Raising financially savvy children is important to me and I’ve found that the best way for my kids to learn about money is to give them an allowance. One of the first questions my wife and I asked each other – after determining how much to give and how often – was whether the allowance should be tied to household chores, or given freely as a way for our children to learn about money with no strings attached.

Allowance tied to chores?

Should an Allowance be Tied to Chores?

A survey conducted by the American Institute of Certified Public Accountants found that 89 percent of parents tied allowance to work around the house – the idea being that paying for chores is good training for the real world, where your compensation depends on completing assigned tasks in a timely manner.

Related: How to put your kids to work

Parents worry that if they hand out an allowance without asking for anything in return, their kids will become lazy and entitled. On the other hand, chores are something that everyone does to keep a household running. Parents don’t get paid for the regular work they do around the house, so why should the kids?

In his book, The Opposite of Spoiled, author Ron Lieber says that allowance money should be a tool for learning and nothing more. He says when parents tie allowance to the completion of chores, they make work the primary focus, not money. Parents can certainly help their kids build a strong work ethic by having them do all kinds of chores around the house. But they should do them for the same reason we do – because the chores need to be done, and not with the expectation of compensation.

“It’s a fine idea for children to learn a proper work ethic, but parents can teach it by paying for larger, once-in-a-while tasks that they might otherwise hire someone else to so.”

Lieber also brings up the point that if chores are tied to money, what happens when the child doesn’t want or need the money, and then decides to sit out his or her chore duty? You’re probably going to make them do the chores anyway, and then you’ve broken the connection between the chores and the cash.

Ok, so what happens when the chores aren’t completed or are done poorly? Lieber says there are plenty of valuable privileges that parents can take away aside from withholding money (screen time, play dates, cell phone use, driving the new car, going out).

As Gail Vaz Oxlade said in this Financial Post article, “I don’t believe an allowance teaches children entitlement: I think that comes from bad parenting.”

How much and how often?

When our oldest daughter turned six we decided to start her on an allowance of $5 per week. We found three large, clear plastic jars and labeled them Spend, Save, Give. Every Saturday morning we hand out five loonies and instruct her to put $2 into her spend jar, $2 into her Save jar, and $1 into her Give jar.

Our youngest daughter was more curious about money at age five and so we started her on an allowance then (without the jars). She turns six next week and I’d like to introduce her to the jar method.

It has been interesting to see how they each use their money. The older sister is a saver and has over $100 in her Save jar. Her younger sister started out as a saver but has quickly blown through the money in her piggy bank. I think the jar method will help her prioritize.

Next up for our oldest, who turned nine last month, is a bank account. Time to put that $100 into an account and teach her the value of interest.

Related: Where to find the best savings accounts for children

Lieber says that with children under 10 you want them to watch the money grow and strive for a goal, so they should have just enough to buy some of what they want but not so much that they don’t have to make plenty of tough choices.

Final thoughts

We want our children to be grounded and understand the value of hard work, and we also want to raise children who are smart with money. We consider these two separate qualities and that’s why we decided not to tie an allowance with chores.

Having a bit of an entrepreneurial spirit wouldn’t be bad, either. Consider the lesson Jake Johnson taught his 7-year-old son Liam about trading time for money.

“In our house, you get paid for recognizing a problem and proposing a solution. I’ve taught Liam that if he wants to make money, he has to pay attention to the world around him, identify a problem that needs fixing, and propose a solution. We then negotiate a payment.”

After noticing the lawn was full of dead leaves, Liam offered to clean up the leaves and negotiated a $10 payment. Then he noticed his grandparent’s car was dirty and he proposed to clean it for $5. He then leveraged that deal into cleaning his aunt’s car, too. Soon he was working on a business plan to take his car washing business to the rest of the neighbourhood.

What’s your take? Should an allowance be tied to chores?

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13 Comments

  1. Amanda on June 6, 2018 at 6:15 am

    I agree with you 100%. We have done just as you outlined and it has worked very well for both our kids. The trouble we have run into now, is trying to steer their minds away from stuff stuff stuff and more stuff. We are slowly trying to move toward a minimalist approach in our house and it’s tough when they get fixated on what the next “thing” is that they’re going to buy.

    I really like the focus on problem solving – I think we’ll look at that! We have a “you can earn extra if you do out of the ordinary chores in half hour increments” right now but for regular allowance there’s no tie to chores.

    Thanks for sharing!

    • Robb Engen on June 10, 2018 at 8:40 pm

      Hi Amanda, thanks for the kind words. I hear you on the minimalist approach and trying to steer them away from “stuff”. We have a rule that when one toy comes in one has to be discarded or given away. It’s not always perfect but at least it gets them thinking about not adding too much to the pile!

  2. Justin Bouchard on June 6, 2018 at 7:08 am

    Great article. I gut instinct would be to tie the allowance to chores to raise nice little conservatives but after reading this – it certainly makes sense not to.

    I love the entrepreneurship angle. Hell – I’ll pay someone each month to make sure the car is always clean!

