Giving Kids an Allowance…or Not

I mentioned here that our third son turned seven on Sunday. Turning seven at our house is pretty exciting. Not only do you usually have two front teeth missing, it’s the year you start receiving an allowance.

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I know that not everyone agrees that giving your kids an allowance is a good idea. But let me explain our reasons, and how we handle allowance at our house. Then later, in the comments, I would love for you to share how you handle it (or plan to handle it) with your kids.

Matt and I want to teach our kids how to handle money, how to budget, and how to give. Before the age of about 10, our kids don’t have very many ways to earn money.

On the first day of each month we give our seven and eight year old boys $4 each. Yeah, that’s it. Four bucks a month. I know parents who give five times that per WEEK. Again, this is just something we’re giving them to help them learn a little bit about money.

We decided to give them their allowance monthly because in the “real world” they are likely to only be paid monthly. They need to learn how to manage that.

With their four dollars per month, the boys mostly learn to give and save. They get to figure out (with our help of course) how much goes in the collection plate each Sunday. They get to help buy birthday presents for each other and for their friends. I love watching them pull their money out of their pockets on Sunday morning as the collection plate comes around, or watching them carry their wallet into Wal-mart so they can pick out a hot wheel car for their buddy. They feel ownership – it is their money.

We discourage them to spend their money very often on little toys for themselves when we go to the store. It has surprised us to see that for the most part, the boys hardly ever ask to spend any of their money on a toy or trinket. Occasionally at a garage sale they’ll see something they want. Or sometimes they’ll save up to get something (often pooling their money together to get something they all want). But in general, the money in their wallet just grows.

Now that Asa, our oldest son, is 11, we’ve stopped giving him an allowance.  He has had various ways of earning money in the past year or so…and the four dollars a month just isn’t necessary. He has done a great job putting money into a savings account we helped him open last summer.  He gives generously each Sunday, and any other time he hears of a mission need or special collection at church.  He’s learning to give and save, and we feel like his little four dollar allowance when he was smaller helped him get on the right track. :)

So, now that we are on our third seven year old, we’re finding that this $4/month system really works for us as we’re training our boys.

What works for you? Do you give your kids an allowance? How do you teach your kids at an early age to manage money (or how were you taught)?

Comments

  1. says

    My oldest is almost 6, so we are just beginning to dapple in the allowance idea. We have a couple times decided on an amount and a payout day, and then completely forgotten to pay him! So, I’m thinking, him keeping track of and reminding us of payday will have to be a key part of our allowance plan!

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  2. says

    Your system sounds great! And most importantly, it seems to be working!

    We haven’t done allowance in years. We have no regular income, so ours is a system of ‘we bless when we’re blessed’ and on a ‘as needed’ basis. If we did have a regular income, I would use a similar plan as yours! Sounds good! :-)

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  3. Brenda says

    The tooth thing is a cute idea!

    We had a plan that I loved from a philosophical standpoint, but my self-diagnosed-ADD-self only kept it up for about six months!

    When B & C were in probably 1st and 3rd grades, we sat down and figured out how much their activities cost us. The little two day session at camp… soccer… etc. We also knew it would be nice if they had money to buy us and each other birthday and Christmas gifts – nothing fancy, but $3-5 per gift. We added allll of those things up that we would be paying for, anyway, and then did the math to figure out how much to give them so they could give a percentage and keep a percentage for something they might decide they wanted.

    We didn’t say we were tying the money to chores. We had a list of responsibilities, and told them that if they were responsible family members that we knew we could trust them to be in charge of the family’s money. The amount they were allowed to be responsible for was commensurate with all those costs I mentioned above.

    I liked doing it this way because it gave them some basics they needed to be prepared to pay for. I didn’t like the idea that any available spending money was available to spend on matchbox cars. I liked the idea that, just like we adults have bills to account for before we get to buy the fun stuff, the kids had to be mindful of their basic expenses before splurging on something fun.

    Now they just detassel… and seem to be tightwads!

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  4. Step says

    Yes, we do allowances here and our system is very similar to yours. My children are 11, 9, and 7 and they each get $5 every 2 weeks on my husband’s payday schedule. Same reason, we want them to understand that in the real world, one is paid either biweekly or monthly. The allowance isn’t tied to any specific chores, but they all have age appropriate responsibilities that they are expected to complete on a daily basis.

