Personal Finance

Should we stop paying son’s allowance?

  • Sound lessons: establishing the link between work done and money earnt at a young age is a positive thing

Dear Dave,

My wife and I are trying very hard to save money and pay off debt, but weíre not making progress as quickly as I had hoped. What do you think of the idea of putting a hold on our sonís allowance for the jobs he does around the house until we get into a better financial situation?

ó Kellen

Dear Kellen,

Kids should learn at an early age that money is connected to work. Even a child whoís in kindergarten is old enough to begin doing some age-appropriate chores around the house.

I admire your drive and determination to get out of debt, but if it were me, I wouldnít stop the process.

I would, however, stop calling it an allowance. Thereís a victim mentality attached to that word. Heís doing work, and reaping the rewards.

We did this kind of thing in our home with our kids, but we called it a commission. We kept it very simple for them, and very affordable for us.

If they did their jobs, they got paid. If they didnít do their jobs, they didnít get paid. It didnít take long for them to make the connection.

Donít let these teachable moments slip away, Kellen!

ó Dave

***

Dear Dave,

I read where you recommend investing 15 per cent of your income into retirement plans. Do you also advise counting a company match as part of that percentage?

ó Bryce

Dear Bryce,

Employment situations, and employers, can change at any time. I want you putting in 15 per cent. That way, you donít have to rely on someone else to complete your retirement savings plan.

Planning for retirement is your responsibility. Itís not your employerís job to make sure you have money to live on in your old age. Stick 15 per cent in there yourself, Bryce. If your employer matches workplace contributions, thatís great. Things will be even better!

ó Dave

ē Dave Ramsey is CEO of Ramsey Solutions. He has authored seven bestselling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 16 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey