Why I Stopped Giving My Kids An Allowance

For years, I gave my kids a monthly allowance equal to their age:

Seven bucks for my seven-year-old, eleven for my eleven-year-old, and so on.

I didn’t give it to them in cash form: I kept track of their balances on a spreadsheet, so they couldn’t spend any of it without making a withdrawal from the “Bank of Dad” first.

What’s more, I paid them 10% interest (.83% a month) on their balances.

My goal was three-fold:

a. Keep their money safe so they wouldn’t lose it
b. Minimize rash spending by gating their access
c. Instill a love for saving with that juicy 10% interest rate

Three months ago, I dismantled all of it.

I liquidated each of their Bank of Dad balances, paid them out in cash, and shut the whole thing down.

In other words, no more 10% interest, no more Bank of Dad…

And no more allowance, period.

Here’s why.

Ultimately, my job as father is to prepare my kids to flourish in the tooth and claw of the real world.

And in the real world, there is no free lunch. No one gives you something for nothing.

Certainly, no one gives you an income AND 10% interest for nothing.

All my previous system was doing was teaching my kids a false reality they would have to “unlearn” once they were out on their own.

What’s more, the fact the whole thing was run on a spreadsheet on dad’s computer was dis-empowering: it made their relationship with money abstract… their finances blindly entrusted to “dad’s system.”

I wrestled with what to replace this system with.

I considered paying them a cash allowance tied to chores: you do these chores, you get this money in return.

But ultimately, I realized that this, too, would do them a dis-service, and leave them fundamentally unprepared for the real world of value-exchange.

For the message in that configuration is that all work should be compensated by cash, when in fact, the most profound work we do is UNPAID: it is the intrinsically rewarding acts of service and creation that we do for our family, and for ourselves… compensated NOT with cash, but with the subtler currencies of fulfillment and love and meaning.

So here’s the new system:

My kids do chores so they can develop the mental category of contributing and working together as a family… and those chores are expressly non-paid.

In fact, I give my kids no allowance whatsoever. I care too much about their future pluck and grit and love-for-work as adults to do that anymore.

When it comes to food, clothing, shelter, school supplies… we’ve got them covered.

But any discretionary purchases they decide to make… that is THEIR responsibility and privilege to fund.

If they want more cash, they know we keep a running list of work projects we will happily pay them to complete… projects separate and distinct from their regular chores.

So that’s the new system.

It means my kids are responsible for keeping and managing their own money.

It means my kids’ financial reality is now an instructive microcosm of the real world.

It also means my seven-year-old now has a couple hundred dollars of cash (paid out from Bank of Dad) in his room somewhere.

Will he lose it? Very well might.

Will he blow it on something frivolous? Already has: he and his older brother recently chose to plunk down over $100 each for some high-end Marvel action figures.

Did that purchase make my hackles rise? Did I want to talk them out of it? Did I want to show them the “error” of their ways? Absolutely.

But I bit my tongue and didn’t say a word.

Because this is how they learn. I can’t engineer loss and risk and mistake-making out of the equation. I can’t devise a bloodless journey.

So rather than shelter them and their money in some abstract system, I’ve chosen to let them learn and fail for themselves.

How they choose to spend or save or invest or waste their money… that’s their choice now.

That’s the true beginning of their financial learning and adventure.

That’s them at play in the fields of the real.

…

Bryan Ward is the founder of Third Way Man and author of the LIT Black Paper