When it comes to allowances, there are those who say you should just give kids some money since they’re part of the family. Others say they should earn it. Dave Briggs is in the earn it camp.
“I do not believe just giving kids money prepares them for the real world,” he explained. “When you get to be an adult, no one is going to swoop in and just give you money unless you count welfare.”
Briggs is the author of a new DVD resource that’s getting rave reviews, “Raising Financially Freed-Up Kids.” I spoke with him recently about his views on allowances.
Briggs says there are two reasons for allowances. “One is to help your kids connect working and money at an early age. The other is to create a vehicle for kids to get money so they can learn to manage it.”
Briggs recommends that parents develop three different lists of jobs for their kids.
Mandatory Jobs for no Pay. These are jobs kids must do just because they’re part of the family. Examples may include making their bed, cleaning their room, setting the table, and feeding the dog.
Mandatory Jobs for Fair Pay. These are also jobs the kids must do, but they receive fair pay when the jobs are completed and completed well. Examples may include mowing the lawn, washing the car, and shoveling snow.
Voluntary Jobs for Fair Pay. If the kids choose to do any of these jobs, and if they complete them well, they get fair pay. However, there is no penalty for not doing these jobs. They are strictly optional. Examples may include washing windows or weeding the garden.
Briggs and his wife have two sons, both of whom are now adults. The biggest challenge they faced in implementing their system was coming up with the appropriate lists of jobs. Briggs acknowledged that this does require an investment of effort and time, but he emphasizes that you don’t have to have an overwhelming number of jobs in each category. Plus, as your kids get older, Briggs strongly recommends that they become responsible for keeping track of which chores they have completed.
Penalties for Poor Performance
What happens if the kids do not complete the jobs in categories one or two, or if they don’t complete them well, or if they complete them but complain about them? Briggs recommends finding something your kid really cares about and make the penalty connected to that. If the kids loves to play baseball, the penalty may be no baseball for a day or two.
Why not withhold payment if the kid doesn’t complete a category two job? For one thing, Briggs explained that not completing the job is not an option; these are mandatory jobs. Plus, some kids are not motivated by money, so withholding their pay won’t come across as much of a penalty.
Briggs advises giving kids some latitude as to when a mandatory job must be done. For example, require that the lawn be mowed sometime Wednesday, Thursday, or Friday.
Different Approaches for Different Kids
Briggs also recommends that parents experiment with paying kids their full weekly allowance at a fixed time every week (“the paycheck method”) or paying a portion of their weekly allowance right when each job is completed (“the commission method”). He says some kids are more motivated by one system over the other.
As for when to start kids on an allowance, again, not all kids are alike. Briggs suggested starting as soon as a child is old enough to understand the rules. For many kids, but not all, that could be as young as age four.
Directing Their Use of Money
Briggs feels it’s appropriate to direct how your kids use their allowance money. Initially, he and his wife required their sons to give 10 percent and save 20 percent, leaving 70 percent for spending. They had their kids put each amount into separate jars.
Some people believe kids should be required to save a higher percentage of their allowance, but Briggs advises against that, especially when kids are very young. “You don’t want to de-motivate them by giving them so little that’s under their control.”
Eventually, Briggs started matching any amount that his kids gave away beyond 10 percent. As his kids got older he also taught them to distinguish between short-term and long-term savings goals. A short-term goal might be saving for tickets to a baseball game in four months. Long-term savings were for larger purchases set further into the future.
“We matched long-term savings if they were willing to engage in a conversation about how they were going to spend the money. They could turn down the match, but if they took the match I got some veto power. If they insisted on buying something ridiculous, they had to do so without our match.”
Briggs and his wife did not require their kids to save for college until they started earning money outside the home. “I just didn’t feel that a nine year old should be saving for college. At too young an age it seemed too nebulous.”
Setting The Amount
As for how much should you give your kids, Briggs says, “The biggest single determinant is what demands you are going to make on your kids as to what they have to pay for. One reason why we paid our kids $20 to mow our lawn is because they had to pay for their own clothes.”
He recommends slowly increasing what your kids need to pay for out of their allowance money. “You feather in what they’re responsible for. At age eight, they could be required to use their money if they want a soft drink. Eventually, by around age 16, they’re buying all of their clothes.”
So, how did this system work out for Briggs’ sons? He says they know how to stretch a dollar, with both making it just fine on pastors’ salaries.
Briggs’ system may sound rigorous, but he’s given it a lot of thought and he has seen the fruit of the system in his sons’ lives. We are just getting set to implement an allowance system in our household, and we plan to use a lot of Briggs’ ideas.
What about you? What’s been your experience with allowances, either as the recipient of an allowance or as the one providing the allowance?