Kids and Allowance

Great article! We have four kids (aged 9-17). We gave/give the kids 1/2 their age weekly ~ unless they’d saved a certain amount ~ then they’d get “double allowance.” It’s a great way for them to always keep a “buffer” amount of money — and gives them a leg-up for big purchases. When they hit jr. high (3 out of 4 at this point) — we started giving them a monthly amount. We don’t pay for anything beyond that amount (if they want to buy food at school, it comes out of that money — vs a free lunch that they can make at home). None of it is based on doing their chores (dishes, vacuuming, rooms, laundry, etc.). But they can earn extra money if they go above and beyond (scrubbing out the refrigerator, etc.) It’s been interesting to see how different each kid’s spending habits are, even with the same rules/structure.

Kelly, since your kids are so close in age, have you had any trouble that one gets more each week than their younger sibling? We started out doing the “pay your age” thing but it seemed really unfair that the 5 year old was able to buy stuff more quickly than the 3 year old so now we pay them equally.

So far I have let them spend it however they want without enforcing any charity or savings but it really irks me how my older one is eager to buy anything he sees, just because he wants to buy SOMETHING. I wonder if we are really teaching any good lessons here or just feeding into his consumerism.

I completely agree that there is no one "right" approach. Adopt the approach (or blend of approaches) that fits best with your family and your values. (BTW: There are some great variations/refinements listed in the comments.)

I think the most important thing is to have AN approach and to apply it consistently. Although it's perfectly appropriate to fine tune it along the way as you get more experience and the kids mature - just don't be ad hoc! That just models poor habits and leads to a lot of friction - particularly with teens.

Learning to be financially responsible (and charitable!) is a critical life skill. Honing skills takes practice. Putting a consistent allowance and/or chore system in place with your kids is a great way for them to learn the skills, practice them, and (inevitably) make mistakes in a friendly environment (or presumably a more friendly and nurturing environment than what they'll encounter in the real world - think credit card companies!)

Where to keep the money? We found keeping it "in the mom or dad’s wallet for safekeeping" really didn't scale well. It gets very hard to keep straight. Having 5 kids, it became particularly unworkable for us. Being a software geek, I built a little web application to help simplify things for my family many years ago. Seeing the positive effect this had on my kids over the years, I ultimately decided to dedicate my profession to this endeavor and took the last three years (along with my old college roomate and computer science colleague) to build out a pretty elaborate "online virtual bank" at http://www.famzoo.com. After testing it with 100+ charter families, we finally launched last month. We'd be delighted to have people check out our tour: http://bit.ly/aijBY7 Tell us what you think.

To be fair, ours is not the only game in town, so look around at other services and compare to determine what works best for you. I'll just say that using such a service really simplifies the process and helps you be a much more consistent and effective mentor in this area to your child.

Regards,
Bill
Founder, FamZoo.com

Wonderful ideas that I plan to impliment with my two cildren!

Wonderful post. My son is five and we’ve started doing an allowance with him and it is very similar to what you are doing. I don’t force him to save any portion of it, he’s figured out on his own that if he wants to purchase anything of much worth, he’ll have to save his allowance for two or three weeks or even more. I think that savings lesson is much more powerful than me dictating how much he needs to save.
.-= Alison@This Wasn’t In The Plan´s last blog ..The Benefits of Banking Online =-.

Great post - always looking for new ideas in the allowance game. . .we go back and forth - no "real" process yet - oldest is 9 and we are paying for all his necessities and most of his wants. . .he is saving most of his holiday & birthday money. =)

HIllary

@Doug —

I am so grateful that my VERY loving parents took the time to teach me about money.

Ask any 20-something trying to dig themselves out from loads of consumer debt — I suspect they would say that, in today's world, handling money responsibly is an important life lesson (or even a survival skill). And it's one that loving parents should be teaching their kids.

I was three years old when I was given my first weekly allowance - just enough to buy an ice cream sandwich each week at the grocery store. Or I could save it for a few weeks and buy a small toy. I can still remember trying to decide between spending on something small or saving for something bigger. The choice is the same today, although the numbers have more digits now!

Doug had to just chime in because I think Kelly was very gracious to not just delete your comment. If I read that right you sort of accused her by giving them allowance and teaching them the value of work she doesn't love her children. What big stuff should she be worrying about? Frankly I can think of no more important job than trying to raise her kids by educating them and preparing them for life all based in love. I think it's just terribly myopic to think that letting your kids fend for themselves Lord of the Flies style is how they are going to figure things out.

