Ask Design Mom: Kids & Allowance

April 12, 2010

Ask Design Mom Question:
I was having drinks with girlfriends and the topic of kids and allowance/teaching money management came up. We have kids ranging from three to ten and are all struggling with a great way to broach this topic in a meaningful way. I thought maybe you and your plethora of readers might have some good ideas.  The issues range from 1) how much to give (too little seems to have no meaning or relevance these days), 2) what sort of tasks are deserving of allowance and which should just be contributing to family life, 3) any good methods for teaching how to save/spend/donate. best, Gillyn

Design Mom Answer:
Great question, Gillyn! This one has been on my mind as well. The first thing I thought of, was a fantastic post my older sister Sara wrote for this blog, about how she handles money with her four kids. (It’s brilliant. You can see it here.) At our house, we’ve tried a few different things over the years, but nothing has seemed exactly right — so, I hope all you clever Design Mom Readers will chime in with your favorite ideas and methods.

In the meantime, we can all admire the super-cool piggy banks at Fawn & Forest.

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{ 27 comments… read them below or add one }

1 Dean Gilbert April 12, 2010 at 11:43 am

We separate the chores into some that are challenging to the kids (ages 5 and 7) and those that are easy. Only the challenging ones earn allowance. Allowance is tracked on a simple spreadsheet.

When allowances are paid out there are deductions for savings (think college fund) and tithes which the children themselves will put into the collection at church.

Any expenditures from allowance must be approved by Mom and Dad. The kids also hear Mom and Dad discussing financial plans and principles, and understand a little about budgets, taxes, and saving.

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2 april kennedy April 12, 2010 at 12:01 pm

My thoughts are that chores and allowances should be separate. Chores are part of belonging to a family and respecting the house you call home. Allowances teach money management, (i.e. opportunity to pay tithing, budget for wants, donate to good causes and add to savings).

With that said, we are horrible at remembering to give allowances, but I’m all over the kids when they forget their chores! Not fair.

We haven’t figured out the right amount to give per week. I think it depends on what you expect your children to do with their allowance money. I know one family that made their children pay their own way to the movies when going with friends. BUT, if the child going to the movies with friends was willing to bring a sibling with them, the parents paid for both tickets! I have always loved that idea and use it in other ways in our home besides just movies/allowance use.

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3 mere April 12, 2010 at 12:40 pm

Don’t really have any experience with this yet, but “Drive – Why we do things” by Daniel Pink is an excellent book about motivation and it mentions not attaching allowance to household chores for the same reason. You don’t get paid to clean your house when you are a grown up, so I guess its best to eliminate that expectation early :) I’m loving this post since I should be starting to think about this now.

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4 Kara April 12, 2010 at 1:20 pm

My family had our chores and my mom would give us 20 dollars a month, we only got 20 and if we wanted more we had to do more. Once we turned 16 the 20 dollars stopped and we needed to get real jobs to pay for our gas, and insurance for our cars. If we wanted to purchase anything more than our 20 we had to earn half of the money. I think it worked out really good!

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5 nikki April 12, 2010 at 1:30 pm

We recently started an allowance with our 5 year old as an incentive to get her to wear more than just her skirts every day as she was wearing through her tights faster than we wanted to replace them. The deal was she had to wear pants 3 days of the week in addition to making her bed, clearing her dishes, keeping her toys tidy and the like. While I understand why someone may not want to associate family chores with money, we believe we are teaching our child how to be responsible and respectful of her belongings and the house. Her money goes into her bank and if she wants a game or toy, it comes out of her money. At the end of the month, we go to the bank and make a deposit. So far she has only purchased one toy and was quite surprised at how much money she lost when she had to shell out $14. She now is much more careful about her savings.

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6 Megan April 12, 2010 at 2:01 pm

When our kids are 3 years old they are officially old enough (in my eyes) to help out around the house and begin understanding money management. Each child earns a weekly allowance equal to their age, i.e. the 4 year old gets $4/week, 7 year old gets $7/week, etc. With each increase in age (and money) they have another chore added. When chores are not completed or too much complaining happens they start loosing a portion of their allowance. That may seem like a lot of money to give but in reality 10% goes to our church tithing, 80% to their long term savings (college, car, etc.), and 10% to spending. So the 7 year old only pockets about $3/month. As they get older those numbers may have to change…or maybe they can get a “real” job : ) We also let the kids keep any money they get for birthdays/holidays and spend as they see fit. My kids have become very aware of their spending money and they will literally wait all year to buy that special game/toy. But once they have it they are very proud of themselves and treat that toy with a lot of respect.!

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7 Michael April 12, 2010 at 2:11 pm

We use a fake money system that we call “housebucks” in our house. Basically, we have a Melissa & Doug cash box that serves as the bank. Chores are family responsibilities, but we give an allowance at the end of the week from the bank (this also prevents us from keeping lots of cash or change on hand, lol). We currently pay $150 in housebucks per week, which also encourages larger number counting than if we used real cash.

