How do we teach our children to use money wisely, to make it their servant and not their master? Should we give a regular allowance, or perhaps pay for chores performed? Should we let children spend their money as they like or require them to spend it under our direction?
Some popular financial advisors and authors of books on parenting advise not to give an allowance but rather to pay for chores performed. One argument in favor of this approach says that this method prepares children for the working world by teaching them that money must be earned. No work, no money. Less work, less money. More work, more money.
But although some people still receive their pay strictly based on the work they do (ie: I do a job for you, you pay me a certain amount), many of us receive salaries. If I am paid a salary and I do not do some of my assigned work, I am not typically docked pay. Typically I am reprimanded. If my work does not improve, I lose my job and all pay. If I work on a salary and I do extra work or do my work especially well, I rarely receive additional compensation. Even those who are paid specifically for the work they do find that, if they decide not to perform their contracted service, they are likely not to have the same opportunity again later. Most of us moms work very hard for no pay at all!
We want to be careful not to convey the idea that work has value primarily as a means of earning money. (The more money a job earns, the more value that task has.) We also want to be careful not to convey the idea that our duty is to earn money rather than to work. (If I do not need money currently, I do not need to work.)
In reality, in the adult world, we most of us do the work that is expected from us, whether as part of paid employment or as part of some other commitment such as family life. We are to work as if we were working for the Lord. Now, my little ones don't understand that yet. But if they develop the habit of working only when they want money and expect to be paid, they may have trouble transitioning later to that other attitude. (Or maybe not, if you handle it sensitively. I speak for myself here--I think I would have trouble helping them make that transition.)
Here in our home, instead, we treat our work as a duty to our family, where we all pitch in to share the work and we all share the resources (the children through allowances just as I and their father have our own spending money allocated in the budget). Just as I (and their father) can take on extra, outside jobs to make extra money, our children can take on extra jobs (but at young ages still within our home) to make extra money. If I had a child who refused to do his work (despite the fact that all privileges must wait upon completion of the day's work--no fun, no meals, no trips outside the house, etc.), I might consider withholding the allowance, but the explanation would be that since the child had decided not to participate in sharing the family responsibility, that child was also choosing not to participate in sharing the family resources. (This has never happened, but I think that's how I would handle it. That would require an extreme case, though, much like being fired from a salaried position.)
How, then, if we handle chores and money in such a way, do we teach children to use money wisely and appreciate its value?
Charlotte Mason provides some advice in Volume 3, beginning on p. 41:
<<In the spending of pocket-money is another opportunity for initiative on the children's part and for self-restraint on that of the parents. No doubt the father who doles out the weekly pocket-money and has never given his children any large thoughts about money--as to how the smallest income is divisible into the share that we give, and the share that we keep, and the share that we save for some object worth possessing, to be had, perhaps, after weeks or months of saving; as to the futility of buying that we may eat, an indulgence, that we should rarely allow ourselves, and never except for the pleasure of sharing with others; as to how it is worth while to think twice before making a purchase, with the lesson before us of Rosamund and the Purple Jar--such a father cannot expect his children to think of money in any light but as a means to self-indulgence. But talks like these should have no obvious and immediate bearing on the weekly pocket-money; that should be spent as the children like, they having been instructed as to how they should like to spend it. By degrees pocket-money should include the cost of gloves, handkerchiefs, etc., until, finally, the girl who is well on in her teens should be fit to be trusted with her own allowance for dress and personal expenses. The parents who do not trust their young people in this matter, after having trained them, are hardly qualifying them to take their place in a world in which the wise, just, and generous spending of money is a great test of character.>>
What elements are described here?
1) Give children "large thoughts about money"--"how the smallest income is divisible into the share that we give, and the share that we keep, and the share that we save for some object worth possessing, to be had, perhaps, after weeks or months of saving; as to the futility of buying that we may eat, an indulgence, that we should rarely allow ourselves, and never except for the pleasure of sharing with others; as to how it is worth while to think twice before making a purchase, with the lesson before us of Rosamund and the Purple Jar". So we need to regularly have little talks with the children about different aspects of handling their money wisely, just as we talk to them about proper hygiene or good manners.
2) Do not tell the children how to spend their own money. Have little talks about money wisdom, as described in #1, but let the children make their own choices and encounter the consequences thereof (without nagging or "I told you so"--that's the hard part). I do violate this principle in one small way--I begin the children with a $3 per week allowance, $1 for spending, $1 for giving back to God, and $1 for saving. When they have enough money saved to open a bank account, we help them open one. But I do insist they divide the money this way. At some point (and I suppose my oldest is at this point now), I'll just give them the money they are allotted and let them make the divisions, which is what CM suggests.
3) Gradually make the children responsible for more and more of their own expenses. "By degrees pocket-money should include the cost of gloves, handkerchiefs, etc., until, finally, the girl who is well on in her teens should be fit to be trusted with her own allowance for dress and personal expenses." For my little ones, the cost of batteries is the first expense they must undertake to supply from their own money. I sell the batteries to them at about my cost. When they tire of buying them, I suggest they ask for rechargeable batteries as a gift (or save up for them). My oldest is about to take on the expense of buying her own toiletries, or at least some of them. For items that are necessary (like toiletries), I increase the allowance when I add the responsibility of covering the expense. For items that are discretionary (like batteries), I do not.
Having a regular, small allowance that must be carefully husbanded to supply necessities and saved to provide little luxuries teaches much more effectively the value of money than any elaborate system we might contrive. This approach simply allows the real consequences of their actions to affect the children--no manipulation is necessary. Not being able to buy a longed-for toy because the money was already spent on candy on a whim causes great grief. A few such incidents teach the importance of considering our purchases. Shopping carefully to see how much of what we want can be bought with the $7.39 we have on hand teaches the value of money quite well, especially as this exercise is repeated many times over many years.
(Receiving large gifts of money, where the frequency and amount of the gifts always remains somewhat arbitrary, cannot teach this so effectively. No one can plan based on this type of income--which is why living on commission or tips is so hard--and a child especially will find this bewildering if we are asking them to budget.)
I do think it's wise, as the children mature, to allow them to see more and more of what exactly make up the household expenses. At some point, they need to work out a budget with a fictitious salary, including taxes and other withholdings, so they can see how far those seemingly huge amounts of earnings really go. Some families let their teens write out the checks for various bills (or help with the online bill-paying I suppose these days).
Most of all, pray over this (as all issues of training your child). The Holy Spirit knows what will work best for your child.