Setting allowances for children
Simply giving your children money on a weekly basis does not teach them anything about how to exchange effort for money. Hamm suggests giving your children a list of chores they can do around the house to earn money so they begin to appreciate their allowances.
As I’ve mentioned before on The Simple Dollar, Sarah and I have a pretty straightforward policy when it comes to allowances for our children. To reiterate the highlights:
+ Our children get $0.50 times their age each week for allowance. This means that a six year old would get $3.00 per week under this system.
+ They’re required to split their allowance up among a few things. They have to give at least a portion of it to charity, they have to invest a portion of it, and they have to save some of it for a specific goal of their choosing. They can decide how much to put into each portion.
+ The allowance isn’t tied to any specific chores, but there are some chores they’re expected to do around the house. Allowance is not used as something that can be taken away for motivation.
In other words, we use allowance as a tool for teaching money management above all else. We want them to learn and appreciate the basics of budgeting and saving.
This does leave a problem, though. They’re not learning anything about exchanging effort for money.
In our current allowance structure, they simply receive their allowance whether they put forth any effort or not. While it works great for teaching money management, it does very poorly for teaching the exchange of effort for money.
So, Sarah and I have been reading about and planning for a change to this system. We want something that rewards our children for showing initiative and putting forth effort.
Our current plan is to introduce a “job board.” We tried an earlier version of this without this kind of visual reminder, but our children largely forgot about it.
Essentially, it’s an ongoing list of things that they can do to earn a quarter. All of the tasks on the job board can be done in five minutes or so. It involves things like taking out the trash or filling up and running the dishwasher or picking up the living room. There will also be some white space for impromptu things.
These are tasks that aren’t part of their expected things to do around the house, but they’re little tasks that they can easily handle. When they do a task, they write their first initial next to it on the white board and then when an adult has a chance to check it, they get a quarter.
With the introduction of the job board, the requirements for saving and giving in their allowance will go up. They’ll have less allowance for purely free spending.
The only thing that has kept us from implementing this is some discussion about exactly which tasks should be listed, which we’ll hopefully resolve soon.
Will it work? I actually think it will work very well, at least at first. The question is whether it settles into a routine or not – and what we can do to help it stick.
I’ll update you fully on how this plan has worked after a few months of implementation.
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