TORONTO – At Patti Barnes’ North Vancouver home, her five kids tend to the garden, take out the garbage and look after the family pets.
The tasks, which typically earn them 50 cents each, are coupled with a weekly stipend of $5 and form an allowance meant to teach the kids between the ages of eight and 15 about hard work and budgeting.
“If you want to go and hang out with your friends, then you need to have saved some money,” said Barnes, the writer behind parenting blog RedHeaded Patti.
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“They learn that going to Starbucks every day burns through your money and if you do that and you want to buy some earrings, now you don’t have that money, so you have to make sensible choices.”
Using an allowance system like Barnes’ to teach financial lessons has long been common, but how parents set them up varies wildly.
When to introduce an allowance, how much to give and how often and whether the amount should be in exchange for chores — an aspect that divides many parents — makes the practice even more different from home to home.
While there are many ways to set up an allowance, the best ones create teachable moments about finances and “a safe space for them to mess up,” said Michael Massoud, director of finance at the Chartered Professional Accountants of Canada.
“It’s (better) for them to mess up and make mistakes, with a little bit of money, when they’re younger, than with big mistakes, when they’re adults that haven’t learned about money … and there’s less of a safety net,” he said.
Massoud started giving his eight-year-old son Lucas an allowance when he was about seven years old and started showing an interest in money.
The allowance isn’t contingent on chores because he didn’t want his son to believe every task he completes will result in earnings.
“It instils the idea that if I do a good job or if I do a job, I get paid for it, and that’s good, but … some people don’t want the notion that you’ll get paid for every little thing you do, even if it’s a responsibility,” Massoud said.
Regardless of whether a parent makes an allowance dependent on chores or not, Massoud advises them to budget for the expense.
A parent should never stretch themselves beyond their means to offer an allowance or start one they won’t be diligent in maintaining because it will be a disappointment for their child, he said.
He recommended parents base allowances on their child’s age, with kids earning between 50 cents and one dollar for every year old they are. Younger kids are happy with almost any amount, he added.
Amy Worrell gives her nine- and 10-year-old children roughly $7 per week each, if they complete chores like laundry or clearing the dinner table.
“Those dollar amounts will change as they get older because $7 a week is not going to cut it when they’re in high school,” said the Durham, Ont. mom, who runs parenting blog Milk and Coco.
“But at this age, it’s a lot of money for them and they’re learning to handle it before they get to high school.”
The Financial Consumer Agency of Canada tells parents to give allowances on the same day every week or month to help kids plan, budget and save.
The agency says teens should be paid less frequently — every two weeks or monthly — to force them to manage money over a longer period of time.
While apps like Rooster Money, Mydoh and Current help parents dish out allowances, many come with fees or require a phone or tablet. Instead, the agency and Massoud suggested paying in small change to make it easier for money to be divvied up between priorities.
Massoud advised parents to set up three jars — one for saving, one for spending and one for sharing. He helps his son split the money equally through all three and talks to him about what kinds of long-term purchases to save up for, what he could spend on in the near term and what causes he might want to donate to.
While allowances might be popular, he said parents should never feel they have to offer one and can easily teach their kids about managing money in other ways. He suggests getting kids involved with family trips to the grocery store and other errands as an alternative.
As a child, Allison Venditti earned an allowance for tasks like shinning shoes, but she is now forgoing the practice with her own kids.
The founder of advocacy group Moms at Work said her kids wait for their birthday or holidays for items they covet and her nine-year-old has plans to earn money by doing bike repairs for neighbours.
Venditti opted not to give her three boys an allowance because she sees participation in their household responsibilities as being “non-negotiable” and part of raising “the next generation of partners.”
She said, “If you give them everything, and that becomes the expectation, that carries on to their whole life.”
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