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Spirit of Money: Giving Kids an Allowance

Q. We give our 14-year-old an allowance for chores. But now whenever I ask for a little extra help, she wants to know how much I'll pay her. A friend of mine, meanwhile, doesn't give her kids any allowance, since she doesn't want to "pay" them for jobs they should be doing anyway. Who's right?
--Gwen G., Arlington, Texas

A. You both are. You're wise to give your daughter an allowance, as it's a great way to teach financial responsibility. With an allowance, she can practice managing her money under your watchful eye -- and your suggestions may prevent her from maxing out her credit cards when she's older.

But your friend is also right. When you make a child's allowance conditional on whether or not she helps out around the house, you create a whole different set of problems. "If children do chores to get paid, they'd be smart to not mow your lawn, but instead to mow your neighbor's lawn, if the neighbor offers more money," says Dave Riley, Ph.D., a professor of human development and family studies at the University of Wisconsin-Madison. Riley suggests cutting the connection between her chores and her allowance completely. Tell her she's not doing these tasks for money, but because she's part of the family and should pitch in like everybody else.

But what if your daughter doesn't like that argument? You may need to get tough, Riley says, but don't take away her allowance as punishment. Instead, take away a privilege or a favorite possession until she does whatever it is you've asked her to do. Let her know that as a member of the family, she's expected to help out -- not for money, but for the satisfaction of contributing to the family's well-being.

Text by Tracy Fernandez Rysavy

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