Allowance – Do you or Don’t you? Top 10 tips on establishing an allowance

saavy piggy bank 300x240 Allowance   Do you or Dont you? Top 10 tips on establishing an allowance

As I begin to think more about money in the context of raising my kids, I am formulating philosophies and plans of which I will share with you and hope that you find useful. My goal is to inspire you to think about a “money” topic, in this case the “allowance”. In light of everything that has happened over the last few years, one thing is for sure, we need not take the topic of financial responsibility lightly.

Top ten allowance tips and ideas:

1. Make allowance part of a greater system – I was raised on an allowance. We scrubbed toilets, pulled weeds and mowed lawns (to name a few chores). My mother and somehow we kids knew that the money, although certainly a nice benefit, wasn’t the point. I believe the reason an allowance was so successful in our household was that it did not come alone; it was part of a greater system. We also had a paper route, worked seasonal jobs at the mall, established savings accounts, paid for entertainment, babysat, worked our tails off during the summers and when paying for education finally arrived – the loans, the grants, the actual quarterly payments – was 100% a team effort. All of that added up to an appreciation for money and financial responsibility.

2. Scale chores and $ earned – Assign $ amounts for level of difficulty of chore

3. Use Paypal or a check to facilitate the actual payment of work on a “payday” rather than simply handing your child cash. Less cash in hand, as we all know, the less likely your child will spend it right away. This approach might help kids get banking a bit more too. Paypal will go directly to a savings account as will a check.

4. Integrate charitable giving as part of the allowance and there are some amazing organizations that make charitable giving fun, especially for introducing your children the concept. Heifer.org is a great example.

5. Integrate “fees” for not doing chores that are expected – what a real life concept, huh?

6. Integrate a bonus system. If your child goes above and beyond the “job description”, reward him or her

7. Consider The Saavy Piggy Bank or some version of it. Introduces the concept of “net pay” versus “gross pay”

8. At an earlier age before establishing an account at a “real” bank, create your own Family Bank. You can go to extremes teaching kids about debt and earning interest. For example, you could have interest compound daily at 10%, or focus more on long term savings.

9. Introduce the concept of a budget: A budget worksheet divided by “fun”, “gifts”, “charity”, “savings”, etc goes a long way as a tool to teach children about financial responsibility and trade-offs in real life money choices

10. Establish from the start a “stop date” for paying an allowance. At what point should your child consider a part time job? Alternatively think about the appropriate “start date” to introduce the concept of “money” via an allowance

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Resources:

- Money Watch Allowance Advice

- Kids’ Money

- Three Jars

- Thrive by Five

- Allowance Magic: Turn Your Kids Into Money Wizards

- Teaching Kids About Money - Listmania on Amazon.com

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Happy reading!
Marnie

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Comments

  1. Sherry says

    Where can I buy one of these adorable blue piggy banks? How much are they? Please e-mail me at felts_sherry@yahoo. Thanks!!!

Trackbacks

  1. [...] – Offer him or her a choice. Although tough for us parents, especially when our kids may not always make the best choices, the lesson will be more sustainable for your kid. So don’t lecture them on savings and the “cost of convenience”. Allow them to experience it on their own. – Allot $X for the week and let him or her decide how he or she wants to spend it. Explain that at the end of the week, whatever remains is his or her money to keep, to save (hopefully) or to spend on something he or she has been wanting to do (i.e. go to the movies with a friend). This $ savings could equal $10 or more a week, which is a good amount of money for some kids. – Go further though in explaining that the money is not simply a gift (although from the parents perspective your child is learning a valuable lesson, surely worth more than the lunch money itself), but part of an allowance (your allowance “system”). [...]

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