The allowance — a decades-old ritual for children. Each week, kids young and old would step up to their parents, put out their hands, and be given precious cash. In the days of Way Back When, this was normally 50 cents or so. Today, an allowance can run parents several dollars a week.
Kids do one of three things with their cash. They either save it for something bigger, spend it all at once — which usually means a trip back to the parents for an advance — or split it between savings and spending. There are also situations where an allowance is supplemented with cash from a side job.
Why do some parents still give allowances to those working outside of the home? Many adults consider an allowance as a salary of sorts for doing jobs around the house. This doesn’t mean they give the full amount to the child like they once did. There may be situations where the allowance is reduced in accordance to the amount of money paid by the other job.
This practice has probably gone on since money was invented. Yet, there are many “financial specialists” on the airwaves who say allowances should be eliminated. The biggest reason — a majority of kids get paid for doing nothing more than sitting on the couch and complaining. There is certainly an argument for this as an allowance can be considered a handout of sorts. And in this period of growing economic responsibility within young families, many parents feel this delivered the wrong message.
However, there’s another side to this argument. Allowances provide children with a sense of financial life beyond school. They receive a weekly or bi-weekly payment for their services and they are given an opportunity to make their own decision on how the money is used. Should a child require an advance, they begin to understand the potential penalties associated with borrowing money they don’t have.
This delivery of funds gives parents an idea of the responsibility levels of their children and, from there, they can make some decisions on how allowances are given out in the future. For example, some parents may resort to a commission-based style of allowance that gives a certain amount of money by the amount of time and effort is made on completing a task. Others may establish a system where each job is given a static cost. And then there are parents who continue to give their children allowances without task connections, yet what they ask them to do is save some, spend some, and give the rest to a cause.
In the end, allowances should be permitted. And, like other financial situations, parents should make a determination as to what version makes them comfortable.