“Working to help parents raise money-smart kids.”
Hello, friends!
This week I’m answering three terrific questions raised by parents like you in my recent Art of Allowance Academy classes.
I hope you find my responses useful on your families’ own money-smart journeys.
— 1 —
What is a hybrid allowance?: Parents can employ a hybrid allowance as a tool to help children learn basic money skills and financial intentionality without a connection to chores.
Generally speaking, the purpose of an allowance is to allow kids to grasp money smarts through their own experiences. So they use money as a tool to learn money-smart skills. The three foundational skills I identify in my book, The Art of Allowance, are saving for goals, distinguishing needs from wants and making smart money choices.
Alternatively, the purpose of chores is to teach our children that we often have to work in order to make money.
In a hybrid allowance, kids complete basic “around-the-house” chores, as they are learning to be responsible members of a household. Examples include:
- Making the bed
- Setting the table
- Clearing the dishes
- Taking out the trash
Children aren’t paid for these around-the-house chores in a hybrid system. However, they can be compensated for extra “above-and-beyond” chores. These are tasks we parents might do ourselves or pay others to do and include:
- Washing the car(s)
- Raking leaves
- Mowing the lawn
- Cleaning the toilets (Maybe draw lots for this one? 😉)
Putting theory into practice, one Art of Allowance Academy parent shared a good example of an above-and-beyond chore: “I don’t like to clean my baseboards, I put up $ on the board on the weekend and one of my 4 kiddos takes the $ once they are done cleaning them.” Bravo!
— 2 —
Weekly or monthly allowance?: Another course parent asked, “[Should I pay an] allowance weekly or monthly? Is one better than the other?”
Like any good question, this one raises another: What is the age of your child?
As I outlined in last week’s newsletter, an allowance should grow with your kids. Personally, I recommend starting with a weekly allowance. This system gets children in the habit of handling money and learning to make financial choices on a regular basis.
Though kids are required (or “nudged”) to put money into specific jars (e.g. $1 into Save, $1 into Share and $3 into Spend Smart), they’re grasping the habit of intentional money choices. And because habits are about meaningful repetition, a weekly allowance is a smart start. Also, the younger the child, the more abstract concepts of time are. So waiting a month can feel like a year. 😩
When kids level up to the Breakthrough Allowance, you can transition to a monthly distribution system. A monthly allowance simulates a paycheck and gives children a little real-world perspective. At first, their new earnings might feel like a windfall. (I remember receiving my first paycheck and thinking, “Wow! I’m rich!”) Given a month or two, however, your tweens or teens will learn to better stretch their money.
— 3 —
What does an allowance cover?: During a recent class, I was also asked, “Do you have any advice about when to expect something to be paid out of allowance or to be paid by the parents? Clothes? Starbucks? Movies?” 🤔
First of all, the money younger kids receive through the Starter Allowance is typically for wants and needlets.
They are learning the basic money-smart skills (Remember those?) with this system, so you likely aren’t going to assign general areas of purchasing responsibility.
That all changes with the Breakthrough Allowance. You will negotiate with your tweens and teens just what their updated allowance will cover. In our family’s case, clothes and food out with friends (like Starbucks) was now on our daughters. Movies may or may not be. Your choice.
As I alluded to above, your system can be flexible. In fact, I wrote this essay to address another parent’s concern about rigidity. You needn’t feel like you’re spoiling your children if you want to surprise them by paying for something they might have expected to come out of their own wallets.
I hope these answers to fellow parents’ questions help your own families.
Clearly, raising money-smart kids can be a fun and an interesting journey. But however you travel this road, just remember to enjoy it.
John, Chief Mammal
P.S. Please consult with a financial or investment professional before engaging in any decisions that might affect your own financial well-being.
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