14 Wildly Different Allowance Strategies :)

by J. Money - Published October 10, 2019

gold piggy bank

So last week we asked how people do allowances since I’m still trying to nail down my own system, and BOY did the floodgates open!

We got messages with all kinds of different styles and theories, ranging from “I pay nothing at all – we already pay for their LIFE!” all the way up to those ponying out $300+/mo whose kids are in charge of a lot more than just their basic chores. (Thank goodness!)

Here’s a look at some of my favorites for anyone else in need of finding or tweaking their own systems. We’ll start with the more humorous ones for all those who couldn’t care less or don’t have kids ;)

Some really interesting ones in here though!! So neat how different we can be!

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The Nagging System

A friend of mine has a brilliant method with allowances.  Her kids have tasks that they each have to do each week.  If they do them without having to be reminded (or nagged), the get their allowance.

If they are reminded, they still have to do their chores (their responsibility towards keeping the house going), but they don’t get paid.

– J

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The Taxes System ;)

I don’t have kids, but I used to get $1 per chore and when I went to collect my Mom gave me $0.70 because “taxes and social security” 😡 … I’m still waiting on my social security payout 🤣

@APurpleLifeBlog

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The Salary System

You might want to sit down for this. My daughter gets $122 every other week. I call it a salary, not an allowance. She has chores, but they aren’t tied to the money.

She is expected to put 10% in give and then split the rest 50/50 into save and spend. Her save isn’t hers to touch yet, I’m not sure when it will be or how that will work. Her spend is split yet again and she has 1 account that has a $150 minimum balance to use for responsibilities (school fees and trips, clothes, gifts, going out with friends, lunch money, etc). This account is meant to mimic always having money available for needs like rent, groceries, utilities, etc so she isn’t ever unable to cover those things. Once that is met, she can choose what she does with any money left over.

I calculated the balance by pulling together what I anticipated I would spend on all this stuff anyway, divided by 26 paychecks a year, adjusted to allow the give and save, and landed on an amount. Each year, she has additional responsibilities added to her list of items that is on her to cover and she gets a raise.

The one thing, as others have mentioned she knows not to ask me for a dime outside of her salary. In my mind, I’m spending the same amount of money I would normally, but I get to avoid arguments like how unfair it is that I won’t buy name brand leggings because she needs new black leggings. She gets to decide if she wants to put money toward that or have money to go out with her friends.

It hasn’t been perfect, but I’ve heard her make several comments that gives me enough data to know she’s getting it.

Financially Fit Mom

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The FamZoo System

This is a GENIOUS solution for kids/allowances (summary: loaded debit cards for kids): http://blog.famzoo.com/p/about.html !!!!!

We pay our kids $1/per their age each week … i.e. our 16 year old gets $16/week IF he completes his chores (and FamZoo allows him to check off each responsibility as he does them so we know he earned the money … then FamZoo releases the money from my FamZoo debit card to his flawlessly!!!!)

If we have special projects for our kids to do like wash the car, we pay them half their age per hour … i.e. our 16 year gets paid $8/hour for anything over and above his chores if he’s trying to earn money for something.

It’s SO easy to designate the allowance to different spend/save/give accounts. This system is AWESOME and you HAVE to look into it as it’s made our lives soooo much easier!!!!!!!!!!!!

It’s a great way for them to practice using plastic and watching their budget at the same time. Really cool!

– KH

[EDITOR’S NOTE: I’ve known Bill Dwight, the founder of FamZoo, for many years now and I can attest that he’s a SUPER genuine guy and really pours his heart into this project that he’s tested year after year with his own 1/2 dozen kids ;) Really great guy and cool system that I always for some reason forget about, haha… Sorry Bill!]

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The Rooster Money System

I have a 9-year-old who gets $5/week from me. He has responsibilities every day that he’s at my house (50/50 custody). On school nights he can earn up to 20 minutes of screen time by doing certain things. Two he MUST do (feed the cat and do his homework) and others are optional, up to two more, including things like picking up the toys/dishes/etc from the living room, helping to make dinner, vacuuming, wiping down the bathroom sink, putting away some dishes, etc. He often comes up with creative ideas of how to earn these points…

He gets that $5 through a free app called Rooster Money and I have it set up to automatically divide so that he gets 50% in “spend” and 25% each in “save” and “give”. I did it this way because he was feeling frustrated by how little he got in spend each week at 30/30/30 and I wanted him to stick with this practice. We’ll have a conversation about adjusting it when he’s older.