Doug~ Not sure what page you are on, obviously not this one. This woman loves her kids! Nowhere in her post does she say she does not love them.

Doug, wow.
They are MY kids, and I do love them.
Thanks for you unique perspective.

I worked with a guy who just left a bowl of spare change by the front door. He always made sure that there was enough (age appropriate) for the three kids. (If didn’t take long for the kids to realize that if one took too much that the others would let him know!)

They taught themselves what money is for and how to spend it and stay within their means.

It’s just money; not love and not life lessons. Worry about the big stuff.

They’re your kids; not pets and not trainees. And definitely not little adults.

Love them.

Two things come to mind. I had a friend who had two teenage daughters. The mother had a “job list” posted on the refrigerator at their house, and it all the jobs to be done in one column and what it paid to do the job in another column. The third column was for the girls to initial what they had done each week. None of the jobs paid outrageous amounts of money, but were reasonable, for example folding and putting away a load of laundry = $0.50. At the end of the week, each got paid what she had earned. It was a good lesson, because it gave them a sense of accomplishment, and to some degree, it showed them what an employer expected from them as far as productivity.

On the other hand, when I was growing up, I had an allowance of $25 per week. (In the ’80′s this was a lot of money.) This was for gas in my car, school lunch, and whatever I wanted to do on the weekend. My parents were pretty smart, because they gave me my allowance on Monday morning before school. If I wanted to be able to go out on the weekend, I had to stretch that dollar to the end of the week. I learned to budget my money. I am still very budget oriented to this day, and I give my parents the credit.

I don’t think there is one perfect answer. I do think it depends on the kid. You’ve just got to find what works for your family

I had an allowance growing up and it helps a lot prepare you the basics of income and budgeting. If there was an item I wanted, I learned to save my allowance to buy it.

Paul, I’ll keep your fine idea in mind for the future, that will definitely come in handy when they are teens.

I also like your idea of saving for something specific. I’ll have to talk to them about that this week.

Lauren, it’s all about finding what works for you. That’s wonderful that she saved up enough for her doll. That will be a fun mother/daughter memory.

Matt, thanks! I like your summary better than my post. Sorry I’m not accepting new applicants for kids right now.

Vilna, it was wonderful to meet you both as well! Our littlest is 3, but he is so influenced by the older kids. Since your kids are still so young, you have plenty of time to consider what you want to do. Maybe starting with $1/week would work, or waiting until they are a bit older.

So glad to meet you at the NYC bloggers’ meetup last night. Loved your entry about allowance, and how you make decisions about how much to give. Maybe I’ll try that. Our kids are so little we just give them random change for piggybanking, but maybe we should start being more systematic. And I love the family change jar idea. U give a lot to think about.

Three powerful concepts jump out at me:

“…when you go grocery shopping you take a list, if the kids tag along have them be responsible for a portion of the list. ”

This is a symbiotic concept because mom is delegating, thus lightening her load, and is simultaneously giving the children valuable real-world experience.

“We do not pay our kids based on chores. Chores are an expected part of life, and since mom and dad don’t get paid for chores neither do they. I will pay extra for chores that are outside the norm.”

This teaches children responsible contribution and provides a feeling of belonging to the family unit.

“We also have a family change jar. The family change jar helped us buy a puppy this year after 2 years of saving all our change. We’re currently saving for a DisneyWorld vacation. Everyone is motivated since we all benefit from the savings. We use a 5 gallon water jug that is empty, and taped on a picture of Disney in place of the puppy we now own and love.”

This is simply amazing. It builds teamwork, encourages saving, and is goal oriented.

Great stuff Kelly - I wish you were my mom!

Hi Kelly, This is timely for us. We used to, like you (and it was your idea anyway:) ) give our DD an allowance equal to her age every other week… but we discovered that we were forgetting it… all three of us. So now we give half her age every week, on fridays when we go to the student center at her school. Snacks there are usually .25 or .50, so she’ll spend less that a dollar but could spend more if she wanted to. The rest goes into her piggy bank (which is an elephant). She’s been saving for her own American Girl Doll, and recently got her $$ all saved up, so we’re headed to one of the Cafés to make a day of it. She has chore she has to do, and there are others that can earn her extra $$… but now that school has started we’re finding it hard to find the time during the week for her to do those chores. At least she clears the table and puts her laundry away!!

