Recently, I’ve coached a few different moms about allowance and chores. These concepts often go together, but I think about them as two separate pieces. Today, I’ll teach you how to use giving allowance to teach financial literacy to your kids.
You’ll Learn:
Giving allowance gives your kid the ability to have some money in their pocket so they can learn how to spend, how to save, how to have regret, and how to feel proud. Listen to learn how.
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Managing money is a skill - and an important one. When you want to teach your kids how to read, you give them books. When you want to teach your kids about their feelings, you emotionally coach them about their feelings. When you want to teach them how to count or do math, you give them small items that they can count and manipulate.
So if you want to teach your kids about money, you have to give them some money.
There are a lot of things I want my kids to learn and understand about money. In order to do that, they have to make decisions and have a lot of different experiences with money.
I want them to experience the feeling of having some money and then spending it. I want them to spend money and be thrilled by the purchase. And I also want them to have the feeling of spending money on something that’s not good quality that breaks right away or that they regret.
I want them to have the feeling of saving their money in order to get something. But I also want them to have the feeling of wanting something and not having enough because they didn't save.
I even want them to have the experience of paying for fines. Sometimes, in life, we make a mistake and we have to pay money to fix it.
Ultimately, I want them to experience both success and failure when it comes to making decisions and spending money. This is how we learn.
My take on allowance and chores might be a little different than you’re used to. While the two are connected, I don’t actually believe that you should pay your kids to do chores.
Allowance is meant to teach financial literacy. Chores teach kids how to be in community. As a part of your family community, they should participate and help out…just because they live there. Both help teach responsibility.
So if you’re not paying your kid to do chores, how do they fit together?
As a member of the family, your child will have jobs to do around the house. There will be expectations for them to meet.
If they don’t do their jobs, what happens? Often, you end up doing the job for them, and they’ll need to pay you back for the time and energy it took you to do that.
Not doing their chore is a mistake. When you make mistakes, you have to pay for them in some way. You have to make it right. One way is for them to pay you back in time. If you did one of their chores, they can do one of yours. Another way is to pay you back in money.
For example, you might give your kid $5 a week for allowance. One night, you realize they didn’t take out the trash, so you do it before bed. The next day (or the next time you pay allowance), you say, “This chore that I did cost $1,” so they owe you that or you take it out of their allowance for the next week.
The shift is that the amount of their allowance is set, but you are docking their pay for things they didn’t do.
These are some tips and things to think about to use an allowance as a financial literacy...
