I have always been against the idea of giving an allowance to kids. I mean the kind of allowance that kids just get, whether they’ve been helpful or awful, completed all their chores or none of them. I wanted my kids to earn money rather than give it to them. I wanted them to learn that money comes from doing productive work, not just from existing.
In search of the perfect system for helping kids learn the value of work, we’ve tried a few different things. They always involved the kids doing chores. A few systems included a specific task list for each child. In another, the kids could choose from a list of available prioritized chores, each of which had a value attached. In yet another, it was luck of the draw during a designated chore time.
None of these programs lasted very long. It wasn’t the kids fault. It was the parents. Before the kids were old enough to keep their own records, it was our failure to remember and track who had accomplished what. Then it was coming up with an appropriate chore for each age, and dealing with the inevitable differences in payment when one child’s work was better than another’s for the same chore. In a hundred ways, the relatively small role of assigning, verifying, and paying for work always seemed to turn into an ongoing job of mediation, arbitration, and record keeping. It was exhausting.
We knew we wanted our kids to learn how to work, and to learn how to make money choices, but our chores-to-cash systems were all failing. But we couldn’t just give our kids money, could we?
Nobody ever just gave us money when we were kids. Wouldn’t giving our kids money for “free” just spoil them?
Ironically, we found our answer in a book called The Opposite of Spoiled: Raising Kids who are Grounded, Generous, and Smart About Money by Ron Leiber.
It’s definitely worth checking out. It discusses much more than just allowance, but today I’m focusing on the allowance section as background on the allowance system that we’ve been using for over a year. Then I’ll get into the nitty gritty of when and how much.
The idea of tying chores to allowance
Kids have a growing list of things they want or need. As parents, we have a huge list of things to be done around the house. We naturally tie these two lists together by creating “chores” that we pay kids for, so that they can buy what they want.
A system like this has the potential to teach kids to work hard. It teaches them that money doesn’t grow on trees, but requires effort on their part.
Those are good lessons, of course, but a chores-for-money system isn’t the only way to teach them.
Let me start by saying that if you have a chore-earned allowance/wage/commission system and it’s working, keep it up! Well done!
For us it wasn’t working great. We tried lots of different systems. They took lots of time and oversight from mom and dad. We weren’t going to pay them a full wage for a job half-done. It was overwhelming for me to decide who earned what and to be fair. They were constantly begging for money chores but were picky about which ones they would do.
Then they’d use the system against me. Any time I asked someone to do something, they would inevitably ask, “How much is it worth?” No one wanted to do anything for free, when others jobs were paid.
They way it was going, if we kept up the chores-for-money model, the kids would have tried to pass up household chores altogether as soon as they started earning more money from babysitting or yard work for others.
Shouldn’t everyone happily help around the house just because they live there? After all, no one is paying me for loading the dishwasher, doing laundry, or making dinner, day after day (after day…). We want to instill in our kids habits of contributing at home because they’re a part of our family. We all contribute to help keep our house clean and our family running smoothly. If we need some “leverage” to teach that, we will use privileges instead of money.
But we definitely want our kids dealing with money.
Why we give allowance that isn’t tied to chores
Succeeding with money is a super important skill that kids need to learn at home. While kids can learn hard work from school or sports, real financial lessons are a little harder to come by.
In order to really learn and internalize money management lessons, you need some money.
Giving our kids money is like giving them the resources they need to learn any other topic. We give them books, sports equipment, and musical instruments so they can learn. It wouldn’t make sense to expect your child to learn tennis without a racket or guitar without a guitar.
So we give them money for the sole purpose of practicing with money.
We want them to feel the remorse of blowing all of their spending money at once, while the stakes are low and someone else is making sure there is food on the table.
They can experience a sense of accomplishment when they deny themselves instant gratification and save up for something special.
After exploring the concept of allowance from this perspective, we decided to make some changes.
We started giving our kids an allowance, not to teach them about work, but to let them practice with money.
