Making Allowances

Weekly cash for children should be viewed as a way to teach about finances. Of course, that's not always how it works out. Here's what some families do.

May 23, 1999|By Peter Jensen | Peter Jensen,sun staff

Daniel Wallace and Sarah Orens are a lot alike -- smart, healthy and likable 9-year-olds who attend Catonsville Elementary School -- but mention the subject of allowance and comparisons turn complicated.

Sarah earns $1.50 weekly, Daniel $3. Sarah must keep her room neat to earn her cash, Daniel has a wealth of chores to do from cleaning off the kitchen table after dinner to feeding his fish and making his bed.

When Daniel practices his piano, his parents give him a ticket and when he collects 20 of them, he earns a toy. Sarah's unique in a different respect: She's expected to donate 50 cents of her weekly allowance to charity.

Adding to the confusion: The rules in both households are subject to change -- and are not always uniformly enforced.

"We may be misleading you if you're thinking that this was extremely well thought out," admits Dr. Jonathan Orens, Sarah's father, an associate professor of pulmonary medicine at Johns Hopkins Hospital.

The days of a casual quarter-a-week tip from Dad are long past. Welcome to the age of weekly allowances that top $10, according to one recent survey, and youngsters who track their mutual fund investments by laptop.

Not only have childrens' allowances gotten bigger, but in an era of single-parent families, children who want $100 sneakers, and brokerage accounts replacing savings bonds, the whole enterprise seems to have become more complex.

How much should they receive? Should it be tied to chores? Who decides how they will spend or save it?

"You want to do the right thing, but you don't know what the right thing is," says Amy Nathan, author of "The Kids' Allowance Book" ($8.95 Walker and Co.). "Families often go through a lot of different plans and arguments to try to figure things out."

With more advertising campaigns than ever aimed at kids, parental wallets are feeling the pinch. Children want more things, but these fledgling consumers need to learn the value of money, too.

That makes an allowance an appealing concept. An allowance forces a child to manage his own money and set financial goals. Two recent national surveys reveal that about two-thirds of children get money regularly from their parents.

"Kids must learn there aren't inexhaustible resources," says Dr. Linda S. Grossman, associate professor of pediatrics at University of Maryland Medical Center. "They have to learn to make choices."

But before a parent reaches for that billfold, a decision has to be made: Is the allowance merely a distribution of family resources or will it be tied, like a salary, to chores? It's an important distinction.

In researching her book, Nathan found that most child behavior experts preferred that allowances not be linked to chores. Yet most parents wind up doing just the opposite.

Why not make an allowance conditional? The experts worry that it sends a child the wrong message -- that they do chores primarily to earn money, not because they have an obligation as part of a family.

"Allowances are best for teaching children about money," says Dr. Michael A. Bogrov, child and adolescent psychiatrist at Sheppard and Enoch Pratt Hospital. "I never recommend using allowances as a behavioral intervention."

Holding back an allowance is not necessarily an effective punishment anyway. It means, for instance, that a youngster's misbehavior on Monday may go unpunished until Friday when allowances are dispensed.

"If a child doesn't need money one week, does that mean he doesn't have to walk the dog?" says Nathan.

Better to deny a child television that night or some other disincentive that can have an immediate impact on problem behavior, Bogrov says. By keeping allowance sacrosanct, children will get the message that they are valued.

"You don't want a child to feel they're loved only when they're productive," says Bogrov.

There is a way to compromise. Some parents offer their children a "base" salary and, like pro sports contracts, offer incentives: Clean the garage and earn an extra $10, or baby-sit your little brother for $15.

The parents of both Sarah and Daniel adopted some form of that system and Nathan approves. "It can even teach older kids to work cooperatively -- to pitch in together to finish a chore," she says.

Next, comes one the toughest decisions of all: How much to pay? The rule of thumb is (believe it or not) about $1 per week per year of age.

That may sound like a lot -- it may even be too much for some children. It depends on what a child is expected to finance out of his or her own pocket. Will he have to pay for his school lunch? Birthday gifts for friends? Clothing?

There is no right and wrong about that, Nathan says, but, whatever rules the parents decide to follow, they have to be factored in the size of the allowance and that's not easy. "Often, parents have no clue what expenses are for a kid," she says.

Jonathan D. Pond, the noted financial adviser and TV commentator, is an advocate of the dollar per week per year of age.

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