[This is a big subject and I have much to say — more than I can organize into a single blog post. Below is the first of what I intend to be at least a 2-part series on the subject of allowance. This first post is an outline and explanation of my theories and thoughts about children and allowances in general. Subsequent post(s) will delve deeper into practical applications and specifics about our experience with allowances.]

If you’re familiar with my blog and have read my post about budget categories then you know that my children receive an allowance. Children and allowances has always been a fascinating topic for me; I love hearing how other people handle this issue so if you have a story/opinion to share, I hope you’ll leave a comment.

The subject of allowances was one that required a good deal of discussion and negotiation between The Husband and I because we were not of like mind. Luckily we visited the issue early (The Daughter was about 4 or 5, I think) and the ability to communicate and compromise are skills we both possess.

The fact that The Husband has four grown children and thus a lifetime of experience more than I do is, at times, both a blessing and a curse. In the case of allowances, it was more the latter. He assumed that we would handle allowances the same way he’d always handled them. I, however, had lots of ideas and ideals that were new to him. I can understand where he was coming from — why put more time and effort into something he’d already figured out? But I don’t do things that way; I believe very strongly in active and conscious parenting and I think that doing something in a particular manner just because it’s always been done that way is a terrible reason to do things.

I started from the beginning and, as always when making important parenting decisions, asked myself some questions:

1. Why should we give our children allowance?
2. Why should our children get an allowance?
3. Should allowance be tied to chores?
4. Will children be paid extra money for extra chores/work/tasks?
5. What lessons do we want our children to learn with their allowance?
6. How much freedom will the children have with their allowance? Will there be restrictions and/or requirements?
7. Will any requirements/restrictions be placed on money the children receive/earn independently?
8. How will we deal with any conflicts that occur as a result of those freedoms/restrictions?
9. What skills do we feel are essential for our children to learn about money before they leave home?
10. At what point does a minor child’s financial independence override parental power?

Naturally, my attitudes about, and past history with, money influenced by my questions and my answers. I was raised by a single mother of four children who never had enough money to go around. I started earning money at an fairly early age and achieved full financial independence earlier than any of my siblings. As a parent looking back on my relationship with my mother, I particularly needed to address my feelings about the issues addressed in Question 10.

As I mentioned, a lot of time, thought, and conversation (with friends, family, and spouse) went into the answers to these questions. In the end, The Husband and I solved our differences of opinion the way we solve all differences of opinion — we compromised and did it my way. [I could say I’m kidding but I’m not — we’ve learned to compromise by having faith in each other and going with the opinion of the spouse who has the stronger conviction that they are right.]

Why should we give our children allowance?
I never do anything because everyone else does it. If I don’t have my own personal reasons, forget it. Yes, there are lessons I want them to learn about money (outlined below) and their allowance is a good means with which to convey some of those lessons. An allowance provides the children with the means with which to practice money skills. But that is not why we give them an allowance. We give our children an allowance because they are part of our family and therefore share in the bounty of the family. It’s a sign of respect; our way of showing that our children are valued members of the family and deserving of privileges in accordance with their age and experience .

Why should our children get an allowance?
This question might appear to be simply a rewording of the first question but it’s not. As I’ve said, giving our children allowance just because other parents do is definitely not a legitimate reason. Our children’s allowance provides them with the opportunity to learn and practice various money skills in a safe and controlled environment.

Should allowance be tied to chores?
This was a biggie and it was the area in which The Husband I had the largest difference of opinion.

His opinion was probably the most common among parents: yes, allowance is tied to chores. Just like in the “real world” you do your work, you get paid. No work, no pay. Period.

I understand this logic. But I don’t agree with it. Our family is not “the real world.” And I don’t feel it’s necessary that they live under the rule of “no work, no pay” for 12-plus years prior to leaving home in order to learn that particular lesson. Life simply isn’t that linear. If we do our jobs as parents, our children will grasp the real-life concept of “no work, no pay” with no perceptible effort.

To me, chores are non-negotiable. Therefore, if you tie allowance to chores you’re setting yourself up for the inevitable conflict of a child who chooses to forgo allowance so they don’t have to perform the work. That’s a Catch-22 that I choose not to set up for myself and my children. Everyone does chores because everyone is part of the family. My children were doing chores long before they started receiving allowances. You contribute to the family because that’s what family members do and abdicating from the family is simply not an option.