Housebucks can be redeemed for various things that we keep a list of on the fridge. For example, an ice cream cone that’s not part of a normal family visit to the dairy might cost $20. We buy the ice cream, and the child pays the “bank” at the house. A Webkinz stuffed animal currently runs $1000, so there are incentives to save.

If the child keeps a certain balance in their money bag, we pay interest, adding more money to their bag. If it falls below a certain amount, we charge a bank fee each week until it meets the minimum no-fee amount.

Cash penalties are also assessed for failing to follow through on responsibilities, so we just ask for payment and the money goes back into the bank. Sometimes these penalties are viewed worse than timeouts. :)

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8 Bettijo @ Paging Supermom September 22, 2010 at 10:37 pm

This is AWESOME! I love it. Not sure if I have the wherewithall to implement myself, but it sounds great.

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9 Carrie Meadows April 12, 2010 at 2:30 pm

We have not started giving our son an allowance, yet (is too young to know what money is), but our philosophy is that he will always get an allowance for the sheer purpose of learning how to use and save money, and to teach delayed gratification. We aren’t going to pay him for chores or good grades, because those things will be expected of him no matter what, and we want the incentive to come from within, not from money. At least, that is what we plan to do, as of now :)

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10 Martini Mom April 12, 2010 at 3:14 pm

I give allowance as a money management lesson. My son has plenty of chores, but they’re not tied to how much allowance he gets. He has his standard chores, but is also expected to pitch in with the rest of the family when there’s extra work to be done. No extra allowance for extra work – that’s just part of helping out the household.

My son has three separate piggy banks: one is savings, one is charitable giving, the third is his “discretionary income”. :) When he gets his allowance, there is a set amount that he must put in the savings and charitable giving banks. The rest is his to do with as he wishes. He’s made some bad purchasing decisions with it, but that’s how he learns. He’s much more thoughtful with his spending now, which is a large part of the lesson. The charitable giving fund does require my approval before it’s spent, but he’s never asked to spend it on anything that I’ve said “no” to. He usually spends it near Christmas to buy a toy for a boy about his age at a local shelter for battered women and their children.

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11 Amy April 12, 2010 at 4:00 pm

When I was in high school, my parents did something with me that they did not do with any of the later born kids, and I think that is why I have always managed money better than any of the rest of my siblings. They said: “We will cover your housing, any food you eat from the house, and insurance. Everything else: school activities, all clothes, toiletries, gas, food out, shopping, books, school supplies, etc must come from either the $100 we give you a month or money you make working.” Most of that $100 went to carting my siblings around around town to appointments and such (which was why they gave me $100), so I learned to shop for a good deal and that I did not need everything I wanted. I also took out my own checking account and credit card (at 16) because I realized that carrying around enough cash was not always practical. Those accounts were my responsibility as well as the consequences of overdraft fees. Far better for your kids to make mistakes and experience the consequences of those choices, while the consequences are less severe, than wait until they are out on their own and the stakes are much higher!!!

For younger children, I have heard of families adopting a sort of “trickle down economics.” The older kids have jobs and pay the younger ones to do chores they don’t want to do. Then everyone has money for tithing, saving, and spending to purchase prized items at home: occasional soft drinks from the family fridge, buy back toys that were confiscated when children chose not to clean up by the set deadline, or even buying a toy from the store. I plan to start something similar to this when our kids reach 5. As they get older, they will be given more responsibilities like I was.

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12 Shannon April 12, 2010 at 4:12 pm

Here is what works for us. I have 8 children, ages 9 – 24, and we have done different things for different kids at different times. The following is what we have found to produce the best results:
1) Have regular chores for everyone, no payment. It’s just life.
2) We have work for hire. Jobs, around the house/yard, that are not regular chores that have a price attached so they can earn money.
3) They can get jobs anytime their grades are above average and keep the job if they continue with the good grades.
4) Money earned is separated into a) church donations, b) spending c) savings. Savings can only be spent when mom, dad, and child agree on the purchase (violin, bikes, plane tickets.) Spending money we let them spend on just about anything except excessive candy or junk food. They learn very fast about wise purchase choices.
5) We pay for a certain amount of reasonable school activities (football game ticket, etc) but they pay for extras (snacks, photos, etc).
6) We have general talks about managing money and debt with what we spend as a family. “We can do this”, “we can’t do that”, “we plan for something big”, that sort of thing.
7) Birthday money from family is the only ‘free’ money they get.

There have been some tough learning lessons along the way for them but the young adults we now manage their money VERY well. And isn’t that the point?

