ALLOWANCE FOR KIDS
Should kids get an allowance? Should you pay your kids for doing chores? What about good grades? These are questions presented to Kidbudget time and again as parents contemplate whether to use an allowance for kids. Our answer remains the same: It is really a personal decision. Every family situation is different. Whatever you decide to do, the important thing is to be consistent. If you decide to pay an allowance, be sure to pay on time and consistently. If you pay for chores, have the money available when the chore is completed or at a pre-determined time. Kids learn best by repetition and consistency.
Whether you decide to pay your kids an allowance or help kids earn money other ways, be sure to help them learn to be responsible for their money. Teach them the concept of setting up a budget, of needs and wants. Teach the value of giving back and long-term savings. Kidbudget has helped to make this learning easy for you as a parent. With the Kidbudget system, kids learn these lessons in a fun and exciting way. They learn basic financial principles like goal-setting and keeping track of what they spend. They learn to make their allowance or earnings last and to take ownership.
To help you as you make this decision, we have provided several options that have worked with other families. We are presenting these options with the pros and cons of each in hopes of helping you make a more informed decision.
Option One: Allowance for kids by YEAR
Description: Pay a fixed amount to your child according to age. This can start as early as birth. Set aside a certain amount of money each week, month, or year for your child. As they get older, you can turn the money over to them and help them learn to budget.
Pros: This method is really the easiest to teach budgeting principles. It is very similar to having a salary in the workplace. Kids know how much money they will be receiving and how much to budget. Many families have turned several purchasing responsibilities over to their children. They learn to shop for school clothes, school supplies, sports equipment, etc. They learn to understand what a bargain is and how to find the best deal. The learn to make their dollars last and to distinguish between needs and wants.
Cons: Many families find this method doesn’t teach responsibility. Kids are “given” money and do not learn the value of working for what they get. Also, when the economy gets hard or a parent loses a job, the kids don’t understand why their money suddenly stops.
Compromise: As soon as the kids are old enough, help them start their own business. Help them to earn money by mowing lawns, babysitting, etc.
Option Two: Pay for chores
Description: Pay kids for the jobs that they perform around the house. Set up an hourly or per job wage agreed upon prior to the jobs being completed. It may work best to include the kids when setting the wage.
Pros: Kids learn that they must work for what they get. They associate money with hard work and learn that things in life are not free. They learn that they can make more money by working harder, faster, or longer. They also learn that what they’ve worked hard for should be taken care of and may be more apt to take care of the things they purchase. Many families have found that paying kids for doing jobs helps them want to do their jobs, serving two purposes.
Cons: The con is that it is more difficult for kids to plan a budget. When they don’t have a set amount to work with, a budget becomes more difficult. Many times this option does not lend itself to allowing the kids to make large purchases such as clothing, etc.
Compromise: To help kids learn to budget, you may want to have a pre-determined amount to give the kids for clothing, school supplies,etc. when the time comes. If they are in need of a coat, set a budget amount BEFORE you go shopping for the coat. Allow them to help with grocery shopping and the food budget. For older kids, you may even want to hand them the grocery list and the budgeted money and let them go shopping.
Option Three: Allowance for Kids, Plus
Description: Pay kids an allowance by age, grades, or any other means you decide on. The plus is that the kids can also earn money by doing extra chores around the house. The same principles that are mentioned above apply to this option as well.
Pros: Kids learn to budget because they have a set amount. They also learn that hard work does pay and that it is important to work for what we receive.
Cons: Because the kids get an allowance, they may not find it necessary to work for extra money. The same cons apply that are found in option one above.
What has worked in your homes? Leave a comment below and share your successes or frustrations.