    We also wanted to teach them how to save and give, so the $5 is broken down as follows: $2 to keep, $2 put into a savings account, $1 for church offering. They each get their $5 in singles so they can divide up the allowance themselves.

    They all are very good about saving up their money and not spending it on just any old thing they see in the store. If there is something extra special they would like to buy and one of them doesn’t have enough money, they will often combine their money and agree to share the item — I like to see that!

    I never had an allowance growing up, but my husband did. As a result, I was very poor with money management until I was married. I wanted my children to learn wise money skills early on.

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  5. says

    My girls are 12, 11, and 7. They do get an allowance. We have just recently done some modification of that. I thought about all the little things they are always asking for – candy at the checkout, a little toy, etc. – and tried to give an amount that would cover that. They each get $20/month. I didn’t originally start my youngest out at that, but it was easier since the other 2 girls were getting it when I started this. They must save $2 and tithe $2 each month. So they have $16 to spend. Especially if I don’t think the thing they want is a “need” I remind them that they can buy it with their own money. Then, they either decide they really don’t need it or they go ahead and buy it. It has really helped them think about their purchases more.

    One of the things I have really liked is that they have pooled their money more than once. My oldest wanted to buy a sewing machine. I told her I would pay for half of it, but she had to buy the other half. She wanted it quickly, so she asked her sisters if they would give her their money for a couple months, and then after she had the money she needed, they could do the same for the next daughter and then the next. They have done this several times when someone wanted something extra big. Some purchases have been worth it to them, and some have not.

    If I’m really against something, I flat out say no, you can’t. But, for the most part, I try to let them learn. I figure it’s better for them to learn with this amount than with a credit card, etc…

    Just this month we changed it a little bit, in an effort to work on them taking more personal responsibility for their chores. They start at the $20 at the beginning of the month. For any day they don’t complete their chores, they lose 50 cents. If they get all their chores done every day of the month, they can actually earn an extra $5. This is working as both a positive and negative consequence for the girls. However, they will get a minimum of $10 and dad said if they ever missed their chores that many days that they got down that far, they’d be in trouble anyway :).

    They have been so motivated by their chores!! Seriously!! My 7 year old wakes up every morning and comes down to move her cards and tell me all she’s done. I’ve only had to do gentle reminders or asked for them to be done if I had a personal agenda I was running. It has been great.

    Today, of course, I think will be the first day they haven’t got a check. But, I noticed things were getting a bit lax, not maximizing. I told them early on that they needed to get done. I have discovered a few things not done, so I’m going to implement the plan, so they know we mean business. If you want to see my chore charts, you can come over to my blog.

    Phew! I got a little winded there, but that’s what we’re doing and I’m really liking it. I love going to the store and saying, “You can buy it with your allowance.” I love hearing them offering to buy things for me, themselves, and/or each other. I love to see them taking ownership, making a goal, and achieving it! Their biggest purchase as of late, was pooling all of their money (including birthday and my oldests’ babysitting money) to buy a wii. There’s no way my husband would ever buy one. He’s very NOT in to video games (for which I am grateful), but they really wanted one and saved up for it. It makes them take it a little bit more seriously if something happens to it, etc.

    OK, I’m done now.

    Jilann

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  6. Julie in Australia says

    Thank you so much for this post as well as the comments. My Prince who is about to turn seven is very motivated to have what we call “pocket money” in Australia. He is helpful around the house and loves to help out with Daddy type outdoor jobs. My princesses are 8 and 3, and also keen to receive money but a bit less motivated to help.

    Thanks again – this has given me more to think about.

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  7. says

    I enjoyed reading your post. I have one 8 yo and one 6 yo. We haven’t really figured out the whole allowance thing yet. We do pay them about 2-3 dollars a week if they do their chores properly. If chores aren’t done, or not done right, then we deduct from their allowance. We may need to revisit the way we do things. My kids seem to want to take every dollar they get and spend it at the dollar store. Your kids’ attitudes toward money is very impressive. Way to go. :)

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  8. says

    while we don’t have kids yet, we are taking a Dave Ramsey course at our church and this has spurred the discussion of what was done in our families and what we’d like to do in ours. When I was younger and earned money, at first I got to “see” and deal with the cash — but later, to help me transition to e-checking, etc., we started using a checkbook system with my parents that taught me how to give, save and spend wisely when the money wasn’t tangibly in front of me.

