How Ditching the Allowance Can Teach Your Kids to be Rockstars with Money
I never did like the idea of allowance.
Except when I was a kid — I loved it then. My allowance was a consistent, reliable source of income that I could count on each week. Five bucks a week? Sign me up! Now, if I could just figure out how to shirk these chores…
Now that I’m all grown up and have kids of my own, I’m on the opposite end of the problem: How do we motivate kids to do chores and pay them fairly without turning our home into a socialist welfare utopia?
Allowance or Welfare?
I think it’s a shame that in our culture we’ve failed to teach our kids practical lessons about money. Money management isn’t taught in school, but after all it’s up to parents to teach and demonstrate good money practices and management.
Don’t get me wrong: giving children an allowance is a good step in the right direction. It does expose children to the idea of money, and it can provide some teachable moments.
The biggest objection that I have of the traditional way of paying allowance is that it can seem a lot like welfare. With a traditional allowance, children get paid the same amount whether they work or not — dad passes out money to the kids, and the children learn what… Dad has money? Money grows on trees? Comes out of the wall?
The real problem with allowance is that there’s no real connection between the doing of work and the earning of money. Do your part, Dad says, and he’ll pay your allowance. But what happens if Junior fails to do the work? Does Dad withhold the allowance? What if Junior does half the required chores, or only does them grudgingly? Does Dad still award the allowance? Half the allowance? Not at all? In an ideal world everyone is motivated to work, and everyone is rewarded equally. But that system quickly becomes subjective and unfair as soon as anyone fails to pull their own weight.
Allowance or Paycheck?
What’s the alternative? If you’re not going to simply award a weekly allowance, it can get really hard to keep track of a child’s work and earnings. Is it worth the trouble?
I think it is. For two reasons: First, earning a paycheck (vs getting an allowance) is a motivator. Most kids aren’t just going to automatically help around the house. Unless you have one of those rare children who just loves to be helpful, you are going to have to motivate them in some way. For some, the threat of punishment works well enough (“put that thing back where it came from or so help me”). But negative rewards and punishments only go so far, and they do little to build harmony in the household. Positive rewards (“please put that thing back where it came from and I’ll pay you a quarter”) are a kinder, gentler way to get your children to do what you want them to do.
There is a second reason to treat allowance like a paycheck, and I think this is much more important: it gives you opportunities every single day to teach your children lessons about money.
Chore Charts
We have tried just about every chore charting and tracking system. We’ve done chore tickets, we’ve tried Dave Ramsey’s “Junior’s Adventures” chore chart system (which is great by the way). We even tried keeping a pocketful of quarters. Truthfully any charting and reward system is better than just paying an allowance.
Consequences
The problem that we’ve run into with virtually every chore system that we’ve tried is how to handle consequences. What if Johnny doesn’t want to do his chores? Or only partially completes the chore. What happens if the chore is done so badly that you have to go back and do it for them? Do you just not pay them for that chore? Believe it or not, we’ve found the threat of not getting paid is actually a really poor motivator. “Do this chore now or you won’t get your 25¢”, sometimes falls on deaf ears. For most children, continuing to play with what’s in front of them now beats earning a few pennies later every time.
Our Perfect System
I’m not going to say that our system is perfect… but ok, I think it’s nearly so. After years of trial and error, I’m going to share with you the system that we’ve developed that I think will work for just about every kid and any situation.
Our system consists of chore charts, chore tickets, competition, and a weekly paycheck.
Chore Chart
In our kitchen my wife has posted a chore chart. The chart is simply a table with one row for each day and a column for each child. (This still works if you only have one child.) Each cell lists the chore that’s assigned on that day.
The Chore Chart pictured at left is just our Table Chores. We also have chore charts for bathroom chores, and bedroom chores. Additionally, there are some chores, such as putting away laundry and sweeping the hallway, that are done every day, so we don’t even have a chart for that.
We don’t use the chore chart to track chore completion, only to keep chore assignments consistent and unambiguous. To track which chores have been done, we use Chore Cards.
Chore Cards
Every time the children do a chore they earn a Hard Worker chore card.
Some chores are worth more than others — loading the dishwasher is worth one Hard Worker, but washing the pots and pans is worth another two cards.
If they do their chores completely and without complaining, they can earn a bonus—one “Cheerful Heart” card for each hard worker. For loading the dishwasher they’d earn one Hard Worker and one Cheerful Heart, but for washing the pots and pans cheerfully they’d earn an extra two Cheerful Hearts. So for loading the dishwasher, washing the pots and pans, and doing it all cheerfully, they’d earn a total of six chore cards — three Hard Workers and three Cheerful Hearts.
Of course if the child whines and complains but still does the chore, they’d earn the Hard Worker cards, but they would not earn their bonus Cheerful Hearts.
