Teach your kids the value of a dollar by having them work for it! You're about to get the lowdown on how we do allowance for kids in our house. Hint: You won't go broke if you stick to these guidelines!
Ah allowance, the great debate among families with kids. Should you pay your kids an allowance? Should they just be part of the family and chip in without any payment? How much should you be paying in allowance? How can we even possibly afford to pay our kids an allowance??
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The questions can seem daunting, but it's really not that complicated! I'm about to break it down for you in just about the easiest way possible. No more fretting over the allowance in your house. Use these tips and you'll be on your way to raising independent kids who can manage their own money! Yes, I know, it's as exciting as getting to go to the bathroom all by yourself without anybody interrupting you for a full 5 minutes. 😉
Before we get into the nitty gritty on allowance for kids, let's first go over…
WHAT WE SHOULD TEACH OUR KIDS ABOUT MONEY
Money is HARD. If you don't get into a good routine with your money young in life, then there will be consequences. Here are the 2 biggest things that I'm teaching my kids about money:
- To be financially responsible, saving AND spending wisely.
- To work hard and set the realistic expectation that nothing is handed to you in life. You have to work hard for what you earn, and you earn what you deserve.
Notice that it does NOT include:
- What we should buy for them.
- How to get kids to listen to us when we tell them what to do.
- How not to make mistakes.
- How to avoid real-life challenges until they are adults.
Why do we do things for our kids that they can do for themselves?
Let's face it…it doesn't do ANYONE any favors! By handing our kids things on a silver platter (whether intentionally or not), it's setting them up for unrealistic expectations because, whether we like it or not, that's not how life works!
“But I figured it out as an adult, so can they…it's time for them to enjoy being kids.”
Sure, maybe we turned out okay having had to figure it all out as adults. But at the end of the day we all want the best for our kids, right? So why not teach them to be the most amazing, self-sufficient, responsible kids/adults they could possibly be? If you ask me, there are not many gifts in this world greater than that.
SHOULD WE PAY OUR KIDS AN ALLOWANCE?
My answer, in short? YES. I know the subject of allowance is a hot debate, and can be somewhat controversial. Here's my take on why it's important to pay our kids an allowance:
- Allowance is a great way to teach your kids to manage and earn money while they're young.
- It transfers financial stress and pressure AWAY from you as the parent.
- Giving them personal money to manage allows them to realize that every dollar is a choice they make to either spend or save for a purpose.
- It teaches kids the value of hard work.
- It gives kids the chance to understand and appreciate the value of possessions.
Some people may say, “But I can't afford to pay an allowance for kids! It would make me go broke!”
To those parents I say…that is precisely WHY you need an allowance structure! You must remember, the purpose of allowance is to give our kids money (that they have earned, of course) to transfer the pressure from us to THEM. It puts them in charge of paying for things that would otherwise drain the bank for us. It helps us as parents reign in how much we spend on our kids, and gives us a set budget each month to plan on.
HOW TO STRUCTURE AN ALLOWANCE PROGRAM
There are LOTS of different ways to structure an allowance program. The best answer to give is to keep trying until you find the best fit for YOUR family…then stick with it and be consistent.
…but I know you all hate answers like that. So Bubba and I recorded a video a while back to explain how we do allowance for kids in our house! We also touch on how much to spend on kids as far as clothing, cars and college goes, but that's a whole separate post that you definitely don't want to miss out on! Click to watch that online HERE or stay on the page and watch it below:
Alright, now that you've watched that super fun video, here's…
HOW WE DO ALLOWANCE FOR KIDS
Most parenting experts say chores and allowance should NOT be tied together.
Kids have chores to do because they’re part of the family. If chores are tied to an allowance, your child could expect to get paid any time he takes out the trash or carries a dish to the sink.James Sears, WebMD
Instead of a specific allowance per chore, we have clipboards with daily responsibilities they must accomplish, such as cleaning zones, chores, morning routine, practice, reading/homework, being on-time to meals, scripture reading, and so on.
They must complete their clipboards each day to get paid at the end of the week. If they miss one day, their payout gets cut in half. If they miss more than two, then no payment! We do allow them to do makeup work to make up for a day, such as memorizing a poem or scripture, doing extra chores, or whatever else you need done.
You can also adapt this for younger kids with sticker charts, stamps, paying with pennies or coins, or anything else that works for them.
WAYS TO KEEP UP WITH THEIR MONEY
In order for kids to be successful in keeping up with their allowance (or any money they earn from working or birthday/Christmas), they need to be able to track it. In our house, 10% of any money they earn is put towards tithing. Then they take the remaining 90% and put half in a long-term savings account (we use Ally bank) and half goes into short-term savings to be used as spending money (whether it's for brand-name clothes, a new bike or going to the movies with their friends).
If you pay your kids in cash money, then a save, spend, share moneybox will help them to literally see what their money is going towards. Empty it at the end of the month and pay the tithing to the church, put the “save” money in their long-term bank account and put their spending money in a safe place for them.
If you prefer to keep it all electronic, no big! You basically do the same thing as above, but they don't receive any literal cash in hand.
TRACK THEIR SHORT-TERM SAVINGS
The hardest part for kids, especially younger ones or even those who have never dealt with money, is knowing how much money they have to spend. That's where a short-term savings tracker comes in handy! One of Hutch's first big-ticket items that he saved up for when he was 5 (after a year of saving!) was a dirt bike. We were all so excited the day that he finally hit his goal! Priya, at the ripe ol' age of 4, saved up for a Jungle Jumparoo (get 10% off with code FUNCHEAP10). She is still proud of her first purchase to this day.
