Allowances are often a tricky topic for parents: it’s important to walk that fine line between entitlement and teaching your children how to manage and respect money. Some people provide an allowance depending for the completion of chores; others feel chores are part of being a member of the family and children shouldn’t get “paid” to do things that need to get done anyway. Since this can be a real conundrum, we’ve come up with a few ideas that might help you decide how to teach your kids the money basics.
The Extra Commission: If you believe chores should be a standard part of your child’s routine, without a given incentive, then this might be a good way to find a middle ground between allowance and commission. Decide on some chores that are always mandatory (like making the bed, doing the dishes, feeding the dog, etc.) and some chores that are more superfluous or not as regularly occurring (like mopping the floor, washing the windows, washing the car, etc.). The mandatory chores are ones that don’t get paid for; they are the chores your children do because they are a member of the family, and everyone must do their share. The other chores can have a monetary value, and if they do those extra chores, they can receive a small payment. This way, they both understand that everyone pitches in, but they can earn something for their hard work.
Save, Give, Spend: This tip actually comes from American financial author Dave Ramsey and has to do with organizing the money you give your kids. When your children earn money from you, whether from allowance or commission, separate the money into 3 equal parts – one for spending, one for giving and one for saving. This way, you can start to instill a sense of equal value among the three different actions: saving money for when you really need it, giving money to charities or organizations in need and spending money on things they want to buy, like toys or candy.
The Family Allowance: Another great way to organize the money you give your kids is to choose a goal that the whole family can support and contribute to. Whether you decide on a vacation, a new television, or even a fancy evening out, come together to find an end prize that everyone in the family can stand behind. Weekly, deposit their allowance or commissions into the goal’s savings fund. You can do a weekly update to report to the family how well you’ve done and how much farther you have to go. Your children then become invested in the savings and understand the value of their money in relation to something big they really want.
How do you handle allowances? Let us know in the comments below!
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