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To Give or Not to Give - The Allowance Conundrum

When Oliver was 10 years old, he bought a microscope for $300. Part of the money came from his own saved allowance and part was lent to him by his father, Markus Barker*, on the promise that he would pay him back as soon as possible. Almost 15 years later, Oliver lives debt-free and has a solid savings account. Is an allowance the best way to teach a child to be money-savvy? It depends who you ask.

Allowance woes. Opting for an allowance depends on the parent’s experience with financial matters both as a child and as an adult, and the family values. “We gave our sons a weekly allowance,” says Barker. Although they got less than most kids their age, he explains, they managed to save money and learn good financial skills. Being paid for chores was not an option because when you are part of the family, that means you do your share, Barker says. Both his sons supplemented their allowance as teenagers, with jobs such as mowing lawns or distributing papers and they worked odd jobs during their post-secondary education years.

Others don’t agree with the idea of allowance, considering it ‘early stage paycheques’ and a hindrance when it comes to learning solid money management skills. Cameron Herold, business coach in Vancouver ( never paid his two young sons allowance. What’s the alternative? One that involves learning more than saving money, according to Herold. “Get them to find work that needs to be done around the house, aside from the chores they won’t get paid for,” Herold says. He suggests helping children find jobs to do, get them to negotiate on how much each task is worth. As many of us know, negotiating is not always easy to do, but it is a valuable skill to have.

Savings for rainy days. Everyone seems to be in agreement with this one. Whether it is 10 per cent or 50 per cent of their earnings that go in the savings account, children are expected to save money. Barker encouraged his sons to save for big items and if he helped them with a loan, they were expected to honor the debt before buying anything else. If it’s a big item and also a good investment, such as a bicycle, some parents offer to add the last few dollars as an incentive for the child to save up to a certain sum.

Herold does neither. “I tell my boys their savings are to invest and provide for them later on when they need a place to live. They can buy stuff with the rest of the money, as much as they can afford,” explains Herold, who was not only debt-free during his college years but also became a successful entrepreneur with his own franchise and several employees to manage before graduating.

There is no single answer to the allowance conundrum. While some parents opt to pay for specific chores, others offer an incentive allowance at the end of the week - provided children keep their end of the deal with basic chores such as tidying up their room, setting the table or taking out the garbage. Also, if your children want to add some extra paid-for chores, such as mowing the lawn or washing the car, make sure they use their negotiating skills to get a good wage.

It is a good idea to help your child keep track of their money by writing things down. Also, opening up a bank account where they can deposit their savings will help them understand concepts such as interest. They will have a chance to see their savings grow every month, and will learn to avoid the pitfalls of impulse buying.

*Name changed by request.

Daniela lives and writes in Vancouver. Her two sons provide the inspiration for many articles, money-related or otherwise. For more information, visit


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