I took a piece of paper and drew 100 squares on it so that each square represented $1. Each time they earned $1, they got to color in a square. This not only helped them to track their money, but it also made them pickier about what they wanted to spend those hard-earned squares on. Since they knew the amount of work that went into earning a square, or $1, it made them more appreciative.
We've since created a cute printable that takes all of the hard work off your shoulders! Your kids will set their goal they're saving for, the amount they need and how much each square, star or dollar bill represents.
We've also created a fun rocketship printable that will help your older kids to focus on what they're saving for. It helps them to figure out why they want it, how much it'll cost and how long it'll take for them to reach that savings goal.
HOW MUCH TO PAY IN ALLOWANCE
Ultimately this will vary greatly from family to family. Certainly don't stretch yourself farther than you can afford! But here is a general gauge I recommend based on the research I've done over allowance for kids and how I was raised.
Pay them half their age per week (or two times their age per month). It's a lot easier for kids to get paid weekly. It keeps the money at the forefront of their brains and reminds them of why they're working so hard to complete those clipboards.
We will also give our kids opportunities to earn more to pay for things they want or need, but this is totally optional for you! Do whatever works best for your family.
For very young kids, consider working toward a family goal or prize and use pennies as a simple tracking tool. You can either grab a few items at the dollar store to have the kids earn with their “chore pennies” or print out a picture of something they want and are working towards.
WHAT SHOULD KIDS PAY FOR WITH THEIR ALLOWANCE?
Now that our kids are earning regular cash, this is the time for us to back off and let them use it as they see fit! Allowance shouldn't be BONUS money, it should be their SOURCE of money!
Use allowance as a great teaching tool. Teach your kids to shop wisely. Go to deal or coupon sites with them and show them how to find coupons before buying things. Help them learn to shop sales, and when to go for quality over quantity. What a great gift to give them!
WHO PAYS FOR WHAT
- Parents pay when you go out as a family.
- School clothes – Give them a budget, then they make the purchases (see how to do that HERE).
- Clothing essentials that they wouldn’t buy themselves, such as socks, underwear, and school uniforms.
- Starting at 8-10 years old (depending upon maturity), kids are old enough to make their own financial decisions and pay for extra things themselves.
- Once they’re old enough to go to places by themselves with friends, they start paying for those outings.
- Clothing beyond school clothes or necessities.
- Name-brand or unnecessary essentials. Give them the budget for school clothes. If they want to spend beyond that, that's their choice…but they pay the difference!
EXAMPLES OF WHAT YOUR KIDS CAN AND SHOULD PAY FOR
- Insurance (can split – based on grades)
- Cars (match what they contribute)
- Clothes beyond the basics
- Toiletries beyond the basics. (My parents totally did this! My mom bought cheap Suave shampoo & body wash. I could get some from the storage room any time I wanted it. If I wanted the expensive fancy stuff, I had to buy it myself. Makeup? Self-tanner? Hair accessories? Bought them myself.)
- Activities with friends
- Haircuts beyond the basics
- Formal dresses/dance attire (taught me to borrow, or buy off-season)
- Speeding tickets/late fees/penalties
- School extras – class ring, letterman’s jacket, yearbook
- Eating out insteading of packing a lunch
- Sports equipment beyond the basics (they want nicer, they contribute)
- College – let them contribute – they pay tuition, you pay rent
- The list goes on!
Printable list of this found HERE
Remember parents: They are earning money that you would be spending on them otherwise, so this should not be costing you extra…this should be replacing the money you would have spent. Teach them to spend wisely and make this a great experience!
REWARDS, MOTIVATIONS AND GIFTS
Let's call it like it is, as parents we enjoy giving our kids things! And at a few dollars per week, our kids won't exactly be able to afford that new bike they really need and want. I think a great way to help keep kids motivated is to provide occasional rewards and gifts to them, and provide them with things they need but wouldn't have the money for (outside of birthday and Christmas gifts).
For example: When my son was younger, he got a pair of Spiderman shoes from a blog sponsor that he wanted for a long time. He really needed them for school. But rather than hand them over to him, I had him “earn” the shoes. The price tag was 20 pennies that had to be earned outside of his everyday chores. He did extra chores, worked on his reading, was extra helpful and nice to his siblings, etc. It took him over 1 month, but by golly, he earned those shoes! He treasured and appreciated them more because he worked so hard for them.
LET. THEM. STRUGGLE.
At the end of the day, in order for this allowance system to work, your kids must be motivated to make money. The only way they’ll be motivated to make money is to NEED money. The only way to need money is to PAY FOR THINGS themselves! Kids learn the fastest by missing out on something once. It will be harder for you than them, guaranteed… but you want them to struggle with this process.
Miss their homework? Consequences at school. No practicing piano? Let them answer to their teacher. Miss the yearbook fee deadline? No yearbook. Fail to pay their parking ticket on time? Added violation fee. Sure, we need to parent and guide our kids. Trust me folks, I am NOT a hands-off parent. However, I believe these are minor lessons in the grand scheme of things, but all of which really should be learned as a kid to help exponentially in adulthood.
We need to learn to let them struggle. Then give them big hugs, be great support and their biggest cheerleaders, and most of all, be a great example to them and it will be the best gift you could ever give your kids!
How do you do your allowance for kids in your house? Let us know in the comments!
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