He finally has about $35 in his “give” pot so he’s been brainstorming ideas of who/what he’d like to give to, which helps him talk about what is valuable and important to his vision of the world he wants to live in.

– Sarah

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The Book Report Strategy

Hey J$,

Have you ever heard the back story about Caleb Maddix? Instead of giving his son an allowance for doing chores, his father would give him money for every book he read and wrote a book report on.

Now that kid is a millionaire, published author and motivational speaker! Definitely something I’m considering for my own daughter, although I’m hoping she just loves reading for reading and won’t expect me to pay her :)

– K

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The Report Card Strategy

I don’t shell out $30/week to any of my kids, but I do reward them handsomely for report cards. $50 for a perfect card and an additional bonus $50 for a perfect year.

Never thought I would actually have to pay it but last year my 9 year old got me for the full $250… Worth it though.

– Paul

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The Quarters System

We started with an allowance at the age of 4 but we do half of your age. So he got $2 a week that year and at age 6 he is up to $3 a week.

We provide his allowance in quarters to make it easier to split out. His piggy bank has four sections: save, spend, give, invest. He has to put one quarter into each of the four sections and set aside one quarter for church. He can choose what to do with the remaining quarters.

Unless he has his eye on a specific toy, he tends to spread them evenly across all categories. Which is easier in these even years. At 5 with 10 quarters he would get frustrated sometimes.

Tracy

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The $1.00/Age System

I used the plan from the book Money Doesn’t Grow On Trees by Neale S. Godfrey (looks like it’s been updated/revised in 2006) which I read sometime in the early ’90s when my kids were little.

I gave them $ per age ($6 for a 6-year-old) per week.  I made them put $1 towards charity and $1 for long-term savings.  I think the book might have said 10% but it was easier for me to deal with since I kept the calculations mostly in my head.

She suggested that they get the money in cash, but I hated having to get the right change (lazy much?) so we kept track of it virtually.  At least until they were over 10, it wasn’t likely they could buy anything without me being present.

It worked like a charm.  Every time they asked for something, I’d say “Sure, you have $X to spend.”  It was amazing how rarely they wanted that particular item when it was their money.  The older child never spent the money weekly – he would only save it all up for a big purchase (a trait he continues to this day.)  The other child was a DVD addict so he always wanted to spend it, but rarely had enough to buy one weekly.  He eventually learned to wait for DVDs (eventually blu-rays) to become less popular so that he could buy them cheaper than the original price.  While he still buys smaller items more often than his brother, he also keeps to a budget and is very conscious of all his spending decisions.

The “kids” are now 31 and 28.  Both handle their money much better than I did at that age (when I had just bought a house with my spouse and given birth to the two of them!)  I always recommend this book to parents of young children.  I think we kept this up until they got jobs at 16.

– KV

[Link to Amazon above is an affiliate link…]

The Points System

J$-

My wife and I have struggled with this since our kids were little (now 11 and 14).  We’d try to implement an allowance or pay them for chores, but nothing worked as everyone lost interest and the money didn’t add up to much.  We have since found something that works amazing and gets stuff done around the house.

I’ll preface this with the fact I have my own business and work out of my house.  We have come up with a “Commission Chart” where each kid has the opportunity to earn points by essentially doing chores that my wife and I would normally do.  Each chore is assigned a specific point value, so mowing the yard is worth more than putting away the dishes.  If they can accumulate 15 points per week, then they can earn their commission of $15.  If they decide they can’t earn 15 points, they get $0.  It’s like any job I’ve ever had, do the work and get paid or don’t and go home with nothing.

Since setting this up 6 months ago, the kids have never missed a week and my wife and I can sit back and have the kids work for us.  We also make them put all of the money in the bank as savings and they can withdraw a portion if they want to buy something, but that is up to us.  Trying to teach them to save at an early age.  Also since I have my own company, we pay them out of the company since their work directly affects my work environment (like a cleaning service) – saves on taxes as long as I don’t pay them more than $600.  Everybody wins.

We now have kids fighting over who gets to do the dishes while I sit back and watch TV.  It’s been amazing!

