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How to Establish an Allowance for Kids

Did you receive an allowance as a child? How to teach kids about the value of money is on my mind constantly. As I begin to think more about money in the context of raising my kids, I am formulating philosophies and plans of 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 decade, one thing is for sure, we need not take the topic of financial responsibility lightly.

How to establish an allowance

Allowance Ideas for Parents

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.

A dad and mom working with their son on creating an allowance plan

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.

Scale Chores and $ Earned

Assign $ amounts for the level of difficulty of a chore

Use Paypal or a check

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 well as a check.

Integrate Charitable Giving

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

Include Fees

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

Make a Bonus Available

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

Use A Savvy Piggy Bank

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

Consider a Family Bank

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

Budget Concept

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

Have a Plan

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

Happy reading!
Marnie


 

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