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!
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.
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 🤣
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.
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!
[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!]
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.
The Book Report Strategy
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 :)
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.
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.
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.
[Link to Amazon above is an affiliate link…]
The Points System
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!
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.
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.
The Montessori Route
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.
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.
Thanks for sending all these over, guys :)
Lots of good ideas to marinate on!!
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!