The words ‘studies show’ almost never bode well in any online discussion. Rarely supported by references to actual studies, it’s a phrase invariably deployed by anonymous, self-professed ‘experts’ to stifle healthy debate. Even in a well written article, ‘studies show’ frequently precedes either a statement of the tediously obvious, or a dubious and contrary assertion that happens to suit whoever commissioned the research in the first place.
From the start, then, I took the views of Lewis Mandell with a big pinch of salt, despite his claim that studies show that young people who have received no allowance score the highest on financial literacy tests. It seems like an attention-seeking distraction from the mainstream debate, which is about whether or not you should link an allowance to chores. The ‘common sense’ view, by which I mean the apparently reasonable opinions held by most people, appears to be broadly split into two camps. There are those that argue that an allowance should be dependent on good behavior or the completion of tasks because that reflects the working life of an adult. Others suggest that this will merely erode the internal motivation to carry out such duties, and the main purpose of an allowance should be to provide practice in making choices and saving up for stuff. What the two camps have in common is the belief that paying an allowance is the best way to teach children about money.
I recently abandoned an experiment in giving my kids an allowance that was unconnected to chores, not because it was entirely unsuccessful, but because I didn’t feel the ongoing benefits were worth the effort involved or the potential downsides to that particular approach. Since then I’ve been looking into alternatives that might help my children learn about finances as well as steer a course between the money-grubbing devil that demands payment for every act of cooperation, and the deep blue sea of entitlement without responsibility.
Some parents keep it simple by plumping for one strategy and either informing their offspring that some day they’ll have to earn their own money, or making it clear that attempts to game the system will not be tolerated. To me this seems at best optimistic and at worst, well…a bit lazy: “Here’s some cash, now stop pestering me for stuff / put your plate in the dishwasher / excel academically” [delete as appropriate].
At the other extreme, there are parents that design and evolve systems that, in attempting to avoid all pitfalls, become impressively – some might say ridiculously – elaborate. In fact there is a growing sector of online services that cater for this instinct. Now, with the help of the Internet and smartphones, parents can:
- Create personalized chore lists
- Manage weekly or even daily allowances
- Assess how well their kids manage their allowances
- Charge interest and track repayments on loans to their children
- Reward good behaviors (e.g. ‘no yelling’, or ‘eat fruit’) with the tap of a phone
- Approve or reject a child’s purchases in seconds ‘via a controlled shopping experience’
- Gain insights about their kids from weekly emails generated by invest and save games
And if you think that sounds like fun, wait until you hear what kids and teenagers get to do:
- Enjoy their chores
- Earn badges, virtual currency or real money through ‘fun’ challenges
- Donate to charity
- Distinguish between wants and needs
- Create SMART goals
- Receive cash gifts from relatives
- Jointly save with the rest of the family for big ticket items
Now, I’m no Luddite. At the time of writing, I have completed 7,409 tasks across 18 prioritized RTM Todo lists since January 31 2009. I personally maintain eight color-coded Gmail calendars and subscribe to a further five public ones. I can also tell you that I have exactly 2,456 digital photographs of my daughter and 3,071 of my son (searchable by time and location) and anything else I need to function as a human being is contained in Evernote. All this is available to me anywhere, any time, any place and is backed up both locally and in the cloud. Should all those back-ups fail, my plan is to have myself admitted to a psychiatric ward and remain there until someone gets my data back. But no matter how naturally I am drawn to web-enabled electronic systems to organize my life, I believe that these well-intentioned piggy bank applications pave a short road to hell.
Individuals are notoriously bad at designing artificial economies and incentive schemes that work. Even if I do define a perfect system that evolves in harmony with my children’s changing needs and circumstances, at what point will I choose to ease off on the degree of control and intrusion in my children’s affairs? I have similar questions when it comes to monitoring the communication and access to online content by children, but within the scope of this post, it’s one thing to have absolute control over the income and expenditure of a six or eight year old, but when should you grant them a degree of privacy and personal choice? When they’re 10? 14? 16? When they demand it? When they finally break free and leave home? Or perhaps when you discover that they found a way to circumvent your precious controls years ago?
While considering all of this, I’ve been making up rules ad hoc for specific situations. During a short break to Disney a couple of weeks ago, for example, it occurs to me that I’m likely to spend $50 per child on merchandise over the course of the visit so, in lieu of the allowance I don’t pay them any more, I give them that budget. By the end of the trip my daughter has had to make comparative choices to most effectively upgrade and modernize her arsenal of fairy wands and princess bling, while I find myself in the odd situation of thumbing out a couple of $20 bills to my abstinent, cash-obsessed son before going home. They’re at different points on the learning curve as reflects their age and personalities, and next time I’ll tweak the rules and accompanying chat accordingly. Over time I’ll also look for ways to talk about shopping around, loyalty schemes, interest on loans, spending on products vs experiences, generosity, charity, longer term investments and so on whenever I spot opportunities to do so.
As for chores, they’re simply expected to do whatever they can reasonably do as a member of the family. I’m sure there will be additional tasks or objectives that they can complete for cash or other rewards along the way, but I don’t see what a regular allowance has to offer the process. On the contrary, regular payments with arbitrary rules attached lead to unnecessary constraints on how I want to teach my kids about money, and are likely to present a distorted view of the world in any case. There may come a time when they are much older and it makes sense to provide an income to cover regular expenses as an intermediate stage towards financial independence. I’ll look out for those opportunities too when the time comes. In the meantime, however, I’m increasingly convinced by what Mr Mandell’s studies show and, having explored the options, I believe that on this issue the contrarian view has the edge over ‘common sense’.