I never got an allowance when I was a kid. I was raised to earn my money through hard work. I wouldn’t receive any money for my work, my payment in the end would be things like having the ability to join a sports team, gasoline to fill my vehicle in my teenage years, or going to a concert I had waited ages for.
Growing up on a farm, there was often a ton of chores to be done, most often every day. So I’d do them, for what I thought back then was for free. I didn’t know the price of things back then. The cost of driving me 50 miles to play a hockey game, my equipment, my gasoline to get to school. It’s extremely expensive, and looking back at it now, I am grateful for what I was given because I know the true cost.
Giving your child money is the easy route
The biggest sense of entitlement a child is raised with at a young age is often an allowance. Now, this is different in every household. Some households make their children do basic chores, just as I did. Clean the house, do the dishwasher, weed the garden. But, there is family situations where an allowance is given to a child without them having to do any work for it.
When you give a child money and expect nothing in return, that child often sees money as something that is easy to come by. At a young age it can be “Wow, I can definitely buy this, I’ll just ask Mom for more money to pay for it!”
At an older age however, it can have devastating consequences. A $20 a week allowance can turn into a $1500 cheque for paying for a broken down car, a maxed out credit card or any other situation the young adult gets themselves into.
Money should be seen as a reward for hard work
If you’re child must earn their allowance, the fact they have to do something for the money is always lingering in the back of their heads. At a younger age, this may mean holding on to money longer, or maybe even accepting the fact that if they want the more expensive item, they are going to have to put in some work to get it.
This creates a ripple effect throughout their whole lives. They grow up knowing that money in itself has to be earned, not given. I am a strong believer in the idea that this trains young adults to make better money decisions, and ultimately learn the ability to manage finances much better than those who weren’t raised on this method.
What about when the costs are much more?
So, we’ve been talking about a young teenager getting an allowance thus far. It’s perfectly fine to employ these methods to train your kids about the importance of money at a young age. But as we get older, typically in the college years, it may be appropriate to help your kids out.
Now, if you’re looking to get a head start on this inevitable time in your life, I would highly suggest setting up an RESP. They are an amazing way to build for your childs future, and it is a government account that too many people don’t take advantage of.
Student loan debt is a big problem in this country. If you’re able to help your children out, I’d strongly suggest you do so. Even making the loan repayable at no interest rate can set your child years ahead of the game. Student loans accumulate fast, just because of the high cost of tuition these days.
With all that being said, you should strongly suggest your child get a part time job during their studying years. It will help reduce that debt both by being able to pay extra payments, and reducing the amount of debt they take on due to an income coming in.
Funding your child after they’ve moved out
This is a hotly debated topic, one that I have a very strong opinion on. If you’ve taught your child the importance of money moving through their teenage years to young adolescence, the transition shouldn’t be that hard.
Sure, there may be times where they are stuck in a tough situation and need money. It’s a fact of life. A young 20 year old has a heavy load placed on them, especially one that is attending post secondary. An emergency cost can definitely be unaffordable.
But if you’re funding your child well throughout his twenties and even into their 30’s, I hate to be blunt but you’ve done something wrong. As human beings, we need to try and find a way to make ends meet on our own. As parents, we need to be cutting the life line, no matter how cruel that may seem. The longer we let our child rely on us for money, the longer it will take for us to retire and the longer it will take for them to become a fully functioning, contributing member of society.
Overall, it’s probably best to cut out an allowance
I really don’t think there is much need for an allowance these days. Give your kid some money now and then to buy something for lunch at the school store. Buy them a video game or a new device when they’ve done well in school or did a good deed for someone. Let them know that money doesn’t come easy, and it is truly hard work that will reward them in the end.
I never got an allowance, and I grew up not expecting one in my older years. I think, at least financially, I am a better person for it.