Should money be a reward?

When deciding how to educate your kids about money, important questions come up: Should you pay your child an allowance for doing household chores or should he do these tasks without compensation because he’s “earning his keep”? And when it comes to a job well done like receiving an “A” in school, is it OK to offer money as a reward? Find out how parents and experts weigh in on teaching your child the value of a hard-earned dollar.

Liz, a mother of two from California, says yay. “I think it’s so important to teach kids the value of a dollar. I never really learned that lesson growing up, and as a result, feel like I’m terrible with money! By giving my 7-year-old money to earn and choices to make on her own with that money, she will hopefully grow up to understand the value of things.”

Steve Siebold, author of How Rich People Think, agrees. “By giving children an allowance, you’re tying money to value and teaching children to think, ‘How can I create value in exchange for money?’ It teaches kids to look for problems to be solved and to be entrepreneurial. They associate money with solving problems and not with entitlement.”

Ann Morgan James, author of How to Raise a Millionaire and mother of one from California, says nay. “If you are already paying allowance, or contemplating doing so, stop! Household responsibilities are just that: responsibilities. They are not — and should not be — jobs for which you are paid. I do not get paid to cook dinner or do the dishes, and I do not expect to pay my kid to do his share around the house.”

If you decide allowance is the way to go, what’s next?

Steve Siebold gives this advice: “Parents should have a combination of tasks that have to be done daily or weekly (taking out garbage or general yard work) to provide the basis for a weekly allowance, and extra chores that happen periodically, like cleaning the car or shoveling snow, that kids get paid extra for. If they want money to buy a toy, you want them to look around the house and think, ‘How can I help? What can I do to solve a problem and earn money for the toy?'” Steve also says parents must be consistent about enforcing the completion of chores. If your child’s base allowance is $10, but two chores aren’t done, the allowance should be less. If there is something going on that kids really want money for, tell them it’s an advance.

If you decide against it, how can you help your child earn money?

Ann Morgan James doesn’t agree with allowance, but she does believe kids should be able to earn money. Her solution? They should make money outside of the home. “Teach your kids they have earning potential. Help them start a business. Sit with your kids and evaluate where you live and what business they can start. Help them think about the neighbors (their potential customers), what they need and what service they can offer. Of course, my personal favorite is the business my son Jack started: Jack’s Garbage Valet, where he takes his neighbor’s garbage cans in and out for $10 a month — but I’m admittedly biased.”

How kids can make money >>