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13 Janelle April 12, 2010 at 7:20 pm

We had a “bank” with my parents. We were given a small allowance ($5 a week) and had opportunity to make more money by doing extra chores (this did not include our regular chores: dinner dishes, making our bed, taking out the garbage, mowing the lawn, etc.) The bank was a sheet of paper with three columns – one that kept track of how much money we had, another for college savings, and another for charitable donations. We were also allowed to borrow up to $100 (interest free) on our banks (this usually happened during Christmastime–we paid for our own gifts for friends and family). We would pull money out of our banks by requesting cash from our dad or, when we were older, charging it on the family credit card and marking it off our bank. I feel like this was a fantastic way to learn money management–especially the “borrowing” aspect (we all quickly learned we hated to be in debt). I felt very prepared to take care of myself after I left home and have watched all my siblings (there are 9 of us) do the same.

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14 Bill Dwight at FamZoo April 12, 2010 at 7:44 pm

Wow, great comments so far. One thing we do that hasn’t been mentioned already is: we set up loans with our older kids for certain expensive items. We do this only when we think its appropriate to purchase in advance of them having saved up the money. For example, my son is a drummer and needed a pretty pricey laptop for recording with Garage band. We were eager to see him get into the recording work (good skills to learn), so we purchased it up front and set up a loan with him. He paid off the laptop over a period of years by having a significant chunk of his allowance diverted to “loan payments”. Seems like a reasonable model of and practice for what happens in the real world – cars, houses. Certainly better than just buying the item outright because by paying it off over a long time they (a) appreciate the value more (b) take better care of it – who wants to trash something you’re still paying off?

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15 Holly Thatcher April 12, 2010 at 8:07 pm

I’ve haven’t read your blog in probably a year and I just saw a link from a friend’s blog and decided to come back to check it out. I LOVE the res-design! It looks very fresh and fun and much easier to read than last time I saw it. I’m putting you on my regular reading schedule again.

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16 Angela April 12, 2010 at 9:09 pm

Where you reading my mind?? Just thinking about this. Like the Blairs, have tried a lot but nothing has been the right fit for us. I love all these suggestions and I’m excited to try some. Thanks!

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17 Victoria April 12, 2010 at 9:14 pm

This has been a toughie at our house also! Our oldest is seven, it really only applies to him so far, the beginnings are happening with our 5 year old. We decided to really sit down and figure out what we wanted to teach the kids about money and work ethics with this allowance issue. We came up up with this. We wanted to provide a bit of spending money to learn about dealing with money in general (counting, saving, spending, worth, value, wants, needs), we wanted to teach that it takes effort to earn money, and we wanted to teach that some things are done simply because the act in itself is worth doing, no reward attached (eg: as a part of the family we all need to pitch in, as a person some things just have to be done, even if you’d rather not). Based on that, we came up with lists of things/chores we expect to have done. These are expected, no money attached. These are also different for each kid based on their age. Things like take your own dishes to the dishwasher. In the evening, Thane (at 7) is expected to clean up his art desk and take the ‘big boy’ toys back to their room, Seth (at 5) is expected to put the cushions back on the couch and the stuffies back in the bin. Then there’s a list of extra chores that can be done if they want to, have time, or would like to earn money. These are things we don’t expect them to do, but helpful things that they are capable of. Like vacumming, shoveling, or picking up their toddler sister’s toys. And the pay depends on the chore and the quality of work. So far so good!

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18 Cissy April 12, 2010 at 9:14 pm

Excellent discussion–I find some new ideas as well as some things that already work in our family.

We try to keep our kids involved in the family budget discussion, so they see that we too have donations, savings, spending categories. They’re learning that even though there is always money in the bank, there is not always money for eating out, etc. My 10yo recently said to me very excitedly: “Hey, it’s the first of the month–we can order dinner for tonight!”

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19 aneelee April 12, 2010 at 9:46 pm

we have a six year old daughter and her allowance kicked in when she started wanting (and asking!) for lots of things in an effort to teach restraint, planning and goal-setting.she gets 50 cents for every year, which is admittedly, not much. right now it amounts to a whopping $3 a week. $1 goes to her piggy bank and $2 go to her wallet. as of now, her wants are fairly modest and most of her money goes to buying herself comics and books. i’ll come up with more strategies as her needs and wants get pricier, but for now this simple set-up works.

oh! and we never give out allowances on Fridays. we found that it got spent almost immediately when we did that. Mondays are payday and we find that it helps with the whole restraint lesson that we are trying to teach. she has to make plans with us for her weekend time if there is something that she wants to get or has been saving for.

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20 Julie April 13, 2010 at 1:10 am

Great topic. My kids are 3 and 7. The 7 year old gets an allowance of $3/week, although I think I had planned to change it when she recently hit 7 years. I suppose this is my reminder that it’s time to re-evaluate and clarify a plan. Allowance is not connected to the chores we are all expected to do as members of the family. Extra jobs can be performed to earn $0.25 – $1.00. I am inconsistent about giving out allowance weekly. I think that is in part because we’ve not yet specified what she buys/what we (parents) buy.

