Questions often arise about how to structure allowance and teach our children the value of money. After much research, I have come up with a system that works for our kids, for now. (To receive a Quick Tip Sheet of this post as well as Expectation Charts, comment below).
I wasn’t comfortable with giving my kids allowance for completing normal family expectations. I have taught Dave Ramsey’s financial curriculum to young adults and also like his philosophy regarding allowance. He has unpaid weekly “family chores” or Expectations for his children to complete and then offers “commission” (what I call bonus jobs) for the kids to earn money. You can see more details on his philosophy by visiting his website, daveramsey.com. My plan is tweaked based on what works for our family.
I created a weekly chart of expectations for my kids that they don’t get paid for such as making their bed, setting the table, keeping their room clean, etc. Once an Expectation becomes a routine, it can be deleted from the chart. If your child is old enough, they might not even need a chart, but it does serve as a great visual. Along with making their beds, putting away their laundry, and keeping their bedrooms clean, my kids also rotate between the following expectations each month: Setting the table, clearing the table, and cleaning the floor after dinner. I have each one do the specific job for one month so we can remember which child has which job and so they can improve at it. As they get older, I will add more responsibilities.
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How is the bonus money earned? At the beginning of the week, I share the bonus job in which they can make money (such as pulling weeds or cleaning baseboards). To earn money from the bonus job, they have to have completed most of their Expectations (usually about six of seven days). The goal is not to be perfect, but to create good habits.
When your children are younger they will need more direction with planning a time together to complete the bonus job. As they get older, once they are told the bonus job, it is their responsibility to complete it. One week my children did not finish numerous expectations, so no money was earned. It provided great motivation to follow through the next week.
It’s also important that our children have a good attitude while completing expectations and the bonus job. I want them to have room to be honest and real with emotions, but when complaining arises, I try to redirect it.
Last week, my son went after those weeds like he was pulling money out of the ground. My daughter whined she wanted to quit after one minute, but I reminded her that she would only earn the money if she completed her job and without so much complaining -THAT IT WAS HER CHOICE. We talked about how to make the job fun and that it honors the Lord when we work hard. I threw on some music and we did some of it together. After a minute, I stepped back and watched her take great pride in her weed-pulling! She turned to her sister and said, “This is fun! We’re on a roll and we make a great team!”
What if my children are not motivated to do it? To help with motivation, when your children mention an item they want, tell them they are welcome to buy it with their own money. The next few weeks help them some with the bonus jobs to show them that they can do it. Or you can simplify the list of expectations if there are too many and they seem overwhelmed. If they still aren’t motivated, they might not be old enough for it yet. The best age to begin “allowance” depends on the child – some might be ready at four years old, while others will be ready at six years old.
What is the right amount of money to give our children? I read to give $0.50 or $1 for each year of your child’s age, but I thought that was a lot, so we give $2/week/child (mine are triplets, but adjust the amounts if your children are different ages). There is no right amount – you might want to give less or more. I figured it would be easier to start lower and increase the amount later, which we will probably be doing soon. Understanding the money concept is the most important aspect.
Where should the money be kept? Our family took a trip to the bank to get rolls of coins and dollar bills and put the money into a large plastic jar. On Sunday morning, our family comes together and goes over the Expectation Charts. If our kids earn the money, they count it out and put it into their “money boxes”. We considered using jars for their money, but knew they would have broken in a minute or less and when we used envelopes, the money fell out. Ziplock bags would be another option, but I wanted something that would last. I bought wooden boxes with three compartments from a craft store that they loved decorating ($4 each). Whatever you use, label three of them “Give”, “Save”, & “Spend”.
How much money should go into Giving, Saving, & Spending? At first, I broke down the percentages by Give 10%, Save 20%, and Spend 70%, but as we quickly found, this was too much money in the spend section since they don’t have normal expenses and bills. As they get older and attain jobs, we will alter the percentages. Our new amounts/percentages are Give: $0.50 (25%), Spend: $0.50 (25%), and Save $1 (50%). The percentages are not as important at a young age, but that they are learning to wisely give, save, and spend.
It is also motivating to have a goal for which to save. My daughters want mermaid tails for the pool this summer, and my son would like a soccer goal. They have been saving earnestly and received birthday money which they put into their Savings box to help. You can also give your children more bonus jobs to make extra money for an item they need by a certain time. Their spending box is for buying smaller items such as snacks at the pool, craft items, ice cream at school, etc. At the end of each month, our kids donate their Give money to the church and to “Lifesong for Orphans” for our sponsored child.
I continue to iron out kinks in our system, but my children have felt empowered and excited with their new responsibilities and freedom. What has or hasn’t worked with your family regarding allowance?