Thursday, October 17, 2013

Should I Give My Children an Allowance?

I'd like to start this post off by saying that you're the one best equipped to decide whether or not to give your child an allowance. Every kid and every situation is different. Plus my kid is not even two yet, so this is uncharted territory for us. That being said, I have stumbled across some words of advice regarding children and allowances that I really liked and wanted to share. Read and implement or ignore as you will.


 
I think Dave Ramsey* did a really great job of addressing the issue of how to "give" children money.

Here are his guidelines paraphrased and commentated by me.
  1. You can start teaching your children about money as early as pre-school. But don't wait until after third grade.
  2. Pay them for chores completed around the house. He recommends $1 per chore and five to six chores per week, but clearly this could/should be tailored to your personal situation.
  3. Don't give them an allowance. The argument here is that this doesn't really teach them anything about money. (You can learn how to manage money from what you earn, but just flat out getting a free gift each week doesn't provide much in terms of teachable moments for money.)
  4. Let them work. Obviously, this is an age and situation appropriate kind of work-- such as babysitting, or mowing lawns for teenagers.
I know the issue of an allowance is a little prickly, since some parents don't like the idea of a child who only helps out if they get paid. I agree that would be bad. But I actually like this other Dave Ramsey idea** that I think could work well. Basically he says you have three different categories of chores.
  1. Chores you're expected to do and get paid to do (and not paid if you don't). 
  2. Chores that you're expected to do (I believe he says "and punished if you don't") because you're part of the family. You don't get paid for these.
  3. Chores that are optional and paid. (e.g., "Kids, who wants to help me sand the deck this summer? You don't have to do it, but you'll get $XX if you do.")
Just for fun, I made a simple printable chore chart for you. I think you could use different colored stickers or markings to differentiate between the different categories of chores (the three I talked about above). That would make it easy to tally up your weekly earnings.

Download PDF by clicking on link above.
*He's sort of a personal finance superstar. Here's his website if you're interested.

**I really, really wish I could give you the link, because I hate referencing things when I can't give you the source, but I can't find it anywhere. It was an excerpt from his radio show that I stumbled across like a year ago. 

Share-- What's worked well regarding kids and money in your family?








13 comments:

  1. I <3 Dave Ramsey! I want to say that he posted something in his blog recently about allowances.

    ReplyDelete
    Replies
    1. Nice! Gotta love Dave :) Also, your baby is so cute. I hope he takes some good naps for you today!

      Delete
  2. Instead of paying me for chores, my parents would take away from my allowance if I didn't do them. I'm the oldest so I kept my own record of how much I babysat my siblings (got something ridiculous like a dollar an hour, but hey! It could pay for the occasional pair of earrings at Claire's) and my parents kept a record of when I hadn't done my chores. So when we met together I got allowance (my age each month) + babysitting money - money for skipping chores. I think this was a great method, and plan to use it with my kids also.

    ReplyDelete
    Replies
    1. I like that because it's real world, too. Getting fined for not doing what you should. Better learn it now than as an adult when fines are most expensive. :) very love-and-logic.

      Delete
    2. Ha! Earrings from Claire's! That brings back memories. I like the allowance idea as well.

      Delete
  3. What we are doing with our daughter (6), is the following:
    - She does not get "free money"
    - She is expected to take care of her room: clean up, vacuum, dust, etc (within her abilities). She does not get paid for that.
    - If there are other chores around the house/garden she gets paid $1 (a nice big Silver-Dollar) for the completed chore (e.g. vacuum the rest of the apartment), a Quarter for each completed sub-part (e.g. vacuumed the living room and kitchen, but not our room), and if no sub-part is done, she gets one Penny for each minute that she worked on it.

    That way she learns that it's to her advantage to finish a chore all the way.

    ReplyDelete
    Replies
    1. I love that you give her the actual coins. I think that is such a cute and tangible way to earn money. Love it!

      Delete
  4. I really love that idea of different categories of chores. I think I will remember that for when I have kids, since it solves some of the problems that I've wondered about how I was raised.

    When I was growing up chores were just something we had to do and allowance was unrelated, just something we got to teach us money skills. In some ways I liked that (because I could get away with not doing chores sometimes), but in the real world money is tied to work, so it makes sense you should have a chance to learn it that way as a kid too!

    One thing we did that's worth offering here though-- once a year we would have a family night where each kid would have prepared a proposal for what their new allowance should be. This could be good practice for other real world scenarios... presenting in front of people, asking for a raise, explaining why you deserve more, negotiating, kicking yourself for not asking for more when they accept your proposal too quickly... :)

    ReplyDelete
    Replies
    1. I love the idea of giving a presentation to your family about why your allowance should be higher!!

      Delete
  5. Here's what we are doing currently that has worked:
    1. About a year ago we started a "bean jar" where when the kids behaved well, helped out, cleaned, etc. they got beans (pinto beans) put into the jar. When the jar filled up, they got their pre-determined prize (big prizes...like chuck e cheese, golf-land, etc)
    2. A few months ago we divided the jars, now each has their own jar. They can earn and lose beans. The prize is now $5 once the whole jar is filled. They can earn beans doing a bunch of things...but i never put an exact amount (5 beans for this, 2 for that...too much work, lol) It takes them about 2 weeks to fill a jar. I love it because they get immediate praise and reward with beans each time they share, clean, brush teeth without me reminding them, show initiative in any other way, etc.. and I'm not losing 50 cents every time they do something well. haha

    ReplyDelete
    Replies
    1. I am loving all of these great ideas. I like how you can give them lots of tangible rewards without driving yourself to the poorhouse or doing tons of record keeping. It kind of reminds me of the points for houses in Harry Potter. (10 points for Gryffindor!)

      Delete
  6. Regardless of what kind of allowance system you use, I think it is crucial to talk with your kids about money and to allow them to make choices with it. They may make some mistakes but it is better for them to blow $20 when they are little than to blow $20,000 with their first credit card.

    We have four children who are now ages 10 - 20. When they were younger, we found that keeping up with allowances and IOUs proved to be very difficult. We didn't have a system to keep us organized and consistent. So...my husband and I created a program to keep track of it for us and that eventually turned into a website, www.moneytrail.net. MoneyTrail is a free, online money management system for kids and teens. We are a virtual bank, meaning that we don't handle your real money or connect with credit cards. We help thousands of families keep track of allowances, IOUs and other money transactions between parents and kids. We have found that our children are much more responsible with their own money when they know exactly how much they have and how long it took them to save that amount.

    ReplyDelete
  7. Regardless of what kind of allowance system you use, I think it is crucial to talk with your kids about money and to allow them to make choices with it. They may make some mistakes but it is better for them to blow $20 when they are little than to blow $20,000 with their first credit card.

    We have four children who are now ages 10 - 20. When they were younger, we found that keeping up with allowances and IOUs proved to be very difficult. We didn't have a system to keep us organized and consistent. So...my husband and I created a program to keep track of it for us and that eventually turned into a website, www.moneytrail.net. MoneyTrail is a free, online money management system for kids and teens. We are a virtual bank, meaning that we don't handle your real money or connect with credit cards. We help thousands of families keep track of allowances, IOUs and other money transactions between parents and kids. We have found that our children are much more responsible with their own money when they know exactly how much they have and how long it took them to save that amount.

    ReplyDelete

Related Posts Plugin for WordPress, Blogger...