Whenever they receive money for allowance or as a gift, both kids divide it three ways: save, spend & share. I love watching how my older daughter choses to spend when the time comes. She recently received a gift card with which she bought herself a toy horse set. She bought her little sister a similar horse set and saved the remainder of the gift card. When she was ready to spend it a couple weeks later, she spotted a stuffed dog which was apparently perfect for her close friend. She excitedly bought it for her. Now little sister is hopeful that her Grandparents might send her a gift card for her upcoming birthday so she can buy her big sister “anything she wants”. My little one saved $10 over the course of a year+. She was moved by the plight of a local animal rescue/adoption center and was so excited when the idea occurred to her to give this “share” money to the animals. Watching big sister use money to sponsor animals locally and help fund projects through Heifer International has had a significant impact on her. Thank you for this topic!

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21 gillyn April 13, 2010 at 9:51 am

gabrielle –

i am floored (guess i shouldn’t be) at all the great responses! there is so much good information here, i can’t wait to discuss with my husband. thank you so much for posting and to all the readers who offered up the great ideas.

gillyn

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22 Jill April 13, 2010 at 10:59 am

I have 5 kids ages 13-4. I agree with Shannon. Chores are unpaid, part of being a family. Extra chores or assignments can be given to earn money. However, like Michael, I had greater success when I switched to “fake money” we use carnival tickets. They can earn tickets for many things. Like extra chores, or if I see them really go the extra mile on something. I keep the other ticket with the matching number so I can do random prize drawings. They can redeem their tickets for cash money, or I have prizes on hand (appropriate toys, etc.) Sometimes we have a movie night at home and treats are bought with tickets. I realized they wouldn’t sweep the kitchen for a quarter. But they jumped at the chance to do it for a ticket. Even if eventually they redeemed their tickets for a quarter each.

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23 Erin April 13, 2010 at 1:33 pm

After watching how my siblings and I were taught about and now handle money and also from watching my kids I’m starting to think that the way they use money has to do more with their personality than any teaching experiences they may have had. That isn’t to say that I’ve given up teaching my kids about money, but I’m trying to do so by 1)keeping any money experiences I give them tied to real life experience. I want them to understand concepts like loans/debt, interest, fees; and to have a financial vocabulary. 2) Change the experience to fit the personality and learning style. i.e. My son is a natural saver so we don’t even focus on that concept with him.

I haven’t figured it all out and it’s a lot for me to try to cater to each child, but I’m just trying to give them lots of different experiences and that means trying lots of different approaches.

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24 Julie April 13, 2010 at 1:48 pm

Loving reading these responses! But I have a question: When you say you don’t pay for the regular chores, what exactly do you mean? We pay by the day- for the kids’ regular chores… if they’re not done, they don’t get the allowance for the day. But their regular chores are cleaning a bathroom, vacuuming, sweeping, taking out trash, etc. What is everyone considering the “free” chores and which ones are paid? Just curious! Great thoughts!

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25 Jamie April 13, 2010 at 4:36 pm

We also separate “regular chores” from “money chores”. I base the value of money chores on how well they’ve done their regular chores, though. If they are lazy for a week, their Saturday money chore isn’t worth much…but if they’ve been responsible all week, they can earn a lot on Saturday. It’ s kind of like they work just for the privelege of working more…awesome, right? I use a peg system to keep track.

And in response to Julie’s question: I think regular chores should be daily upkeep things (vacuum, sweep, toilets, etc), and money chores should be things I might consider hiring out for (if I was rich)…deep cleaning, or seasonal things.

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26 cherri Coles November 17, 2010 at 2:22 pm

We give each child money buy how old. $9 For a nine year old. You can decide how often. They have a book that they write the amount they have and list what they spent their money on. Then they deduct what was spent. They meet with dad once a month to go over what they spent/saved.

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27 Jean W February 25, 2011 at 11:08 am

On a slightly different note: My daughter raises money for charity each year at her birthday party rather than accepting gifts for herself. She has done this since kindergarten. It’s a great way to invite lots of kids and spread a positive message, but without encouraging my child to become materialistic. The party is all about games and fun, not presents. My daughter selects her cause, and I find a charity with a good rep that matches her goal (ie Heifer Int’l when she wanted to “help hungry families”, WWF when she wanted to “help animals and save their habitats”, etc.). We tell the guests the charity that my daughter selected and encourage them to make donations instead of bringing a gift. My daughter gets very excited about seeing the funds she raises for a good cause, and she has learned that it’s sometimes more meaningful and feels better to help others than it is to accumulate a lot of stuff for yourself.

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