    Based on our pre-kid discussions, I think we’re leaning towards not an “allowance” per say, but earning money for the jobs (above and beyond chores just because they are a part of our family) they contribute to our home. This way our kids will hopefully learn that money is earned in response to a service you provide. With that money, we hope to teach our kids first to give, second to save and third to make wise spending decisions. we’ll see how that goes… but that’s where our discussions have led us at this point.

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  9. Jill Roper says

    My husband and I early on decided that it would be better if we taught our children about money. We had learned many lessons in the early part of our marriage and wanted to share what we had learned. Allowance is given because of that. There is no earning allowance. It is given because it is a TOOL to help US teach them about stewardship. Chores are done without pay because each member is a part of the family and needs to pitch in. So, at age 5 each of our children were given allowance on payday. They were required to put half of all of their money (except gifts) into the savings account we started for them. That money was to never be touched because it was for their college education. The other half was split into giving to the Lord and their spending. We had them save at lest $5 before they started spending it so they wouldnt nickle and dime themselves at the store and have nothing ot show for it. When our daughter went to college she wrote a check out of her account for the first semester. She had ownership in her education. She ended up getting her degree in 3 1/2 years, graduating with honors. SHe worked hard. SInce then we have launched two more the exact same way. We have three more at home that are teenagers and continue the practice. In our mind allowance is a must so that they can be taught wise financial decisions.
    Just my 2 cents

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  10. says

    We give an allowance to give them the opportunity to learn how to handle money. But we wait until they are in Kindergarten. Even at the start of Kindergarten, they don’t really have a concept of money it seems- nor do they know the value of each coin and dollar. We decided on $1 per age per month. So a five year old would get $5 per month, seven year old $7. We encourage them to pay tithing to the Lord and to set aside 50% for savings. So far it works. But we will probably stop giving allowance around age 12- because then they can mow lawns and babysit and do more odd jobs around the neighborhood. At 12 we are thinking about giving them a clothing budget. But we are still a few years away from that and still discussing.

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  11. says

    We did not do allowance with our older two. After taking the Dave Ramsey class and watching our 19 year old (who had financial peace in high school!!) wreck his finances, I’m changing my mind about the allowance thing.

    It’s hard getting started with the 13 year old as she is in a stage where all her chores are just a joke. It’s hard to want to give money to her right now…if she were an employee she would be so FIRED! LOL! And even though the money isn’t actually for the chores it still feels like a reward for jobs poorly or undone. But we are working on getting that started. I want to get her working in a checkbook when she enters high school.

    Our youngest is 4 and I plan on starting her on her birthday. There is a bank that is broken up into three parts…spend, save, give that I want to get her for her gift and then jump in.

    No idea how its all going to pan out…but not doing anything didn’t work with the first one for sure.

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  12. says

    we had modest allowances growing up. (my little one is too small yet.) i think allowances are a great idea. i went to college with girls who never had to manage (or earn) money, and by teaching financial responsibility young, you are doing your kids a big favor.

    our allowances were tied to chores, and we didn’t get it until they were done in a satisfactory manner. i’ll probably do the same with my kids.

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  13. says

    We could never figure out an allowance plan that actually worked and that we remembered to do. We tried so many different ways, we could never get it to work. Then last year my kids got a job walking the neighbors dogs during the week. They pay them $20 a week (split 4 ways). Now I don’t every worry about giving them money for anything. they earn so much on their own and do a great job saving. I am just so glad they got a job, because it took the headache of allowances away from me. Oh, we do pay sometimes for extra bigger chores like shoveling snow.

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  14. says

    It sounds like your plan is working well and it is certainly a reasonable amount. My kids are all gone and we did not do allowances but we did teach them money management. I think you are doing fine.
    Roberta Anne

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  15. Sharon says

    We have four children and we hand out allowances.

    My 12 year old daughter gets 10.00 per month. This is for her to spend but it also covers any church Youth Activity that might come up during that month—she knows and agrees sh’e responsible for this.

