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Teach Kids Money: Tying Chores & Allowances
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This is a guest post by Danny Kofke, a special education teacher and author of How to Survive (and Perhaps Thrive) on a Teacher’s Salary. Danny and I have been emailing back and forth for the better part of the last month or two, working on a guest post about children and allowances. I asked Danny to write this post because it involves a hotly debated topic in parenting – should you tie your kid’s allowance to their chores? Or should they do chores “for free” because they are part of the family? Here’s his take.
My wife, Tracy, is a stay-at-home mom to my two young daughters – Ava, age 5 and Ella, 2. We don’t make a large salary so we have to be frugal with our money. We are trying to pass on our values to our children. Ava gets an allowance every week for the chores she does. We check each chore off on a daily basis and at the end of the week Ava gets paid for doing these chores.
I decided to pay Ava for her chores since this is work she has to do in order to get paid. We actually refer to her allowance as commission since, like a commission, she gets paid for work she does. I use allowance in this story because most are familiar with that term. Most people get paid for work that they complete. I feel that having Ava do some work, albeit minimal work at this point in time, to earn money will help her develop an understanding that work leads to getting rewarded with money. I am lucky enough to drive her to school everyday (she attends the same school where I teach) and she knows I go to work and get paid for teaching my students. I tell her that she gets paid for her jobs too and wanted to demonstrate this with an easy to use chore chart.
Setting Allowances
We have decided to start off small with the amount we give Ava each week. Right now it is $1.00. As she gets older and does actual work that is above and beyond what she should do, we will increase the amount she gets.
The chores she does right now are basic ones (cleaning her room, using good manners, brushing her teeth, etc.) that are expected off her. My goal with her allowance at this point is not to reward her for doing things that she should do but, rather, to teach her about handling money. I know her chores are easy for her to do and I want it to be that way. I want her to be able to accomplish all of them so I can have a teachable moment with her every week when she gets paid. When she gets a little older, and the money management tools I am teaching her now are hopefully ingrained in her, more will be expected of her to earn this money.
Savings, Give Away, and Spending Jars
Ava has three jars:
- Savings
- Give Away
- Spending
When she’s paid, Ava puts some of the money in the Give Away container first, then Savings and finally Spending (she knows the correct order and this is very important). I feel that by doing this she will continue this practice later in life.
If Ava wants something at the store, now that she’s five this seems to happen more often, Tracy and I tell her we have to go home and look in her Spending jar to see if she has enough to buy it. We use her Savings jar to save up for items that might cost a little more money. Ava has used the money in her Give Away jar to buy a present for a student at my school who lost her father and for a canned food drive at our church.
A few months ago she said something that made me so happy. After putting money into each container she said that she had enough money in her Spending and Savings containers and wanted to get more in her Give Away so she could buy a ball for her 2 year-old sister, Ella. I was so proud of her. She is now of the age that she has started to notice that some of her friends have more materialistic things than she does. We explain as best we can to her why this is so but it definitely made me feel good to hear her say that she wanted more money to give something away rather than buy for herself.
I feel that my 5-year old knows more about how to handle money than people many years older than she is. If Ava continues to follow these three simple steps upon getting paid throughout her life, I have little doubt that she will be financially successful.
What are your thoughts on tying chores with allowances and setting up money jars?
(Photo: minidriver)
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When I have kids, I plan on giving them an allowance so they can learn about handling money but I’m not going to tie it to chores they are expected to do. I don’t want them to think they can get out of their chores if they don’t care about the money. In addition, I’d want to be able to take away the allowance if necessary and not have to explain why they still need to do their chores.
I agree with the comment above. While Danny’s argument is well thought out and his budgeting values are solid, there is the very real possibility that he may be teaching his children to work only when they are paid. There may come a time when he can’t pay them for work they need to do to contribute to the family’s well-being and they may not feel motivated to do it. As they grow more independent and, as teens, perhaps earn their own money, they may feel that they don’t have to do the routine chores of home since they don’t need the allowance. Chores are part of a commitment to family life, everyone participates, everyone works, everyone benefits. Danny probably doesn’t get paid for taking out the trash, either. Some stuff you just do because it is expected.
To deal with the valid issues raised in the previous comments, as children get older you can start “charging” them for the things that you provide (food, shelter, etc.) and arrange the math so that if the chores are done, there is a surplus (allowance) and if the chores are not done, there is a deficit (bill).
Then not only is the child learning how to handle money responsibly, s/he’s learning that these things do not come for free.
I think the Give, Save and Spend banks are an excellent approach. There are values that can be taught within each area that are essential to managing money wisely. Personally, I think it’s a good idea to pay a child for work or chores performed around the house. The value of working to earn is important for a child to understand, mainly as they mature, but helpful to learn early.
I really enjoyed your post and am looking forward to starting my Ava
on the G,S,S banks as she turns 5 this next year.
An allowance is given because the child doesn’t work. He is dependent on the parent for his basic needs and more importantly his dignity. It should never be tied to chores or any other performance. It is freely granted the child regardless of his behavior.
Teaching the priniciples of saving or giving can be easily taught using the money included in an unconditional allowance just like it can using money the child earns by doing jobs that are above and beyond daily chores. Chores instill family values and responsibility and should never be tied to money.
If a child has an allowance and he learns to manage it correctly he will never be embarrassed when his friends stop in front of a snack machine by not having some money on him. He also learns that he can have extra money if he’s willing to work for it, over and above his responsibilities to the family.
Every parent I have given this advice to has offered very positive outcomes reporting that their child’s self-esteem had grown along with their empathy for others.
A lot of what people know are based off of what our parents taught us. My parents lived frugal and I live in a similar manner. This is not always the case, but more likely than not they will at least learn small money lessons like these.