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Making Allowance Count: Tips For Raising Children Who Aren't Spoiled

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While it's clear that kids need chores, the role of allowance in a child's life may be less clear. One consistent finding from research is that providing an allowance typically undermines participation in chores. That said, is there any reason to give children an allowance?

The answer is yes, according to Ron Lieber, the "Your Money" columnist for the New York Times and author of The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money. He suggests that a regular allowance -- even for young children -- can be a valuable platform to learn about handling money and life values as well. Here are 3 tips Lieber offers to make allowance really count for something in a young child's life:

Don't Treat Chores as a Job

The benefits that kids get from chores derive from doing them for non-material gain. They act on their natural instincts to be helpers, which advances their ability to empathize with others and work together with family members. Self-reliance becomes ingrained at later ages and kids veer away from the trend to act entitled. So consider Lieber's first tip:

"Adults don't get paid for doing things around the house, and neither should children. It's just something we do to help one another out and keep our homes functioning. If you want your kids to learn a real work ethic, they can go work when they're teenagers for someone who doesn't give a lick about them and will fire them if they don't perform. And if you want leverage over them, take away their privileges when they don't do their chores, not their allowance."

Practice With Money Makes Progress

Not paying for chores does not, however, mean that you shouldn't give kids money on a regular basis. The trick is to provide an allowance in the sense of a regular distribution of money that is not tied to any type of work or task – it's simply money they get from you that they can use how they like. Lieber offers guidance on how to make this experience meaningful:

"Money is a teaching tool, and allowance is for practice. One of the most important reasons for kids to have allowance is so they can see how it feels to spend on the wrong thing and experience regret, to save for something bigger and feel that sense of accomplishment and to sense how grateful organizations are when you walk in with your 'Give' jar and hand over the money. We're in the grown-up making business after all, and handling money wisely is a big part of being a successful, happy grown-up."

Gratitude Is Powerful

While a regular allowance will provide kids an opportunity to learn many lessons about managing money, it can also stimulate thinking about non-material pleasures and broader values. Here's Lieber's take:

"Reminding yourself about the good things you have can help divert attention from thing you may want that are financially out of reach. Saying grace is one good way to do that, but so is a round of toasts each night at the family dinner table (or whenever you have time). There are no rules here except that you should raise your glass to someone or something that was awesome that day. Kids love toasting; it's grownup and a little loud and it doesn't put much pressure on them or feel to formal."

The Bottom Line

Raising kids to do chores without receiving an allowance for them, and providing kids with an unconditional allowance to learn and practice money skills, will provide a well-balanced approach that will make both chores and allowances count towards the positive development of social and personal skills throughout childhood.

Richard Rende, Ph.D., is a developmental psychologist, researcher, educator, consultant, and author. He has held many leadership roles in child development research and academia throughout his career. He is co-author (with Jen Prosek) of the forthcoming "Raising Can-Do Kids: Giving Children the Tools to Thrive in a Fast-Changing World" (Perigee/Penguin Random House; August 2015), which provides an evidence-based approach for nurturing entrepreneurial traits that all children will need for future success. Rende serves as Director of Curriculum and Instruction at the Phoenix Country Day School. He provides a trusted academic voice on parenting, and his work has been featured in Parents.com, Parenting.com, the Huffington Post, the Wall Street Journal, Yahoo!, Time.com, CNN, MSNBC, ABC News, and NPR.

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