Teaching kids about money can be a rewarding experience, however it’s also full of questions. Take for example, kids and allowances. There are plenty of opinions about what works best for kids, but what will work best for your family? Even though our daughter still has time before we cross that bridge, we’re thinking about allowances and chores so we can have some idea of what to do when she gets older.
Allowance for Chores
One big benefit of having commission for chores is that it can help kids realize the connection between work and a paycheck – you have to earn it. Some financial gurus like Dave Ramsey prefer having kids work for their money as it can also help them appreciate the value of it. For some children, there is something special about money that one had to work for versus money just given.
With involved parents, it can be a great teaching opportunity for little ones as they take on more and more responsibilities and find ways to earn more.
The drawback for giving an allowance for chores is that your child could expect to be paid for every assignment they have. The tough part would be working a system where certain chores are to be completed without pay as a part of family responsibilities.
With a regular allowance, kids can start a basic budget. They get paid on a set day and the money has to last until the next allowance day. Instead of just demanding money from their parents whenever they want it, having a scheduled allowance can give children a sense of responsibility. They can also set up goals for buying things that they might want, helping them learn the habit of saving.
For some parents, they start off with a set amount and add bonuses to certain chores. Others tie allowance to their kids’ age and increase as their children gain more responsibility.
The drawback for the scheduled allowance not tied to chores is the expectation of money without having to do anything. Parents would need some ground rules on what is expected for the child to get his or her allowance.
Thoughts on Kids and Allowances
Raising financially savvy kids takes patience and effort. Just because parents have a plan doesn’t mean things will work out that way. It’s about adjusting the allowance until all of you find a balance that works. What will we do? We’re not sure yet, but we’ll be keeping our eyes open for opportunities to teach her about money.
I’d love to hear from you about your family. How many of you have allowances for your children? How is it handled – do you tie it to chores or do you have another system? How do you determine what is a fair amount for allowances?