According to Cameron Herold, coach, mentor, and owner of BackPocket COO “allowances teach kids the wrong habits.” Cameron believes that allowances actually teach kids to think about having a job. Instead, he believes in teaching kids how to be entrepreneurs—and entrepreneurs don’t rely on a regular paycheck.
According to Lewis Mandell, a professor of finance at the University of Washington who recently studied more than 50 years’ worth of allowance research, “The kids who receive [a regular, unconditional] allowance tend to think far less about money in general.” He also said “Those children appear more likely to grow up to be ‘slackers,’ since they aren't learning to associate work with money.”
If you want to raise entrepreneurs, Cameron Herold suggests that you teach your kids some alternatives for earning money. For example, encourage them to walk around the house and yard looking for things they can sell or paid chores that they can do. Require the child to initiate the interaction with you regarding what work they’d like to accomplish and how much time it will take them to complete the work, and then negotiate on how much they will get paid. This teaches children the art of finding opportunities and the skill of negotiating.
Another way for children to earn money outside of an allowance is for them to take the junk and toys they’ve outgrown and start selling them on Craig’s’ list or E-bay. Teach your kids how to fix the price, write the item’s description, pull up photos, etc. If you’re children are minors, you will probably have to set up your own personal account online and then add them on a sub account.
Many critics suggest that giving a child an allowance teaches the child to expect money for nothing. Other allowance alternatives include:
Earned Time – Instead of money, your child can earn time for chores that they accomplish. That time can be put towards extra time on the computer, an extended bed time, additional time with friends, etc. This idea promotes a good work-fun balance and is more affordable for mom and dad.
Paid Rewards—With this system, you provide some money to your child when you catch them demonstrating good behaviors such as getting certain grades, displaying good manners, being a good Samaritan, etc.
If your family has decided to follow a chores-for-pay system, you may want to take a look at our blog, Keeping Chores Simple. It describes a method that we use with our children. Chores are split up between the everyday/expected chores and the above-and-beyond chores. The blog includes a link to a free downloadable “Everyday Chore Chart” template.
FamilyMint™ encourages parents and children to learn about money together. They also believe that the best teacher is experience, and with FamilyMint kids learn by setting and working to achieve goals they create themselves.
Our Money Management Certification Program™ combines a 60-page step-by-step workbook with a fun online money management application for kids. Kids that complete the 2-month program develop key money habits that will benefit them the rest of their lives. The FamilyMint Method increases your child’s understanding, confidence, and success in saving and managing money.