Giving Allowance to Teach Financial Literacy

Explicit content warning

12/12/24 • 26 min

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:

Why I don’t believe you should pay your kid to do chores
Financial lessons all kids should learn
The value of giving an allowance
How to use allowance to teach financial literacy

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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Why Financial Literacy Matters

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.

The Allowance-Chores Connection

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.

Giving Allowance to Teach Financial Literacy

These are some tips and things to think about to use an allowance as a financial literacy tool.

Decide how much allowance you’ll give. This is a personal decision that depends on your financial situation, how many kids you have, etc. The cool thing is that when you start giving your kid allowance and stop buying extra stuff (if you have been), you’ll have a better handle on your own money.

In my opinion, $1 a week is great up until age 5-7. Then, you can raise it a little bit. We did $5 a week for a really long time with our boys.

Once they hit high school, it was more like $20 a week, because they were paying for food, movies, bowling, etc. when they were out with their friends. Now, in college, we give them slightly more than is necessary for the week or month, and they use that to pay for any extras.

Decide what you’re willing to pay for and what your kid has to pay for themselves. For example, if you’re going to a carnival, what will you provide? What extras does your kid have to buy for themselves? Maybe you pay for their admission or a ride wrist band or one sweet treat. Anything beyond that, they’ll need to pay for on th...

You’ll Learn:

Why I don’t believe you should pay your kid to do chores
Financial lessons all kids should learn
The value of giving an allowance
How to use allowance to teach financial literacy

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.

----------------------------------

Why Financial Literacy Matters

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 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.

The Allowance-Chores Connection

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.

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.

The shift is that the amount of their allowance is set, but you are docking their pay for things they didn’t do.

Giving Allowance to Teach Financial Literacy

These are some tips and things to think about to use an allowance as a financial literacy tool.

In my opinion, $1 a week is great up until age 5-7. Then, you can raise it a little bit. We did $5 a week for a really long time with our boys.

Previous Episode

Giving Your Kid Their First Phone with Kristi Bush

Parents often ask me about how to approach giving their kid a phone for the first time. Today on the podcast, I’m joined by Kristi Bush, founder of Protect Our Kids. We’re talking about strategies to use before you give them the phone, as well as tools for monitoring their use.

You’ll Learn:

Examples of kids accessing internet content that they shouldn’t (and how it often happens)
Why it’s important to have boundaries and guidelines from the start
Common pitfalls of gaming consoles
How to prepare for giving your kid their first phone
Strategies for monitoring device use

If you’re concerned about technology use and want to establish good practices in your family, you’re going to love this conversation!

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Kristi Bush is a coach and speaker who helps families navigate the overwhelming challenges of social media and devices. She’s worked with kids and families for many years, including as a licensed social worker. She combines science and storytelling to give a unique perspective of the benefits and threats associated with social media and technology.

Giving Your Kid Their First Phone

Kids are curious (they’re supposed to be!). But this curiosity can lead them to seeing things online that are not developmentally appropriate. Using technology and social media is a skill. Your responsibility as a parent is to teach your kids those skills, slowly and in stages. You don’t want to jump in with an all-access pass right away.

Kristi agrees with the guideline of waiting until 8th grade before giving your child a smartphone. However, she also acknowledges that some families might need ways to communicate with kids who travel home from school on their own, have sports, etc.

So, how do you know when it’s the right time?

First of all, don’t give your kid a device if they aren’t even asking for it. This is just a win for you as a parent.

Kristi says that parents’ relationships with their kids change after they get that first phone, “Once you give your child a phone, you will always wonder, are they okay? What are they doing?” It changes the whole dynamic.

You’ll know that they have access to some pretty serious things and that you’ll need to have some adult conversations. Of particular concern are pornography, predators and bullying. Your kid might see things that really stick with them.

The other concern is when your specific child is mentally, emotionally and psychologically ready for the responsibility of a phone. This answer is different for everyone, even within the same family.

If your kid is already obsessed with gaming or their appearance (which can be intensified with constant access to a camera), these issues will be magnified if they have a phone that is with them all the time.

Ultimately, Kristi wants parents to feel good about their decision. She talks to a lot of parents who gave their child a phone because all the other kids their age had one, but they didn’t feel okay with that choice. The decision was driven by fear that their kid would be left behind socially, and they didn’t follow their gut.

Whenever your kid jumps into texting, social media, etc., they will catch up. They won’t be left behind. Just as with other developmental stages and skills like potty training and reading, it’s okay for every kid to be on their own timeline.

Set Up Strategies

Here are some steps and strategies to prepare your child and their new device:

Decide (along with your co-parent if you have one) on the boundaries and guidelines ahead of time. Set up the phone with passcodes, settings, etc. before you give it to your child. This way, it will be ready for them to use as soon as they open it.

Kristi says, “Settings are your friend.” This is where you find a lot of privacy features. And don’t worry - You’re not going to break the device. If you mess something up, you can always backtrack and redo it.

