large cans of worms that they didn’t want to deal with. They also believed that if we wanted money of our own to spend, we should do what they did and get a job. That is exactly what we did.
When we were young, all of us had paper routes. For those reading this who are too young to remember, there used to be a thing called a newspaper. Think of it as the news.google.com of the day. Back in the day, young teens would go to a specified drop-off point, take tons of these newspapers, put them in plastic bags, and deliver them to the front doors of the neighborhood. This was all done before daylight so that when people would go out in the morning, their paper was waiting for them on their front steps (or in the bushes if they didn’t pay regularly, or even strategically thrown on the nighttime leavings of a dog if you were a particular a-hole!). Even I, as a VERY young man who still had training-wheels on my bike, was up when it was still dark, separating and delivering papers! Granted, I was basically tagging along with my mother and brothers, and given just enough work to feel like I was part of something, but at least I was part of something!
When we got paid, my parents would take all the money and bought savings bonds in the name of whichever child had earned it. The rule was that once one of the kids a) reached 18, and b) had enough money in a savings account to match the face value of the bonds, they would receive their bonds. This was my parents’ way of helping us prepare for a future with down-payments on cars, houses, college tuition, marriages and possibly even divorces. Okay, when I say ALL the money, what I mean was all the money they were given. While I was too young to collect from “my” customers, my brothers would collect from theirs, and would shave a little off the top so they had some flash cash. I’m sure my parents knew, but they never said anything about it, and life went on. Additionally, several of my older brothers took on other jobs in the neighborhood and didn’t tell my parents about them. Again, I’m sure my parents knew, but didn’t say anything. After all, this was the lesson they were trying to teach us.
Fast-forward to when I was 13 or so. I told my parents that I had an after-school activity that was going to look good on college applications. What I didn’t tell them was that I had gone to the mall, lied about my age and got a job (back then, it was so much easier to do things like that. Employers weren’t nearly as sophisticated with checking Social Security records or anything like that). It was a crappy job, but it paid a little above minimum wage. I kept it until I got fired because my parents had gone to the mall and my boss caught me trying to hide from them.
The bottom line:
My parents were successful with their method of teaching us the value of money and work. Of course, there were sacrifices made. Their kids weren’t honest with them about money, which I believe is very important. I teach people that being honest about money is the foundation to good financial literacy. Maybe I give them too much credit in assuming that they caught on to everything my brothers and I did behind their backs, and my parents had no clue that we all did things for money that my parents wouldn’t have approved of.
They also taught us a lesson I’m sure they never intended to. We learned how to hide money. We got good at spending only enough money to buy things we wanted, but not enough to raise questions as to where the money came from. We certainly never invested any of it ourselves, or even put it towards savings. My older brothers bought stuff that they didn’t need and really only kind of wanted. When I was older, I definitely bought stuff I didn’t need, or even a little bit want.
Finally, by not allowing us the opportunity to enjoy the money we did give them, while they did help us prepare for our future, they also took away the incentive to work. Why should I bother working at all if I don’t get paid for it at all? Not even the satisfaction of a job well-done. I believe not experiencing that incentive to work and do a good job tainted my ability to enjoy later jobs and to do well at them. I’ve certainly made up for it in later life, but I sometimes wonder if all my brothers did. To them, work was something you did for no reward whatsoever.
So, should you forego giving your children an allowance like my parents did? The answer is that it depends on what your goals for your children are. For my parents, their goal was that we learned to work for every dollar we earned, and to earn every dollar we had. In that, they were successful. Do the trade-offs they had to make bother them? I don’t know, but I think they would be okay with them knowing the end result they achieved. Are you willing to make those same trade-offs?
The girls in this video seem to be having a lot of fun, and are actually more like what I picture when I hear this song than the original. Enjoy!