The Joplin Globe, Joplin, MO

February 21, 2013

Parents get innovative in how they divvy up allowances, chores

By Kevin McClintock
Globe Staff Writer

JOPLIN, Mo. — Thanks to iPhones and video games such as "The Elder Scrolls: Skyrim," it's a bit more difficult for parents to teach their kids about banking, investing and the value of the all-mighty dollar bill. Kids, however, learn to understand money at a young age, particularly those receiving a weekly allowance. And many local parents are coming up with innovative ways to teach their children about finances that has little to do with a plastic piggy bank.

Webb City resident Heather Wade said her kids, Kayden Baker and Keaton Neil, receive a $1 for each year of their age.

"They get it weekly on Friday," she said. "They have to write their debits and credits in a check register."

The allowance, she added, isn't tied to completed chores, though they are expected to help around the house with minimal fussing.

"They can lose (dollars) for fighting or trouble they get into," she said. "But they have the opportunity to earn that lost money back."

Because of this unique system, Wade said her children save remarkably well. She said her son gets $10 a week and he is up to $395.



Elementary earners

By the time Wade's kids are in their teenage years, they, as well as other children who learn to value their allowance money, should be well on their financial way.

In 2008, teens earned roughly $141 billion. One-third of that money came from gifts and the rest from their earnings. According to the American Bankers Association, spending and saving habits form in children between the ages of 5 and 7.

"It's extremely important that kids learn the importance of savings," said Catherine Pulley, spokeswoman for the American Bankers Association.

And for good reason. A 1995 National Bureau of Economic Research working paper showed that high school seniors employed 20 hours per week were expected to earn approximately 11 percent more down the road annually than their counterparts who did not work.



Rewards for chores?

We asked readers for their strategies on the Globe's Facebook page. The answers covered a variety of plans, including different beliefs about giving allowances based on chores.

John Lanza, a finance expert and creator of "Money Mammals," a book series that teaches kids about handling money, said tying allowance with chores isn't the most sensible way to set up an allowance system.

"By providing our children with an allowance that's unencumbered by chores, we are more likely to raise kids who become more comfortable with money," he said. "They'll be better equipped to understand that money is simply a means to an end and not an end in itself: a very important lesson."

How do parents feel about that?