    • Robb Engen on June 10, 2018 at 8:43 pm

      @Justin – It’ll be a proud moment when my kids make the connection that a little (or a lot of) extra work can earn them more money and help them reach their goals faster. I need some age appropriate big chores though.

  3. Chedidoo on June 6, 2018 at 8:02 am

    We’ve done the jar system for about 7 years and it works! We give allowance as a hybrid result for chores, family-member contribution and money for their day to day personal expenses (mall with friends, movies, bus fare, and now their inexpensive pas as you go phone plans). Our kids pay and are responsible for ALL their school supplies as well, and are expected to save up first for that starting in January (as it is a fairly fixed cost), so it is there ready and waiting when they need it in the Fall. They take better care of their supplies, and reuse a lot. Kids are 15 and 13 now and they are really good with money. Done some hard leaning lessons along the way, but that’s how they learn. I was taught to just never spend money…and that wasn’t a balanced or enjoyable approach.

    • Robb Engen on June 10, 2018 at 8:46 pm

      @Chedidoo – That sounds like a good approach, especially as my kids get older and expand their wants from dolls and games to cell phones, designer clothes, and gas for the car.

      My youngest spotted some Kate Spade sunglasses at Winners and they were $30, as opposed to $15 for the non-designer glasses. I said I’d pay $15 and if she wanted them that bad she could pay the difference. She did, and I think that was a good money lesson and one that I’ll happily apply when they’re teenagers.

  4. Dividend Earner on June 6, 2018 at 8:35 am

    Both my kids now 16 and 18 had chores without an allowance tied to it. That was to teach them being responsible at home. In grade 5, they also started doing their own laundry. They clean up after the pets regularly at home as part of wanting pets.

    They got an allowance around grade 4 with no strings attached and the intention was for them to learn to spend. There is a very specific discussion between identifying a NEED or a WANT. Need is cover by us the parents and Want is covered by them.

    I ended up automating transfer between accounts online and that was not the best. Giving cash that they can hold would have been better. I just was never prepared with cash every week but I recommend cash early on.

    I also set them up with 3 stocks with Computershare very early on. Half of the money they get from their grand-parents has to go in it. Compound growth and the power behind it is really difficult to teach and how time plays a major factor when starting early.

    We also talk about money a lot. We discuss NEED and WANT.

    • Robb Engen on June 10, 2018 at 8:51 pm

      @Dividend Earner – Thanks for sharing. I agree it’s best to use cash in the beginning. That’s been hard for me, too, because I rarely carry cash. I think my oldest is ready for a bank account now so she can start learning about interest. My youngest loves to see how much cash she has in her jar and she even has some lofty goals (i.e. toys) that she’s saving up for.

      I like the idea of dripping stocks early on and putting half their birthday money away for the future.

  5. Paul N on June 6, 2018 at 3:45 pm

    Being a sugar daddy, I have been asked this question many times… kidding 😉 . Although the analogy could be applied in that sense too.

    However, I do believe that the value of money needs to be explained to children in ways that show it in practical application. Money is a storage device for your work. You do something valuable, that someone else appreciates and they pay you, and in turn you acquire some-thing, or a service that is valuable to you. I think an allowance tied to chores does help teach that in positive way. I guess we could get political with this topic quite easily and equate the push for a “Basic Income” with an allowance with no strings. So there may be a group out there that disagrees with this concept which feels this teaches totally the wrong values.

    • Robb Engen on June 10, 2018 at 8:55 pm

      Hi Paul, the thing we struggled with is that by tying the allowance to chores it’s like you’re giving them a choice to do the chores (for the money) or not. It doesn’t work that way in our house. It’s expected that everyone has a part to play in the household chores (age appropriate, of course) and doing them is non-negotiable.

      Using an allowance with a no-strings-attached approach provides them with the opportunity to learn about needs and wants, budgeting, taxes, trade-offs, and that there’s no infinite supply of money – once you spend it, it’s gone.

  6. Brian on June 10, 2018 at 5:55 pm

    We add a 4th jar: taxes. Our daughter pays 30% tax on her allowance. She asked originally what that tax money is for. We explained it is to provide services and infrastructure, in this case around the house. She wanted to redecorate her room and she used her tax money to for the paint. Most people don’t mind paying taxes as long as they know they are receiving good value for it.

    • Robb Engen on June 10, 2018 at 8:58 pm

      Hi Brian, that’s an interesting approach but I’m not sure I agree with it. I guess it would depend on the age of the child. I feel like the lesson would be lost on my six-year-old, for example, as she might say, “why didn’t you just give me $3.50 in the first place?”

      That said, I have been imposing a Halloween tax for several years with great effectiveness. 🙂

  7. Eric Bowlin on June 22, 2018 at 1:09 pm

    I know some parents are against allowances and say the kids should just work around the house to help the family.

    While that’s totally true, I believe it’s our jobs as parents to prepare children for life. Money is the biggest thing people don’t know about when entering adulthood.

    I love the jar idea and I definitely want to have something similar when my oldest daughter is a year or two older (she’s 5 now).

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