Another important point regarding this issue — the reasons for chores and the lessons conveyed through the assignment of and completion of chores is completely unrelated to the lessons I hope to convey through the disbursement of allowance.

Will children be paid extra money for extra chores/work/tasks?
Believe it or not, this is the question that I’ve had the hardest time defining my position on. I’ve revisited it many times over the past years. The temptation is always there but, so far, after rethinking my position I always come down to no.

Extra work is a part of life. As adults we know that sometimes the going gets tough; circumstances change. Sometimes one family member, for whatever reason, can’t carry their usual load. Sometimes extra work falls out of the sky — just ask my children about blizzards

Being a member of a family means sometimes having to shoulder a larger portion of the burden. We might learn additional lessons; we might be given additional thanks, praise, or even extra privileges as a result of carrying a larger burden but I don’t want to set my children up to expect additional monetary compensation any time they take on an extra task.

What lessons do we want our children to learn with their allowance?
First and foremost, I wanted to give our children a taste for saving money before they acquired a taste for spending it. Secondly, it was my hope that our children would experience for themselves the adage “’tis better to give than to receive” — I didn’t want their allowances to become an exercise in self-gratification in the form of saving up for some big toy they wanted(hands-down the most common application of allowances). As parents we’ve done a bang-up job of meeting our children’s needs and nearly as good a job of meeting their wants. Their allowances were intended more for money practice, saving, and as a means of learning the art of gift-giving for parents, friends, siblings, etc.

How much freedom will the children have with their allowance? Will there be restrictions and/or requirements?
This was another biggie for me. I’ve seen this issue handled lots of different ways and heard from friends and peers about how their parents’ policies affected their personal spending habits. The answers to these questions have a direct impact on question #10 so it’s important to understand the repercussions of this policy from the very beginning.

My children absolutely do not have complete freedom with their money — though I must say that this part of my policy has never been tested to any great extent. I don’t know if this hasn’t come up because of how I handled the issue from the very beginning or if I was just lucky, but I think it’s best to know how you stand before the issue arises rather than try to decide policy on the fly. My policy is that allowance cannot be used to circumvent my household rules; if an item is forbidden in our household, it doesn’t matter whose money is purchasing it. Not allowed means not allowed.

Although I do say how money cannot be spent, I do not dictate how money must be spent. I don’t impose a minimum percentage that needs to be saved and I don’t require the children to make donations or offerings to church or other charitable organizations.

Will any requirements/restrictions be placed on money the children receive/earn independently?
The same rules apply here as they did above — circumventing household rules is not allowed no matter what the money source.

How will we deal with any conflicts that occur as a result of these freedoms/restrictions?
I’ve never been one of those parents afraid to say “because I said so.” That’s not to say that my mind is closed or that I won’t listen to well-formed, thoughtful opinions on matters. I’ve been known to change my mind after being presented with logical argument or after pondering a point and seeing flaws in my own logic. That said, the easiest way to deal with conflict is to avoid it to begin with and, thus far, we’ve been successful in avoiding allowance-related conflict by being very clear about our positions on subjects like candy, electronic games, and high-heeled shoes

What skills do we feel are essential for our children to learn about money before they leave home?
I’d like our children to be accomplished at budgeting. They should also be familiar with the ins and outs of bank books, the concepts of interest and compounded interest, and the rules for using credit wisely. I would also wish them to be careful, informed consumers. As with any subject, our deepest desire for our children is that they understand the basics and have the skills and intelligence to gain more specific knowledge along the way.

At what point does a minor child’s financial independence override parental power?
In a word, never.

It’s impossible to cross bridges until they are encountered but I feel awfully strongly that people living under my roof live by my rules. Not only that but people who are financially dependent upon me live by my rules even if they don’t live under my roof. If The Husband and I are footing college expenses, then there are still rules that have to be lived by. If you want to make all of your own decisions then you need to be able to pay all of your own bills and be living under your own roof.

In case The Daughter is reading this, that means no tattoos and no nose-piercings until you’re out of college and on your own!

So, how did you handle allowance with your children? Or, if you don’t have children, how do you think you’ll approach it? Did you receive allowance? What did you learn? Was it tied to chores?

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