    My 11 year old son gets 8.00 per month, my 10 year old daughter and my eight year old son get 5.00 each per month.

    They also earn money around our beginning homestead. Oldest daughter sells extra eggs, oldest son collects soda cans to recycle, two youngest raise and sell baby bunnies. They tithe on this money and give an offering, too.

    Hubby and I feel strongly that you should teach them while they’re young about money….if they learn to handle small amounts of money now, handling larger amounts in the future will be easier. :)

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  16. says

    When the kids were little we thought about giving them an allowance (.25 cents per year so a four year old would get $1.00 a week) but we didn’t do it.

    We did, however, have extra chores (outside their regular ones) that they could do to earn money. That way, they had the choice to work for their money.

    We also would have them spend some time thinking about something before they bought it. They weren’t allowed to buy the first thing they saw. They also had to have our permission to buy it.

    As they got older, they earned their own money doing stuff for other people. They are now 15 and 20 and manage their own money. Our 20 year old has a part-time job (he is in college) and he manages his money quite well (he’s pretty frugal) and he also tithes.

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  17. says

    WOW, my baby boy turned 7 on Monday! So close in age to yours!
    Either way… We started our oldest on $2 a week at age 6 1/2 (wanted to start at 6 but his behavior was tooo bad at the time) My just turned 7 yr old will start allowence this week…. (he is strong willed and just couldn’t buck up enough to get it any earlier) Sounds mean, but it has worked…
    Allowence for the oldest (8 1/2) is now $2.50 a week… And the 7 yr old will be $2 a week (might have to go to monthy so I can remember easier! LOL)
    Anyways, we don’t TIE it to chores, but they CAN pay someone to do their chores…. AND they have to PAY someone if the HURT them physically or replace something if they break it. EX: my Oldest just bit a boy at school… I KNOW WHAT THE HECK? Either way, we are huge advocates of making things right/better to those you have wronged… since this boy lives in town and we live in the boonies, Trev couldn’t GO THERE and do the kids chores, so instead he spent a whole months worth of allowence on a TOY he knew the other boy would like. Then he had to write him a letter and give him the gift.
    I also charge the kids if they KEEP leaving their lights on. Petty, I know, but I like to SHOW them that it costs money to do things in the house (they know how much it does cost to run the house, I wanted them to know, to show them why we RESPECT ours and others things!)
    OK, that was winded, but that is what has worked for us. So far we give our kids money for church each week, but I am thinking maybe the oldest should have to give $1 a month out of his allowence also!
    What a great post, it was fun reading what the others have done!

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  18. says

    I think that is a great reason for allowances…it is a life skill they NEED to learn…you know how many young people are in debt because of NOT knowing how to deal w/money, I was giving my 7,10, 12 yrold, $5.oo a week ,BUT I told them I was going to decrease it to only $2.00 maybe 2.50, because it is too much money, the reason I give it to them weekly is because on Sundays after church , they always want to go to the church kitchen or library and buy a little something and I ask them “well do you have money??” and if they do then go ahead , just remember to spend wisely…I think it is definitely something chidren need to learn , my 7 yr old had saved up $32 , and she really wanted to buy a toy at target , but she could not afford everything she wanted, she cried …but I said “well you have this much , so make your choice, you can’t afford everything..” ,also I specifically let them know that this allowance is for the purpose of learning how to managae their money, not for chores, chores are expected regardless.

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  19. says

    I have no kids yet, and don’t know when/if that will happen… so I will share from my own history.

    I never got an allowance. There were times in my very young years that my parents made barely enough to pay the mortgage AND buy enough food to feed the four of us. Even financial planners didn’t see how Mom really got all the bills paid.

    I was always handed the coins to put in the collection plate. I was taught how to divide money to give, save, pay necessities, and blow. Mom worked on an envelope system WAY before Dave Ramsey ever thought of it.

    I still made mistakes with my own finances. I don’t know that they could have educated me in the deepest dangers of the credit cards. I didn’t “suffer” until I was laid off from a job. I had not planned to be without income. Good that you teach the boys to save, as well as care for giving and responsibilities.

    Sounds like you have a good pattern. Keep it up!

