When I was growing up, my parents never gave me an allowance. Sure, I had particular chores around the house I was expected to do, but nothing was ever formalized and I certainly never saw cash for washing the dishes.
This used to drive me crazy. No, I didn’t think I deserved an allowance for being a helpful kid, but what annoyed me was my older sister got an allowance when she was a teenager, but my parents didn’t follow suit with me! Granted, I had a part time job and my sister never worked in high school. But still! Fairness trumps all other thoughts in the adolescent mind.
So, when our kids were getting old enough to understand what money was used for (buying candy) and could manage small tasks (feeding the dog), my husband and I decided we were going to create an allowance system that would be fair, teach money management skills, and recognize the value of hard work.
This lovely, noble idea turned into a nightmare.
I tried the magnetic chore chart on the fridge, with cute animals and pretty boxes for the kids to check off their daily tasks and then get paid based on their work completed. After about two weeks, the chart was never touched again, chores were possibly not done, and money was certainly not changing hands. Too much hassle.
We decided we were perhaps going about the allowance/chore thing all wrong. My husband attended a local seminar on money management for kids. He returned excited about the ultimate allowance strategy. And in theory, it sounded great!
But once again, the implementation was mind-boggling.
In this system, chores were again tied to dollar amounts. This seems to be standard practice. The payout system was unique and followed some great strategies for teaching kids about saving. However, I needed a higher math degree to calculate the complicated percentages and it did not solve the pay-for-chores conundrum.
For several years, we tried to persevere through this system. The kids would (maybe) get their work done, we all constantly fought about it, and we parents would (maybe) remember to pay them. Sigh. Why was this so difficult?
Finally, about 3 years ago, as the kids were entering their teen and preteen years, I decided to simplify and revamp the system. And it is working. Let me break it down for you.
- Yes, the kids still have chores to complete. In fact, every year on their birthdays they “earn” a new chore to add to the list. Lucky kids!
- However, these chores are not “directly” linked to their allowance payments anymore. They are expected to complete the jobs because, frankly, they live in our house. Okay, we can threaten to lessen their allowance if a job is not done, but we do not keep track for the sake of determining their payout amount.
- Every birthday, their allowance amount increases. Every family has to determine what they think is fair for them, but for us, it means $8 more a month (roughly $2 a week).
- Now for the fun part. We want our kids to learn about saving and investing, but we also want them to have cash in pocket. And we want to contribute toward their future, whether for college, trade school, buying a house, whatever. So, here’s how this works:
- Once a month, they get one big cash amount for their spending money, equaling 50% of their allowance for the month.
- Once a month, the other 50% is put into their savings account or investment fund (we let them decide how much goes into each) and WE MATCH IT. Yes, that’s right. Every dollar they save or invest is matched by us. This way, we are also contributing toward their future endeavors in a tangible, visible way.
And that’s really it. It is incredibly, undeniably, easy.
Now, the hardest part is remembering to withdraw cash out of the bank to pay them spending money. Once they are driving, a debit card will be in order, but for now, cash is king. So, my husband and I decided to withdraw all of the expected monthly cash allowance amount at the beginning of the year. That way, it would be on hand in the house.
The first time we did this, my husband returned from the bank with a huge wad of bills (since the amounts aren’t very even it’s smaller denominations) and thought it will be great fun to throw the money in the air and laugh hysterically. While I’m clucking like a mother hen and the kids are shrieking with laughter, we realized something was wrong. A huge chunk was missing. After a mad scramble we found it in the car, tucked between the seats. Lesson learned, honey.
Now a few years into using this system, my kids both have several thousand dollars in the bank and/or investments. We feel responsible because we are actively investing in their future, too. The accumulated money will be a great start to their adult lives, without causing us to scramble at the last minute to assist them like good parents.
They have enough spending money in their pockets to blow with friends (daughter) or never spend (son). She is learning the true value of money, how to be a discriminate shopper, and what being broke feels like. He is learning how to play the stock market with his money, how to be a total miser, and what it feels like to be pretty damn rich for a 13 year old.
Let me encourage you. If you want to teach your children the Minority Mindset, if you want to teach your children about hard work, if you want to stop feeling overwhelmed and irritated about allowances and chores, simplify the system. Your children are not your employees; they are the gifts you have the honor of raising. It doesn’t have to be so complicated.
Contributor’s opinions are their own. Always do your own due diligence before investing.
- How We Created a Budget
- Three Mistakes You Should Never Make With Your Money
- The Importance of Starting Retirement Planning Young