When you’re a dad, parenting questions often come up that you struggle to find answers to. Since other parents are the worst and Google will send you down a rabbit hole of paralyzing, paranoid terror, we’re here to help by putting those questions to the experts. This is “Basic Dad,” an advice column for dads who feel stupid about asking for basic advice.
The Very Basic Concern
Last weekend, my wife and I had a disagreement about money. It wasn’t bills or debt or anything like that — it was about our kids’ future allowance. Our daughter is only 3, but the topic came up, so we talked about it. My wife thinks that starting to give her an allowance at age 5 will help teach her the value of money, let her learn about saving and give her a sense of being able to make her own choices. All of which I completely agree with.
Then we got to how much.
She wants to give our daughter $10 a week. I think that’s INSANITY. Five dollars should be more than enough given that this money will be used almost exclusively to buy toys. Am I right in thinking that giving a 5-year-old over half a grand a year is madness? Or am I a dinosaur who doesn’t understand the current value of money?
Basically: When should we start giving our children an allowance — and how much should we give them?
The Expert Advice
Stella, Mother of Three: To me, God knows they already have enough crap, so they don’t need an allowance to buy more stuff. I feel like until they’re maybe 12 or 13, they don’t need an allowance. I want to teach them that you help out around the house without having to be paid for it. We all live in the same house, and there should be shared responsibilities.
My oldest is 11, and he’s been starting to work to earn his money, so he’s been weed-whacking for my dad and my sister to make a few bucks in order to save for a phone. He might get 10 or 20 bucks for like five or six hours’ worth of work. At home, though, I can’t justify paying him to weed-whack because he should just be helping out anyway.
Todd, Father of Two: My oldest is 8 and my youngest is 4, and we give them $5 a week if they complete their assigned set of chores. We settled on five bucks as the amount because as a single-income family, it was the most we could afford each week. We started doing it about six months ago because my oldest kept asking for more and more Legos and we wanted to teach him some sort of responsibility with money, and that, if he wanted something, he had to save for it — and earn it by doing chores.
It’s taken a little bit, but it’s starting to sink in. Previously, if he had $20, he’d rush out and spend it to have something. But now, when I ask him if he wants to go to Toys R Us, he’ll say, “No, I still need $25 to get what I want.” So it’s actually starting to work well! He’s learning to hold onto the money to get exactly what he wants. Before, he didn’t understand that $80 is actually a lot of money for a Lego set. With the 4-year-old, though, it’s still a little over his head.
Jacqueline Whitehead, Financial Adviser, Mother of One: I believe kids should get an allowance, and I think they should start as early as age 5. This is usually when they begin to understand the concept of money — they’re paying more attention to their parents as they’re spending.
As far as the amount, I believe they should get a dollar for each year, so a 5-year-old gets $5 a week, a 15-year-old should get $15 a week and so on. I believe this can continue until they go off to college. This way, they see that there’s value to money and that you need money to live. Secondly, this is the way for them to see that money is important in life, and that they need to know how to handle money.
I also believe that this should be given automatically, not for doing chores around the house. Maybe if they do an extra chore they can get extra money, but regular household chores should just be a responsibility. Further, I believe in the concept of 80/10/10, where you live off 80 percent of your money, you save 10 percent and give the final 10 percent to charity. Financial literacy isn’t taught in schools, so it’s up to the parents.
Another thing I’d like to point out is that parents should make sure that they make a few cash purchases with their children present each week. When my daughter was growing up, I used my debit card all of the time, which meant she didn’t understand that I was using actual dollars to buy things.
Rick Day, Self-Made Millionaire, Father of Two: With my kids, I explained to them that, just like Dad has a job and has to perform his duties, you have to go to school and perform your duties. And so, I do a pay-for-grades system, as well as giving them additional opportunities to make money around the house. For the grades, I said, “I’ll give you 20 bucks for every A that you make, 10 bucks for a B and if you make a C or below, you’ll lose five bucks. If you get straight As, I’ll bonus you an extra $100.” This would be two or three times a year, whenever they got report cards, but of course, you can always adjust the dollar amount.
I started with this around middle school, age 11 or 12. They didn’t get any kind of regular allowance, but if they said, “Dad, I need some money,” I would tell them, “Great, how would you like to wash the boat?” This was outside of their regular chores, which they were not paid for. The way I figured it was, we’re a family, and we all contribute and chip in.
I’m very much into a meritocracy, and if you want to make money, find a way to do that. I remember going to Target and my son would ask for a pack of gum. I’d say, “Sure.” He’d put it on the belt and I’d take the little divider, and he’d give me a look. But I explained that my job is to buy you the essentials. If you want gum, candy, toy cars and stuff like that, you can wait for Christmas or your birthday or you can earn some money and buy it on your own.
They both go to private school with kids who get new cars, whereas he got a used Mazda. Where his friends play video games and vape all summer, I made him get a part-time job. I explained to him that I know this is a tough lesson to learn, but those guys are going to end up working for you someday.