Limit access to the outside world. Many apps and games have chat features or even internet search functions that can expose kids to strangers or inappropriate content. In some cases, you can turn off this feature or limit it to approved contacts.

Keep your settings up to date. A challenge for parents is that apps and operating systems are always updating and changing. Kristi recommends revisiting your child’s device settings at least every 90 days. Take a close look at the settings to be sure none of your guidelines have been bumped off due to an update (which happens all the time).

Take it slow. Don’t give your kid multiple apps or games right off the bat. You’re going to have to learn how to manage the settings for each individual app or device. Make it easy on yourself and go one at a t...

Next Episode

Winter Break Tips

Winter break can be hard for us and our kids. What often happens is we sort of just start going into the holiday season and winter break without a plan or being prepared.

You’ll Learn:

How to get through winter break without feeling exhausted and sick by the end
Ways to support your kids and decrease meltdowns
What to do when your kid is disappointed by a change in plans or something not going the way they hoped
How to find more “sparkle” and delight this winter break

In today’s encore episode, I’ll give you 4 winter break tips for you and 4 tips for your kids. You’ll learn strategies to take better care of yourself, feel less overwhelmed, be compassionate with your kids and reduce meltdowns.

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Today, I hope you’ll feel empowered to put the brakes on if you need to so that you can actually enjoy this time with your kids and have fun doing the things you want to do this holiday season.

Get What You Want Out of Winter Break

In order to have the experience you want this winter break, you have to know what that is. What do you want?

Before any sort of winter break, holiday, summer experience, vacation, birthday party, or anything like that, I spend a few minutes making my own personal bucket list of what I want to do or experience and how I want to feel during that experience.

I’m a big fan of chasing the feelings we want. What feelings do you want to chase during this break? Maybe you want to feel connected, calm, or joyful. When you know how you want to feel (and what kinds of things make you feel that way), it’s easier to make a plan.

Decide in advance what you want to feel, and then make a plan to create opportunities for it. Look at your calendar and figure out what you want to do and when you will do it. For example, if you want to create intentional one-on-one time with each kid, decide when it’s going to happen, put it on the calendar and communicate the plan to your family.

And as you look at what’s already on the schedule, ask yourself why you are doing it and if it aligns with how you want to feel. Remember, you don’t have to do it all.

Winter Break Tips

When you are overwhelmed and you have no time or energy to take care of yourself, it's gonna take away from enjoying the season with your kids. These four strategies will help you to be more calm and present this winter break.

Tip #1: Be realistic about your schedule and to-do list.

Before you jump into a bunch of activities, take a moment to ask yourself, “What can I actually handle right now? What’s been going on for my kids, and how are they doing?” Think about how much time, energy and mental capacity you have.

If you’re really depleted (or if you just know it’s always a disaster when you go out to eat in a restaurant) I want you to opt out and say no. Change your plans rather than push yourself.

Tip #2: Stop people-pleasing.

Similar to the first tip, this is about not doing things that are outside of what you want to do or what you can handle.

When you try to please others by going outside of what you have capacity for, you end up feeling like crap. You don’t enjoy the thing or you feel resentful or you get home and dump all your overwhelm and feelings on your kids.

It is okay for you to disappoint people, change your plans or decline invitations. Friends or family might feel a little sting when you say no, but that negative feeling will likely pass quickly.

Tip #3: Ask for help.

This is a hard one for moms. We feel like it’s our job to do all the holiday stuff, but sometimes there are people in our lives who actually want to help and be involved in the holiday preparations.

When we do it all ourselves, we usually end up really tired and sometimes resentful (again). It’s okay to invite your partner into it if you have one. It’s okay to ask guests to bring something to the dinner or take your neighbor up on their offer to watch your kids.

Your people want to help you. So let them.

Tip #4: Decrease the noise.

This is something I’ve really been trying to practice in my own life. It might look like keeping clutter down around the house, turning off some notifications on your phone, reading less news or taking a break from social media.

Hearing our phones ding all the time actually upsets the nervous system and activates cortisol.

When we spend less time listening to and responding to these other things, it opens up time and space to connect with yourself, your kids or in nature. Maybe you’re laughing, playing games or going for a walk as a family.

The goal with all of these tips is that you feel better and more calm this holiday season. Not frantic, rushed, too busy or overwhelmed. I...

Become A Calm Mama - Giving Allowance to Teach Financial Literacy

Transcript

00:00:02.240

Welcome back to become a calm mama. I'm your host. I'm Darlyn Childress. I'm a life and parenting coach. And today on the podcast, I wanna talk about allowance and financial literacy and how I teach the concept of allowance to my clients. And I brought this up today because the last few weeks in the Calm Mama Club, I have coached a few different moms about allowance and how they connect to chores and whether you should connect them to chores, whether you should pay ki