We were excited. The kids were excited. And a year later we’re all still happy with how it’s going.
How Much Should You Pay for Allowance?
In The Opposite of Spoiled, the author recommends between 50 cents and $1.00 per year of the child’s age for a weekly allowance. For example, the weekly allowance for a 6-year-old would be between $3 and $6.
We chose the low end of 50 cents per year. For our family, it currently looks like this (though the 3-year-old is getting a raise really soon):
- 11-year-old: $5.50 per week*
- 9-year-old: $4.50 per week*
- 7-year-old: $3.50 per week*
- 4-year-old: $2.00 per week*
We also have an 18-month-old, but he doesn’t know that money is a tool or a resource. He still sees it as a snack. He will start getting an allowance when he is 2.
For our four kiddos who get an allowance, the total is $15 per week or roughly $60 per month. If you’ve seen our monthly budget you’ve seen this line item for the past year.
How We Teach Our Kids to Divide Their Allowance Money
Because the express purpose of giving an allowance is to provide our kids with “practice money” early and while the stakes are low, we give them guidelines about how to use it.
You wouldn’t throw a clarinet at your kid and wish them good luck. You would at the very least give them a book to guide them. Even better, you (or the school) would give them a human (or at least a YouTube video) to talk them through the basics.
The basic guidelines we give our kids about their money are:
1st: Give (10%)
We teach our kids to first pay 10% of their money for tithing. Giving away 10% of your income is a good, solid financial principle to follow whether you’re religious or not. Worthy causes abound. Teaching your kids to be generous and think outside of themselves goes beyond just teaching finances.
2nd: Save (45%)
We help our kids think of things to save their money for. At first they often don’t have any idea of what they want to save for, but with a few suggestions to get the ball rolling, they easily come up with a list. From there they decide on a specific goal to start with. Having a goal in mind focuses their efforts and lets them really enjoy the fulfillment that comes from achieving something exciting.
3rd: Spend (45%)
Half of what is left after tithing is for spending. When kids have money they are allowed to spend, they learn that their money can buy lots of things, but it can’t buy everything. When the money is gone, it’s gone, and they’ll have to wait to get more. They learn to be smart shoppers by looking at prices, finding the best deals, and weighing various options before making their final decisions.
Our kids have never questioned our requirements for dividing their allowance money. After all, it’s free money to them, so they have no room to complain.
As they earn money beyond their modest allowance, they continue the same division of funds. As they earn more “real money,” we will encourage them to save a larger portion of what they earn, for college and other larger goals, but for now we want them to save toward goals that will be attainable in a reasonable amount of time so they can know what it feels like to win with money.
Change Matters– The Nitty Gritty of Kid Allowances
I knew that the hardest part about allowance and teaching kids to manage their money would come in the logistics.
As adults who do most of our money management digitally, it’s pretty easy to divide our money however we please– down to the penny!
For a six-year-old who is given a $3 weekly allowance and taught to put 10% into giving and then split the remainder between spending and saving, it can be tricky when you just have three $1 bills to work with.
Don’t worry! I solved this issue before we even started.
I made a note card for each age. The front of the card shows:
- Total weekly allowance for that age
- How to break that dollar amount down into the three categories (Tithing- 10%, Savings- 45%, Spending- 45%)
On the back of the card I have a handy parent reference that shows the number of dollars, quarters, nickels, and dimes that will allow the child to have the right coins to easily divide the money between their categories.
*I didn’t want to deal with pennies, so when the kids have an odd age (meaning there is a $.50 in their payment amount), I changed it to be $.55 instead. Let me show you why in this example:
If a 9-year-old gets $4.50 per week and gives 10% for tithing ($.45), he is left with $4.05 to split between spending and saving. That will be $2.02 in one and $2.03 in the other, both involving pennies. Ugh.