– E

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The 40/25/25/10 System

I give my son his age in dollars for allowance (7), so it will continue to go up every birthday. He is required to divide it up into:

  • 40% – spend
  • 25% – save
  • 25% – invest
  • 10% – give

He knows invest is for college. In the save jar he has baggies for different savings projects. From this jar of money he has to buy holiday gifts for Mom and Dad, so that’s a constant baggie. Other baggies change, a current one is for a drone. Give is for a project we chose together, although he has also thought just giving dollar bills out to friends randomly was how it should be used. LOL. (EDITOR’S NOTE — Totally something I would do – even as an adult, haha… )

The spend jar is for random purchases like racing cars from the grocery store. He has sometimes chosen to put his spend money in his save jar (yay! message getting through!), but most of the time he blows it on things like $1 toys. Our plan is as he gets older, he will be responsible for buying his own items with his allowance, such as clothing. As we implement this his allowance will increase accordingly. Hopefully we are setting him up for some good finance basics.

– Erin

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The Spend How You Want System

My daughter is 10 and we give her $20 a month. We don’t tie her allowance to any performance and we don’t buy any toys, books, or extra things that she wants during the month. It’s worked pretty well as a way of letting her experiment with money and see what works best for her.

When we started she did spend ALL of it every time but then she got into some situations where she couldn’t buy something more expensive that she wanted. Now she keeps about $200 as her base and will save up to that if she’s spent it down or will donate or long-term save depending how she’s feeling.

We were very swayed when we set this up by an article about Warren Buffet (that I can’t find now) he was saying that childhood is when you want them to make mistakes, such as finding out what it feels like to be broke etc, so just let your kids spend their allowance how they want. It’s worked great for us.

– LeAnn

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The Montessori Route

Hi J,

I’m a self-proclaimed minimalist, so I tend to try and find ways not to just teach about financial responsibility, but responsibility with ones time, energy, and stuff. Having too much “stuff” has its own consequences, just like having too little. A lot of my belief aligns well with Montessori principles, and thus had a conversation with a colleague years ago that completely shaped my approach with the kiddos:

He grew up going to Montessori through high school and his parents were big believers in the principles especially when it comes to equipping independence. From that stemmed an incremental independence structure they setup for him and his sister. They started at year 0 (Kindergarten), and sat down and created a list of responsibilities they have on behalf of their children and on behalf of their household. Then they juxtaposed cost against those items.

For example, on behalf of young children you buy clothes and wash them, buy groceries and cook them, and prepare their school stuff/fill out forms/etc.

On behalf of the house, they cleaned, did laundry and performed yard work.

They ranked the activities based on complexity, time required to perform, and reasonable age a child is able to manage the activity. They then assigned a cost to those items calculated from things like “what it would cost to outsource this activity, like a maid” and what someone of their education level would average being paid out in the open market. Items that were self serving (buying clothes) were only assigned budget for the items, not for the work of doing it.

Then, each year, starting in kindergarten, they’d give them the activities aligned with the age and the budget required to do it. For example, in kindergarten, they’d give the kid responsibility of taking all their laundry to the laundry room and sorting it, or picking up around the house. Then, at the end of the week, they’d “pay” them for their work. If the work wasn’t completed, they wouldn’t get it.

As they got older, they took on ownership of small budgets, for things like clothing and eventually budget for lunch. My friend’s dad allotted him $300 on jan1 after his 10th birthday and told him that moving forward he would be responsible for planning and purchasing his own clothing. This came from a conversation (argument lol) about a pair of shoes he really wanted. So his dad realized it was time he learned about his clothing budget. He quickly bought the shoes, and ended up spending most of his budget early in the year and when winter came, he had to wear a small jacket bc he ran out of money. Needless to say, he learned very quickly about planning for back to school shopping, and ensuring you have enough money for September, when you’re planning in January.

Anyway, my point of this story is that just like money is a conduit for necessity, the introductions to money should be a conduit to independence and money management. I think save/spend/give is important, but how to spend (budgeting) and how to save, are the key lessons and so much of why so many people have issues with money. They didn’t grow up practicing with small amounts of money, so it became daunting when they got grown up amounts of money.

To conclude the story, by the time my friend was in high school, he managed the family grocery budget, his own clothing and school budget and even began dabbling in investing with his dad (started his first IRA) with his extra budget money. He got a credit card in 9th grade and learned early what would happen if he didn’t pay it off on time. He also learned to manage his accounts because all the money he received was given to him in an account. He also learned about credit card rewards and the benefits of different cards.

He even learned to bargain with his sister for her work, so he would get her money, for activities like school trips and going out with friends. Once he realized there was a cap to what he could earn at home, he realized he had other skills that could earn him money outside the home and he got his first job and started his first business.

I think his dad was a genius by setting up a home economy that aligned with some real world numbers that let the children learn early on how much things are worth, how much effort certain things take, how much time these things take (and in turn respect for their parents and what they do!) and how money is either a tool or a curse depending on what you do with it.