In my house we go the route of you work you get paid. But they have a core set of chores to accomplish as well which are not paid. If they don’t do those chores they start to get fines. I’ll tell you what at the end of the week when they get paid and then have to give you money back because they didn’t put their stuff away or we’re swordfighting when they should have been getting ready in the morning that changes some behavior.

We have them allocate 10% to giving and at least 10% to saving. When they are saving they’ve got to pick what it is they are saving for so they just can’t pick any toy the next time they are at Target and say that’s what I’m saving for? It also helps us to reduce the amount of cruddy little cheap toys that are around the house.

It certainly has its difficulties and by no means is this perfect, but it’s working for us so far and I hope it’s teaching them some valuable lessons. Like you Kelly when our kids are old enough I want them to control their school purchasing I think that’s also a great idea.

Jeff, glad you found it useful! The kids rarely get money from other sources, so an allowance is really the only way to teach them about money.

Matthew, I love the idea of saving for gift money, especially since I’m always the one doling out $10 here and there for birthday party presents.

Liz, thanks! I’m honored that you stopped by.
So when you have the kids save, are they saving indefinitely or for “bigger” purchases?
I am terrible at saving, so I love the idea, but need to put it in practice better myself!

Great post, Kelly. Spacing allowances at least two weeks apart helps teach budgeting-otherwise, when kids blow it, they just have to wait a few days to get more money. We decided to make savings mandatory, though. I’m convinced we need to indoctrinate our kids to save part of every dollar that comes into their lives. We’re hoping habits learned in childhood will stick with her for life.

I love the ideas about getting the kids involved in family shopping. We need to encorporate that.

DebtFreeAdventure had a similar post about this topic a a little while back (http://bit.ly/mFrCN). Here’s what I wrote in the comments there:

“We give our children allowance because they are part of the family. As a family, we participate in the blessings we’ve received, including our income. And also as a family, we all participate in chores and helping out (without compensation).

If they want to earn extra money, they can do extra things (wash car, pick up sticks, etc). I don’t think they should be confined to allowance in their money making pursuits. The Lord praises hard work and we should reward it.

As for taxes, that’s not a bad idea depending the age. I’m currently working with my 4 year old on money management. She’s learning things about interest, saving, tithing, etc. Right now, taxes would be overkill (and perhaps confusing). Down the road it would be worth considering. Here’s the bank/teaching guide we use: http://www.crown.org/cartproducts/Product.asp?sku=PK101&aid=

Her % are: tithe = at least 10%, saving = 30%, spending = 60%. Saving is for presents to buy people. Spending can be for whatever she wants. If she wants something that costs more than she has, she can save for within her 60%. Furthermore, she can only have 3 things on her list, the item has to be on her list for 3 days before she buys it, and she can only buy 1 thing a week (she doesn’t have a ton of money so this isn’t too much an issue).”

I love the ideas about getting the kids involved in family shopping. We need to encorporate that.

DebtFreeAdventure had a similar post about this topic a a little while back (http://bit.ly/mFrCN). Here’s what I wrote in the comments there:

“We give our children allowance because they are part of the family. As a family, we participate in the blessings we’ve received, including our income. And also as a family, we all participate in chores and helping out (without compensation).

If they want to earn extra money, they can do extra things (wash car, pick up sticks, etc). I don’t think they should be confined to allowance in their money making pursuits. The Lord praises hard work and we should reward it.

As for taxes, that’s not a bad idea depending the age. I’m currently working with my 4 year old on money management. She’s learning things about interest, saving, tithing, etc. Right now, taxes would be overkill (and perhaps confusing). Down the road it would be worth considering. Here’s the bank/teaching guide we use: http://www.crown.org/cartproducts/Product.asp?sku=PK101&aid=

Her % are: tithe = at least 10%, saving = 30%, spending = 60%. Saving is for presents to buy people. Spending can be for whatever she wants. If she wants something that costs more than she has, she can save for within her 60%. Furthermore, she can only have 3 things on her list, the item has to be on her list for 3 days before she buys it, and she can only buy 1 thing a week (she doesn’t have a ton of money so this isn’t too much an issue).”