This article on the Simple Dollar discusses raising kids to be financially responsible.
My wife and I have a goal to raise our kids to be more financially responsible than we have ever been. We are currently digging out of a financial hole we dug ourselves, which is a situation we hope our children never see.
Allowance
I’ve read arguments for and against making a kid earn his allowance. We tried giving an allowance that wasn’t tied to chores, but it didn’t work well. My son would procrastinate as hard as he could. He’d whine and pout. Every chore got to be a fight. It was a fight I’d win, for sure, but not a fight I wanted to have.
As an adult, I don’t work for free. I only work if I see a benefit, whether that be a paycheck or a “warm fuzzy feeling” from time donated. Kids are the same way. My son doesn’t get paid for every possible thing that he does, but he does get paid for most things. Doing the dishes is a paid chore, while watching his sisters is not*. Cleaning his room doesn’t earn him any money, but cleaning the bathroom does. We’ve drawn some fairly arbitrary lines between “chores” and “helping the house”.
The current payment system is simple. When he does five chores, he gets five dollars. We don’t put a cap on the number of chores he is allowed to do, but we do require he do some. In practice, this means he gets $5/week as his allowance. Every other time he gets paid, his money goes directly into an untouchable savings account. Only half of his allowance is his to spend. That half has very few restrictions placed on it. The saved half involves research, discussion, dedication and a bit of argument to spend it. It’s not an argument he wins often and he is okay with that.
Result So Far
Our method of allowance seems to be working. My son actively pursues odd jobs with the neighbors. He values his money; watching him bargain shop at a toy store or spend an hour looking for the best price on the internet is fascinating. He knows that the money he has, he has earned and the things that he buys with that money come directly from his own effort. At nine, he is saving for a car, when he doesn’t forget to think long term about this account. That’s a level of planning I never considered at that age. So far, I haven’t found a problem with our system.
*His sisters are one and two. They do not get an allowance, yet.
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