Today he is financially independent at 35 years old, and a senior software dev manager. He lives very minimally with his girlfriend in Seattle, in a one bedroom condo he bought and paid off, has no car, and spends his money traveling, enjoying the outdoors and eating well and giving back what extra he has that he doesn’t need.

Kudos to his dad!!! I’m taking notes for my own kiddos.

– Jenny

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The “Just Let Them Have Fun” Route

Give them a couple bucks a week and let them have fun.

Speaking as someone who grew up in a family too poor to give me an allowance, I cannot tell you how many times I was embarrassed to be unable to buy things like snacks and such when out with my friends. It’s a humiliating experience, and sure I saved all the money I got as gifts or from odd jobs, but I could never spend it because I never knew when I might get more.

Five bucks a week isn’t going to ruin them for life. And yeah sure make them earn it with chores, but you cant act like the house they live in and food they eat is its own reward for their work, those are the costs of being a parent, not a debt incurred by a child.

– Stone C.

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Thanks for sending all these over, guys :)

Lots of good ideas to marinate on!!

{ 19 comments… read them below or add one }

1 anon October 10, 2019 at 6:03 am

I know some people will probably criticize The Salary System but my parents used it and it worked incredibly well at teaching me and one of my siblings how to manage money and prioritize. I retired early at 39 and one of my siblings could retire anytime. The other sibling will probably never even create an emergency fund, but he likely would have been just as head-in-the-sand about finances no matter what my parents did.

The only caveat: don’t expect kids to be solely responsible for absolute necessities like school lunch, auto insurance, medical care, winter clothes in cold climates, etc. I skipped lunch for years because I hated spending money on gross food and I ended up getting anemia. One sibling had a growth spurt in winter with zero dollars left in savings, so he was going out in 30-below weather without a jacket. Kids are kids. They aren’t neurologically capable of anticipating future events on the exact same level as an adult with a fully-developed brain can. You still gotta parent.

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2 J. Money October 10, 2019 at 10:11 am

YES!! Haha… great points.

And especially us MALE children… we are much slower to catch on than our female counterparts :)

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3 Lisa October 10, 2019 at 9:14 am

I’m looking at these systems and am so glad my kids are grown. I worked making my own money from the age of 10 since my parents didn’t have it to share. I paid for girl scouts, school trips, pictures and stuff I wanted. When I had kids, they did chores but received an allowance off and on – I just made sure they had money for the necessary things – you know, like clothes that fit and were warm, food, but still tried to teach them about money. I also let them spend their own money on what they wanted after they saved a percentage. They were still kids, let them be kids. One kid now owns a house and one is happy doing what he wants, going where he wants, and will settle down soon. Both have told me they have friends with really screwed up money values due to too tight parental control over any money the kids had growing up.
Guess I just wanted to say, make sure your children get some say in their own money but don’t make them totally responsible before they’re old enough to vote!

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4 J. Money October 10, 2019 at 10:15 am

Glad your kiddos came out well with this stuff :)

That was the most interesting thing reading about from older parents – how they all turned out!! Us young parents are still in “experimenting” mode and going off *theory* haha…

So thanks for sharing your experienced insight!

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5 Kyle Adams October 10, 2019 at 12:47 pm

I love spreadsheets of course, so I told the kids I opened a bank account for them – they get small amounts of money for little chores, birthday money – toothfairy money, whatever grandparents give them… I started out giving them them 20% interest per week (just keeping track of it in a simple spreadsheet), when my wife and I talk about money they all want to know how much money they have – when we go to the store they can spend their money on anything they want. Explaining to them how much interest they get each week got one of them so excited she wanted to save $100 so she could get $20 per week in interest.

Of course when she did save up $100, we dropped the rate to 20% per month, eventually dropping it to 5% per month – still enough to get them excited about saving. My thought process is time goes by so slowly when you’re a kid you have to really boost the interest rate to get them to notice the positive outcome of saving.

Last week one of my oldest daughters had an emotional breakdown when she realized she spent $20 on a toy she didn’t end up enjoying very much, she cried for like 30 minutes… I thought it was a fantastic lesson for them on being careful with spending money on things you enjoy and all of them have been very good at saving and spending their money on things they really want. When we’re at the store and they ask for something it’s easy to just tell them they can use their money if they want to.