Competition
This is where things get interesting.
If a child is assigned a chore but doesn’t do it, then we get their chore cards. You’ll see why this works in a minute.
Additionally, kids are allowed to buy, sell, and trade their chores with their siblings. For example if one of them really wants to earn some extra money, she could offer to wash the dishes for her sister, in exchange for some extra barbie time or something like that.
At the end of the week we count up the number of cards each person has earned and pay out of a fixed amount of money in proportion to the total number of cards earned. We put $5 into the pot for each chore-aged child. We have three chore-aged kids, so the total in the pot is $15. Theoretically, if one child did all the work and the others did nothing, they could earn up to $15, though that has never happened for us.
As you can see, Mom & Dad get paid also. This is how we deal with chore shirkers — if we have to do their chore then we get paid for it, and the total value of the cards that they earn is diluted. This way we can provide a positive incentive without any negative reinforcement method — taking money from them, punishing them for not doing their chores, or anything like that — they simply get paid less.
Could you do this without the element of competition? Sure you could. But we’ve found that paying a flat rate per card doesn’t provide the same incentive to not shirk their chores… We’ve found that the competition is a powerful motivator — children are competing with each other (and with their parents) for a bigger piece of the pie. If they wanted to earn $5, and we just paid 25¢ per chore card, they could stop after earning 20 chore cards. By introducing this dimension of competition, they have to keep working in order to stay ahead of their siblings. Plus this way they can’t bankrupt us by working too hard.
Most kids aren’t going to fully understand this system right away. That’s ok — as they begin to understand what’s happening you’ll see the lightbulbs start to turn on in their heads. Keep an eye out for those teachable moments, and use them as an opportunity to talk about money and finance.
The Fear of God (or Dad)
Most household chores are done within this framework — they can earn chore cards for all assigned chores, and for anything extra that they do to help out.
But there are also some things that are done simply because they are required, or else. For example everyone makes their own bed in the morning, simply because they must. Nobody gets paid to make their own bed.
How you decide to divvy up the chores between chores that they get paid for and chores that they do because they must is entirely up to you. In our house we find that chores that benefit the household are done for financial remuneration, but chores that are done for your own maintenance(making your bed, putting your dirty laundry in the hamper instead of leaving it on the floor) are done because simply because they must be done.
The Paycheck
Payday happens once each week. We sit down around the dining table, count up our chore cards, and figure out how much everyone has earned.
Each child has three envelopes with a single word written on the front: Save, Give, and Spend. We require our kids to divide their earnings among these three categories.
Save
First, we always save a minimum of 10%, no matter what. Saving — the idea of “paying yourself first” is one of the most important lessons that we want our kids to learn. Saving for the sake of accumulating money isn’t particularly instructive to most kids (unless you have a little Ebenezer Scrooge), so we have each of our kids set a savings goal. Emma, our oldest, is saving for an iPad, Selah is saving for a laptop, and Eliana, our youngest saver is saving for a pony (sigh).
If your kids are old enough I highly recommend reading The Richest Man in Babylon with them. The author, George S. Clason, teaches the value of saving money through a series of parables. Even if kids don’t totally understand the principles, the stories will stick with them.
Give
We also require our kids to put at least 10% in their Give envelope. Where they give it doesn’t really matter — they could make a donation to your local homeless shelter, put it in the offering basket, or save up for a donation to your favorite charity. Whatever you decide, your guidance is needed: this is an opportunity to teach a lesson about wise giving.
Spend
What good is earning money if they don’t get to enjoy it? The spend envelope is for anything that they want to buy on a shopping trip. It could be a pack of gum, a cheap toy, or a milkshake the next time you go to Sonic. We also encourage our kids to accumulate cash (aka “save”) in their Spend envelope for bigger purchases. They might save up $25 for a special Lego set, $50 for that new American Girl doll dress, or anything else that we approve of.
Lest the lines become blurred between Save and Spend, remember that the Save envelop is for a specific, long-term goal — something big, while the Spend envelope is for any expenses that our outside that goal. They’re allowed to dip into their spending envelope for any reason (that we approve), but they’re not allowed to touch their Save envelope until their goal is met.
Have you ever asked yourself what you would do differently if you had the opportunity to start your life again with the knowledge that you have now? In some ways our children are that opportunity. You can’t make them live a perfect life, but you can, at least in the area of money, pass on knowledge that you wish you had learned in your childhood. And in the process give your children a powerful advantage in life.
This is our favorite system, but ultimately, whatever system your family embraces, your goal should be to take every opportunity you can find to teach your kids about money. You can give your children a gift more valuable than any amount of money: an appreciation for the value of hard work, an understanding of the relationship between work and money, and the skills to manage money effectively.