On the other hand, if we pay our 9-year-old $4.55 per week and he puts $.45 into tithing, he is left with $4.10 to divide between saving and spending, which divides beautifully ($2.05 in savings, $2.05 in spending) without using any pennies. Hooray!
This works out the same in every odd year. The even years work out perfectly on their own.
Yes, I realize that a full 10% would actually be $.455, so they are a half penny short. In our own finances I always round up, but for the sake of sanity and simplicity, I’m avoiding pennies. Now that I think of it, I could add an extra penny for tithing on odd years (adding $.06 instead of $.05).
Whatever you do, be sure to talk with your kids about money
Whether you give your kids an allowance or pay them wages for chores, the most important thing is that you talk about money with your kids. They aren’t going to learn to manage money at school. Their friends aren’t going to give them solid advice. They need your help!
You don’t have to have a perfect track record with money in order to be a valuable teacher. Kids are smart. They can learn from our mistakes. Wouldn’t you rather that your kids know about your mistakes so they can avoid making similar ones. They’ll be forgiving and they’ll thank you later.
Need some ideas to get started? Here are 4 things you should tell your kids about YOUR finances.
The Opposite of Spoiled also has lots of great ideas for embracing, not avoiding, conversations about money with your kids. The author shares ideas for handling not just allowance, but chores, charity, savings, birthdays, holidays, cell phones, clothing, cars, part-time jobs, and college tuition.
Not every idea in the book fits our family, and not every idea will fit yours either. That’s fine. Thankfully, every family is different. But teaching kids to understand and wisely use money is a uniquely parental responsibility. They won’t learn it anywhere else. It’s definitely worth reading and really thinking about.
What do you think?
- Do you give your kids an allowance? Do you pay them for chores? Why or why not? How did you decide on the amount?
The Intentional Teacher says
Wish you made it easier to share your post on Facebook. Valuable tips for parents to educate their children. Much needed content for my students (special education teacher in NYC).
Anne M says
Our son has an allowance. We started because it was easier than him asking to buy things all the time. Now we just ask if he has enough in his savings. We started in First Grade or so, and chose a rather arbitrary amount that was enough to buy a computer game after saving for a few months. In 8th Grade, we added paid outside chores. Snow shoveling and yard work are paid per job, but are weather dependent. He also gets paid a small amount per month to wheel the trash bins to and from the street. We will re-evaluate this whole thing when he turns 16, since many of his friends will likely be getting part-time jobs, but we live in a somewhat rural area. He uses a lot of his money to pay for “extras.” A big expense each month is paying to get his phone line upgraded from “regular” (the amount which we pay) to “smart.” He also purchases things like fancy headphones, and computer games. I think this has really helped him learn about saving for what he really wants.
This is an awesome system! Both the budget blogger and the child therapist sides of me agree.
I don’t think I got allowance growing up, but I was one of 7 kids. Once I was about 12 I did earn lots of money babysitting and other jobs like weeding or house cleaning. We give our kids allowance once they start kindergarten. We figure by then they can start counting money and have a better understanding of how it’s used. Allowance is not tied to chores. There are other chores available that they can do to earn money, but they have to get their regular daily chores done first. The money making chores are deep cleaning like washing walls or baseboards or windows. Not easy chores, I make them work for their money; so far they haven’t done them much. We do have them set aside tithing weekly, but I need to be better at having them set aside savings every week too. Over spring break we went to the Lego store and they brought their money they had saved up and bought some Lego sets. My oldest once spent what I thought was an excessive amount on Pokemon cards. We do expect our kids to pay for more things as their allowance goes up, like paying for gifts for family members and friends. Eventually once they’re in high school I expect we’ll have them pay for all their clothes and school supplies out of their allowance. Our kids also get money from the tooth fairy, sometimes as gifts around birthdays and Christmas, and occasional odd jobs like when we helped pet sit a neighbor’s dog. I will also sometimes offer other little money making opportunities like after we had some trees in our yard cut down, there were still a ton of branches around the yard, so I paid them a penny for every stick they collected.