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6 J. Money October 11, 2019 at 7:00 am

I think you’re right that you have to make it *exciting* enough for kids to really get interested in it all.. And 20% interest will def do that! It makes ME want to be your kid! Haha…

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7 Aubrey Dinneen October 10, 2019 at 1:35 pm

Wow, allowances have gotten complicated since I was a kid!
My parents gave us $20 a week that was ours to spend however we want, but we only got it once we completed our chores and they reviewed by our parents. I legitimately had to pass an entire checklist a page long (2/3 was bedroom and 1/3 was the bathroom). I will say my dad used to swipe his finger to check for dust, etc. However, it wasn’t just money tied to our chores, but also being able to leave the house. We couldn’t go play if the work wasn’t done. My parents always said that you have to learn to manage your responsibilities, so if we didn’t maintain our room throughout the week, we paid for it on the weekend. If we made sure to pick up after ourselves during the week, the cleaning was a quick and easy process and we had the whole weekend to ourselves.
When it came to clothing, however, my parents always paid for that, but we had a budget. And we had to make choices on what to buy based on the budget. However, we were never penalized for growing because you just can’t predict when/if that would happen. But we tried to plan for it the best we could

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8 J. Money October 11, 2019 at 7:07 am

I remember those days when I was locked at home for refusing to make my bed, haha…

The battles we choose as kids :P

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9 Stephanie October 10, 2019 at 2:23 pm

Those are all interesting allowance systems. I do a few combinations…I give each kid $20 each month (they both do a lot around the house: trash, making beds, dusting, lawns, dishes, laundry, etc.). Then we pay them $15 per A and $10 per B…let’s just say, I’ve been paying $90 per report card per kid for quite some time, and we let them spend it however they want. Their spending has evolved from buying junk to now saving for big ticket items (ipads, laptop, game console, drums, concert tickets). During their winter break, we’re having a family meeting on finances (checking, savings, credit cards, investments, etc.).

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10 J. Money October 11, 2019 at 7:07 am

Yeah family meetings!!! Great idea!!!

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11 George October 10, 2019 at 7:10 pm

We give our daughter $10.00 a week for doing her chores. She gets $7.00 for herself, $2.00 for saving and $1.00 for church. But he funds go into three separate jars so she can see her savings growing. Works so far – she is taking on more responsibility and choosing to move money from her jar tot he savings jar every week.

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12 J. Money October 11, 2019 at 7:08 am

Awesome :)

I like the idea of *physically* seeing them separated like that too – much easier to grasp.

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13 Abails October 10, 2019 at 10:54 pm

I love Kyle Adams’ response, I also pay 1% per week, so it’s easy for me to calculate and show the kids how their money can work for them. My kids are 9, 7, and 4, and they get $3, $2, and $0 for allowance but all get the 1% weekly interest. We call it the bank of mom. :) They pay for stuff they want, I pay for stuff they need. Thanks for the great conversation!

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14 J. Money October 11, 2019 at 7:09 am

Glad you’re enjoying it!!

Thanks for contributing to it! :)

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15 Paul Higgins October 11, 2019 at 2:31 am

The “Salary System” is quite similar to the “Capitate Your Kids” program documented by John Whitcomb in his book of the same name. We came across it fifteen years ago while working with a foster child and other kids (and parents) at our church. Dr. Whitcomb learned how to handle money at an early age when he lived away from his parents at an international boarding school and had to live within a budget. As a doctor, he became familiar with the “capitation” model in which healthcare providers are given a flat monthly fee to cover all their patients’ health needs. He combined those two experiences to develop “Capitate Your Kids,” a program in which you progressively give kids more authority and responsibility for their spending on basic needs.

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16 J. Money October 11, 2019 at 7:10 am

Cool – thanks for the rec!

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17 { in·deed·a·bly } October 11, 2019 at 3:25 am

I battled with different allowance schemes over the years. Eventually I came up with an ingenious one that was self-policing and fool proof… or so I thought. Inevitably my kids outsmarted me, figuring out how to game the system. At least the chores got done though, which was an improvement over the previous arrangements.

I wrote about it once, it ended up being one of my most popular posts and somehow got included in “The Best Investment Writing Vol. III”. https://indeedably.com/subversion/

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18 J. Money October 11, 2019 at 7:17 am

That is pretty good, haha…

I was never that smart enough growing up to hire someone else to do my work for me :) Plus I was way to stingy to even give any of it up! Still working on that as an adult some times :)

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19 Scarlet October 12, 2019 at 12:16 pm

My daughter is always going for the big pay out. She made homemade pasta the other day and then tried to bill me $18/ hour after the fact. Nice try, kiddo!

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