Kids and Money, Part 1:  Chores and Allowance

Kids and Money, Part 1: Chores and Allowance

November 01, 2016
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For many of us, properly raising our children is our toughest challenge. Parenting can be rewarding, particularly as our children show signs of turning into caring and responsible young men and women. Throughout the journey, struggles abound and decisions seem never ending. Day care or stay at home, pre-school or free play, public or private, cloth or plastic, SUV or minivan (our vote is minivan), focus on one sport or try many. What are the Joneses doing and how can we keep up (or do better)?

One area of concern is how to teach kids about money. Do we give them everything they want? Where do we set limits? Chore chart or allowance? What should they pay for? Should they have a job outside of school? What if they ask what I earn in a year or how much money we have? As the parent of two teenagers and one elementary age child, I don't have all the answers, but I do have some ideas to share.

What Didn't Work

Many authors and pundits support the use of a chore chart. Somewhere in the house, post a list of chores for each child and keep track of what each does for the week and pay accordingly. We tried this two or three times, never lasting more than six weeks. We were diligent, the kids tried, but our family schedule rarely allowed for the critical review-payout-reset meeting to occur. Strike one.

Next up was Monopoly© money. At the beginning of the week, each child received their share of the family budget in Monopoly cash. They were then charged their share of expenses - mortgage, utilities, retirement, charity, mileage for transportation to and from their activities. At the end of the week, if they had any money left over, it would convert to actual cash. This idea was excellent on paper. And if your kids plan to be accountants. Pretty sure this idea didn't last two weeks. Strike two.

What Kind of Works

The detailed methods above failed our family because they are different from how we actually run our finances. I'm going to let you in on a little secret. Here goes. We don't budget and haven't for many years. But wait, I'm a financial planner? That's right, and I actually follow my own advice: spend less than you make, pay yourself first, and invest for the long haul. How do we do this without budgeting? Pretty easy, if we can't pay our credit card bill at the end of the month, we clamp down on spending until we can. It's not for everyone, but it works for us.

So how do the kids fit in? First, we scrapped the official chore list and developed a simpler mantra - keep your room straight and do whatever we ask, when we ask. That could be cleaning, yard work, dishes, whatever needs to be done. Second, we instituted an age-based monthly allowance for each child. As long as each child performs as requested, the allowance flows. Failure to perform a task results in an immediate deduction. Bonus tasks result in bonus pay.

The results? So far, so good. It's not perfect, but it alleviated a lot of needless stress from keeping up with daily chores.

Up next: The Tough Questions.