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Kids and Money

May 27th, 2014 at 04:21 pm

LAL's blog entry reminded me (peripherally) of a conversation I had with my sister yesterday, and I figured I might as well get some thoughts from those of you here who have been through this. My niece (E) is 4 and a half, and starts kindergarten in the fall. When school starts, my sister is going to start giving E a small allowance and teaching her about finances.

Of course at E's age (nearly 5 by then), it will be simple, but we were discussing different ways to handle it. Sis doesn't want to just give E money as an "entitlement", so there will be 'chores' attached to it. She also doesn't want to 'pay' E for doing tasks that she should be doing anyway -- making her bed, putting away toys, cleaning her room, etc. Yard work -- picking up sticks, or helping rake leaves -- would be a 'payable extra'.

We got into a grey area with tasks like helping clean the house, doing the dishes, etc. On the one hand, those are things E should be doing as part of living in the house; on the other hand, dusting and vacuuming are pretty typical "chores", I'd think, or at least they were when we were growing up.

The other question was how much she should get. One book my sister was reading said kids should get half their age per week, at least at this age. So $2 or $2.50 per week -- which Sis feels is a lot. (Though I did suggest she start right off having E put 50% to savings, and then dividing the remaining 50% between spending and giving. They're not religious, so there isn't a 'tithe' requirement; I had suggested 25/25 but maybe 30% spending/20% giving would be more appropriate.)

We got an 'allowance' as kids but it was basically just enough to pay for lunch every day, until high school when we got $5 extra. I don't recall having any chores attached to it. My sister doesn't even remember getting an allowance, so we don't really have a lot of our own experience on which to draw!

What have you all done with your kids (or what did your parents do with you)? What worked and what definitely didn't? Do you pay for household chores, or just those that go above and beyond? What's an appropriate allowance for a 5 year old?

5 Responses to “Kids and Money”

  1. ThriftoRama Says:
    1401204875

    We give one dollar per week per year of age. I'm a financial journalist by trade and I've read a lot of books about allowances. The rational is that as soon as the kids have 'wants' (like toys, etc.), they should be given an allowance. They need to learn how to use that resource to get what they want: as in, learn how to save up for what they want, make trade offs, how to count money, what is and isn't a good price, etc.

    If it's too low and she forces savings, you run the risk of frustrating the kid before they learn the lessons. If it takes a year to save up for the toy they want, at that age, they will just give up and no lessons is learned. The amount given should make it possible for them to save up for or buy what they want within a reasonable amount of time.

    We have set tasks they must do each day (reading, math, clothes in the laundry, clearing the table, cleaning up toys), and they get a check mark for each day they do all of the tasks. Get all your check marks and friday is 'payday' When we know they are saving up for something, we offer them the chance to earn extra money by doing extra jobs like washing the car, dusting the basement, etc.

    My kids are 4 and 6 and this seems to be working well. We also let them separate their money into categories via the four-chambered piggy bank (jars would work fine too.). They have been off and on charitable, giving to their favorite elephant at the zoo and 'kids in the hospital'. They are learning and it's working!

  2. creditcardfree Says:
    1401205523

    We give one dollar per year of age per month...my 17 year old only gets $17 per month. The allowance is given with the expectation that they will do any chores we ask and will do basic cleaning up after themselves...making bed, putting away their dishes and laundry. The oldest now does her own laundry. We have been doing this allowance method for probably 10 years and it seems to work for us. There have been times where we have paid extra for harder chores, such as leaf raking. They definitely know about spending the money and saving it as well. They have not been too frustrated by the slow growth of the money. I think this is likely because they get generous cash gifts from relatives at their birthday and this seems to supplement the allowance.

    I think when I was in high school my parents started giving us larger allowances. I remember $75, but we had to cover personal care items, outings to movies with friends, and my sister says it covered eating lunch at school, if we didn't bring one from home (although I don't remember that personally). My sister and I are both the financial managers of our household finances, so I think we did learn how to use money, write checks, balance our checkbook because of the generous allowance given by my parents.

  3. MonkeyMama Says:
    1401206483

    My spouse and I were raised the same, financially, and it worked so well we don't plan to change anything.

    We don't particularly do the chores/allowance thing. At age 5, my kids started receiving a $2/week allowance. I now have an 11-year-old and we have discussed increasing this, but since my kids are so close in age and due to their tastes and interests and everything, they don't buy a lot and tend to go in on everything together, so don't need as much individually. Around age 13 or 14 the allowance stops - they will have to be working if they want money. Which I think is around the age they will want to be going out more with friends and so on, so probably works out. I could see other kids maybe needing more than $2/week. & $2 was probably a lot when they started (at 5).

    The point, for us, is to get them comfortable with money management long before they ever start to make real money. By the time they get their first job, they will be well versed in making purchase decisions, saving, etc. (At 16 that working will bring in a LOT of money, and they will be well prepared to manage that). We don't put a lot of input into what they do with their money. I figure this is the time to learn the hard lessons and to make their mistakes. They've gone through phases of spending, savings, charity, in their own time.

    I think a lot of people get caught up in the word "allowance". Personally I think it's far more important for kids to have the money managment experience than to get caught up in the word "allowance". But you know, this is an age 5-12 thing, in our families. I also don't think allowances are appropriate for most older kids. We don't tie in allowances and money into chores. Chores are just what you do as part of the household and kids need to learn to be adults. I don't have strong feeling on that - just that we personally don't tie those together. If we had a big chore for the kids to do we may pay them, but I Think we tend to lead a pretty low chore existence. So, it just hasn't come up and I have no idea what I would pay them to do. I'd have to think about it. I can see my 11yo mowing lawns or walking dogs in a couple of more years. (I think he'd be capable today, but just not a lot of financial motivation at this point).

  4. LuckyRobin Says:
    1401261386

    We absolutely tie our kids allowances to their chores. In the real world you get paid for the work you do, so we feel that if they don't do their work, they don't need to get paid. They have divided the chores up the way they want to. My daughter's chores are dishes, laundry, vacuuming, cleaning the bathroom, taking out the trash, cleaning the kitchen sink, and helping make dinner on occasion. My son's chores are helping to feed and water the rabbits, ducks, chickens, and turkeys twice a day, changing out bedding, turning the compost pile, mowing the lawn, and shoveling manure. Both kids help with cleaning rabbit cages (we have 15 occupied at the moment on the farm). They are expected to keep their rooms up and help in the garden regardless of allowance. My kids are 14 and 17. The 14 year old does more hours of work a week and gets $25. The 17 year old only gets $20. She would get more if she was willing to deal with the manure, but she's not and does not mind the lower amount accordingly.

  5. LivingAlmostLarge Says:
    1401282012

    Our kiddo is starting an allowance to teach her about spend, save, and give. And it' not tied to chores only but also behavior. We're trying it out. Ironing it out. I think that she needs a glass jar. But at $2/week it's gotta be in quarters if we expect her to save and donate.

    And my 4 year old has been doing "chores" for over a year as my expectations of her contribution to the family. Put away dishes, put away clothes, pick up toys. Not much but something.

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