Tara P says
I loved this post, Stephanie. We don’t have kids right now, but when we do, I think we will follow a similar system to what you’ve outlined here. I didn’t get an allowance growing up, but I definitely had friends who got into that “how much will you pay me for doing this” mindset. This seems like a great way to avoid that, while also creating a way for kids to practice handling money.
I’d love to know more about what your kids thing about the system. Do they like it? What sort of goals have they set for themselves re: saving?
Hi Tara! Our kids love it! Sometimes they have things in mind to save for (our 9-year-old really wanted a drone with a camera) other times they just save because they don’t have anything in particular that they want. They’re actually pretty good at not letting it “burn a hole in their pockets.”
I once read of someone who was trying to teach her child about saving and using credit. There was a certain toy or electronic component he wanted, and it happened to be on sale. Mom bought the item, and while she wanted to teach him how to save she had a second lesson to teach. She bought her son the toy, let’s say it was $100.00, but put it away until her son had repaid half the price. After that he was allowed to have it, but was still responsible for repaying the other half. The mom wrote that when he’d reached about $75.00 in repayment, the item wasn’t as fun or cool as he’d anticipated, and was not too happy in paying the final amount. By the time he’d paid it in full the toy was relegated to the bottom of the heap.
This illustration helped not just her son but me as well in tempering how I used my credit card. I did use this system once for one of my sons. Though the value of the item was much less, (about $20.00), the lesson still applied.
That’s a great illustration! Having to pay for something you no longer care about is a painful lesson. Better to learn it as a kid than as an adult!
When I was in grade school I got $1.25 a week in quarters. One quarter was for church, one for a ‘college fund’ piggybank, and the rest was for spending. I don’t think I spent much. My sisters and I knew that if we wanted something that wasn’t clothing, our options were to buy it ourselves or to ask for it as a birthday or Christmas present, and we usually decided we could wait until the next gift-giving holiday rather than spend money. (Easier for the sister with the summer birthday than me who had birthday and Christmas within a month of each other.)
High school this was upped to $5 a week. We were supposed to give one to church and one to college fund, I did the former but it was obvious from how much was in my piggybank when I counted it that I hadn’t been faithful with the latter. (I had about $300.)
I assume the reason we weren’t expected to get jobs in high school was that we lived at least 10 minutes’ drive from anywhere we could get jobs, so ‘have kids get jobs’ really meant ‘basically give up the use of one car so that the kids could use it to go to work + help kids coordinate who can use it when + help kids decide who puts gas in it when and mediate any arguments about that’, and they decided it was worth more than $40 a month to not do all that.
Thanks for sharing your experience! It’s so interesting to see how different families handle allowance, chores, and money in general. 🙂
I haven’t done allowances, very occasionallyi will offer to pay for chores. But not very often. We have rental houses the kids have all helped with and that is where money for summer camps or vacations comes from. We discuss the family budget and ask what things they want to include in the budget. They get money from grandma for their birthdays, tooth fairy money of which I give enough to teach save spend give from. We have done yard sales, painted a building together, helped grow and sell pumpkins and they have done work for grandpa and other odd jobs as they get older. The money from these family projects gets split between the kids.The oldest three had summmer jobs and they are expected to pay for their own meals out with school events and other sport or school expenses. If a younger kid wants money for something they can ask if I have extra chores I will pay them for. Chores are expected daily by anyone who eats and sleeps here.
Those are all great ways to earn money together as a family and nice that you split the funds! I like how you discuss their upcoming needs ahead of time. Way to get your kids thinking smart!
Thank you for sharing your system! It’s so well thought out, and I think it would work for our family.
Could you please give a few ideas of things your kids are planning on doing with their savings? The first thing that pops into my head is college. Do you have any rules on how and when savings is spent?