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  20. says

    We don’t do allowance per say we do commission. We have a chart that has everyday things on it like picking up your room, brushing your teeth, helping your siblings, etc. For each task completed my son gets a check. For *extra* non-listed tasks he gets two checks (usually involving something he did above and beyond). At the end of the week we count up the checks and give him a quarter for each check. We then immediately put 10% of it in his piggy bank and then take another 10% and put it up for him to give in the offering at church the next day. He keeps the rest in his wallet that he got for Christmas.

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  21. Mrs. S says

    I am in the middle of doing “school” right now so I can’t read each comment, but I have a question (and a comment…). Our eldest is 5. He really wants his own money to spend. We have talked about it before, but never did it because he is so young. But he really seems to have a handle on the whole concept. He has chores, and we feel that is just “part of being a family”. So any money he will get will be for jobs done above and beyond. We are thinking .25 for a job is enough at five. Jobs will vary depending on what I need help with, ie: watching sisters for a minute or two, sorting laundry, putting away dishes, vacuming. These aren’t his regular duties. We shall see how it works out. When he gets older (about 7) we will start the tithe and saving part. Right now counting is a big enough task! LOL!. Ok now my question for any “seasoned” mom’s is this…what about our preschooler. She wants to do EVERYTHING brother does. She will want a new hot wheel too, or whatever he spends his money on at Target! Obvisiouly, she isn’t old enough to earn money. So do I buy a trinket for her here and there, and make him buy his own? Or do I tell her she has to wait until she is five too? How in the world do you keep it “fair”?

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  22. says

    Great ideas! I like the monthly payout, although in the military it is 2x a month :). We are just starting a new program with the kids, commission. We start in Feb so I don’t know if it is going to work yet. I hope so!
    Toni

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  23. Pam Smith says

    I too do it the “Dave Ramsey way” as well. We start giving commission when our kids reach 1st grade and we give them a 1/2 of their age per week. (For example, my 7 year old gets $3.50 per week.) Each year as they get older we give them more responsibilities around the house. They must tithe 10%, give missions 10%, save 20% and can spend 60%. Every bit of money they receive(birthday, Christmas, etc) is split up in this way. Our kids do daily chores and if they don’t do their part they will lose their commission.

    Once our kids reach an age where they can start making money on their own we will no longer give a commission. Hopefully by that time they will be able to manage their money well.

    Our #1 goal in doing this is to teach our children how to handle money God’s way. Training them this way really works for us.

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  24. says

    We did the 4 can system. They each painted 4 cans that sat on their dressers. One for tithe, one for offering, one for savings, one for spending. Periodically we all toddled to the bank to deposit the savings.

    Even when they were toddlers, they had chore lists. There were pictures of dishes, pictures of toys, a picture of a table setting, a picture of a pile of laundry, etc. when they helped with the dishes, set the table, picked up extra toys or helped with the laundry, they got to color, scribble, whatever they could do at the time on that picture. At the end of the week, we paid them for each job.

    As they got older, cleaning their rooms, helping with dinner, doing the dishes, putting laundry away became part of what we do for the privilege of living with a family in a house.

    They have a daily chore chart that must be completed before they are allowed free time. They do not receive pay for that. But, if they see something that needs done like vacuuming, dusting, bathroom swipe, laundry done and they do it and record it and we pay them for it. Needless to say, I don’t do a lot of housework myself. They have learned to work and appreciate making money.

    We own a lawn and turf company and now that they are 12, 13, and 15, they can work hard and long and really make good money and we don’t have to worry about hiring employees and paying worker’s comp and SSI.

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  25. says

    I grew up a missionary kid – we were either broke or had no access to shopping – either way we didn’t get an allowance. It was quite a few hard years of learning how to manage money when I did become independent, and so I want my children to have access to money more than I did – and to teach them how to use it.
    It astounds me how financially illiterate most of our society is – and we are reaping the results of that in our current economy.
    My husband is very wise about money and I think it is largely because he worked hard and earned money while quite young. His parents taught him to tithe and to have a horror of borrowing money. When money is earned, it has more value than when it is given, and so when my kids become old enough to desire an income, I will find jobs (not their regular home chores) for them to do that bring them money. I’m already thinking about small business ideas that they could turn into pocket change.

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