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Are You Creating a Money Monster?

Money Monster

An allowance can be a great way to teach your children the value of money and basic management through regular income. It can also be a great way for parents to define which expenses belong to the children and how family values affect spending. In her book Kids and Money, however, Jayne Pearl writes that parents often give allowances with certain terms and conditions without fully realizing the potentially negative consequences that loom. Here’s our take on the big three:


We don’t make money in the real world for being thoughtful, using proper language or abiding by the law. We are rewarded with appreciation, friends and freedom. Bribing your children to behave teaches them to put a monetary value on their actions and achievements, and is likely not a big enough reward to encourage consistent good behavior long-term. Experts instead suggest reinforcing good behavior with special trips or expressing appreciation.

Additionally, reducing allowance as a punishment for poor behavior will not be nearly as effective as say, taking away something like television or computer time. It’s a lot easier for children to give up something intangible, like a few dollars of allowance in the future, than something in the here and now.


Giving a monetary reward for good grades certainly seems more comparable to the real world, but it can lead to your children focusing more on the result than the process. Not to mention, a lesser grade could still be considered an accomplishment depending on the class. Is an “A” in gym class better than a “B” in advanced physics?

Kids should be proud of good grades and there’s no better reward than hearing you are proud of them as well. Celebrating the achievement will be much more meaningful than handing over 20 bucks.


Tying a monetary reward to chores can be a double-edged sword. On the one hand, it reinforces a positive work ethic and personal responsibility. On the other hand, it can lead to an expectation of getting paid every time they do something helpful as well as the loss of that feeling you get from doing a good deed. As adults, we don’t get paid for taking out the trash or cleaning our room. It is a family responsibility.

However, if your children want to earn extra money around the house, consider paying them for chores you might otherwise pay someone else to do. Mowing the lawn, cleaning windows, baby-sitting siblings, or mopping floors are examples that fit in this category. This way you do not jeopardize the family chores but allow your children to see the benefits of working.

Want more thoughts and ideas on being a smart money parent? Visit to view the article archive or follow me on Twitter @scottserfass

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