We don’t do allowance because we are still paying off our student loans, and $60/month is a lot of money right now – more than twice what we even save for their Christmas and birthday presents combined. We have been blessed to have relatives who like to give them money on their birthdays or Christmas, so that is what they have to work with. My husband’s aunt, for example, gave them $25 each for Christmas, and I actually steered them toward using it just for fun events like going bowling, getting a meal at Chick-Fil-A, or attending a homeschool skating party. As they hit the middle school years I am trying to encourage them to learn how to earn money, and that’s the point where we will help them understand more how to spend or save it.
That totally makes sense! We didn’t do allowance at all while we were focused on paying off debt either. That’s really nice that your kids are given money that they can manage. That doesn’t happen for us at all. My kids have no idea what “birthday money” is when other people talk about it. (I never got “birthday money” or “Christmas money” as a child either. It’s a great opportunity to teach smart money choices though!!
We used to do allowance for chores but ran into the same problem you had. I would always forget to put down what he had done or hadn’t done. Then I had to add it all up at the end of the week and hope I had enough of right denominations to split into his giving/saving/spending banks.
Just recently, we went to a flat rate per week, but he gets paid at the end of the month, as that’s when I get my paycheck. We do $1 per year, so $8 per week right now, but we only have 1 child, so less kids to split our money with.
He’s saving up for some Lego sets that he wants, although he does get distracted and wants to buy other things while he’s supposed to be saving. Sometimes, if he wants to get a special candy that is over my limit of what I’ll spend for that, he’ll have to pay me back the difference when we get home. Although there are days when I say “No” to the candy because I feel he’s either had enough sugar already or he hasn’t been behaving the way that he should. Although, at almost 9 years old, the behavior part is getting to be less of an issue than in the past.
That’s great to help your son focus on saving for things he really wants. Thanks for sharing your experience Carolyn!
Torrie @ To Love and To Learn says
I never was given allowance growing up, but I had enough money-making opportunities that I still learned pretty early (thanks to my parents) about smart money habits. I guess the only yearly chore we could ever earn money for was raking leaves (we were paid by the bag), but I started cleaning my grandma’s house when I was like 9 or 10, and then before that, I would do odd chores to help neighbors and get paid. Super glad that my mom took a very active role in helping me to be smart with all that money, though!
I like the idea of an allowance, for sure. Our budget is pretty tight at the moment, but as our kids get a little older, I think I might be using some of these ideas!
That’s great that you had those opportunities to earn money as a kid! And that’s great that your parents played an active role in teaching you smart money skills!
This is super interesting! I’d be interested to know what types of things the kids buy with their allowance – for example, do you only buy toys on special occasions such as birthdays now? Maybe candy can only be purchased with allowance money? Etc
And if you do have rules like that, how have the kids have reacted to the changes?
Those are great questions Lesley! It has been fun to watch the kids to see what they do. They each have their own personality for sure!
Our 7-year-old bought a container of 200 soft pepermint candies (not sure what they’re called) for like $7. His teacher had them and he liked them. Boy the other kids gave him a hard time about that! They calculated how much each piece of candy cost and told him he was nuts.
Other kids are savers. Our 9-year-old bought a drone and gum. The oldest has spent some of her money on a watch and buying meaningful gifts for siblings.
We haven’t had to make any rules about spending so far. We don’t do lots of toys, so if it is a toy (like the drone), it’s well thought out and not those junky cheap toys that get underfoot and as a parent you just want to throw away.
Interesting take on allowance. I cant say I agree with it 100%. I feel tithing is a personal choice and while donating to worthy causes is good for kids to learn they also need to learn to manage their money and consequences.
I do like hoe you mention do what works for your family. In what 1 person does may not work for someone else. I’m sure out situation wouldnt work for others either. Thst is the wonderful thing of America we can choose what we do.
Thanks for the interesting perspective
Thanks for reading and commenting Jen! It’s true, what works for one family won’t be what’s best for another family. I love hearing what works well for others so that I can adapt it to fit our own family’s needs and values.