Don't Give Your Kids an Allowance - Hire Them Instead.

Don’t Give Your Kids an Allowance – Hire Them Instead.

allowance

The kick @$$ guest blogger streak continues! Anyone who knows me personally would probably tell you that I have had strong opinions about having kids in the past. Honestly, since getting married I have softened my views a bit (aka grown up), but my wife and I still aren’t having them any time soon.

HOWEVER, I have always wondered what I would do in terms of an allowance when we do have them. My dad gave my sister and I one quarter per chore completed…which I thought was highway robbery at the time!! Fortunately, my guest Maggie from NorthernExpenditure.com has some GREAT advice that she uses for her kids. Enjoy, and make sure you share your opinion below! – M$M

I’m a millennial with kids. I’ve got three of them. I’m passionate about personal finance and making smart decisions about money. And I’m even more passionate about raising my kids to not be dumb! So how do you handle money with little kids? Give them an allowance? Buy them all the stuff? Make them earn their own school supplies? We’ve stuck to three principles that have worked well for us:

Don’t Pay Kids for Being Alive

I’ve always had a problem with allowance. My kids don’t deserve money just for being there. What message does that send them? They grow up thinking they are literally entitled to weekly cash because they exist. This is the biggest mistake you can make. If kids don’t learn what it takes to earn a dollar, they won’t appreciate the value of it when they go to spend it. A dollar you pick up off the street is so much easier blown on candy than a dollar you worked to earn.

Give Your Kids Responsibilities

My kids each have a series of age-appropriate tasks they are in charge of weekly. They clean their bathroom. They fold and put their clothes away. They clean their rooms. They vacuum. They dust. Etc. I do not pay them for these responsibilities. We talk a lot in our house about how we are a team as a family and we share our home. We each have things we do to be a helpful part of the team.

These are expectations.

They have expectations from us as their parents. They expect that they don’t have to pay for housing, utilities, food, clothing, etc. They expect us to make their meals (though our oldest is starting to help out with this one more). They expect us to help keep the house clean as well.

We all have our roles as part of the family and part of the team. If we don’t do our part, it impacts everyone. This is a tough and important lesson for kids to learn. It requires them to think outside of themselves and realize the impact of their help (or lack thereof!) in the broader concept of our house and family.

Hire Your Kids

My kids are expected to fulfill their weekly responsibilities without pay. On Saturday, if they have done so, I will hire them for extra jobs. The pay varies based on age, the job, and what their financial goals are. My daughter is saving up for a waterproof camera before our next vacation (think of the fun in the pool!). The key is that I treat each Saturday as a job interview. If they did not complete their responsibilities during the week, or if they threw a fit about doing so, or if they simply had to be reminded too many times, they don’t get the job.

We talk about what would happen if their dad started whining about assignments at work. Or, if I didn’t do my job when it was assigned. We make these conversations elaborately dramatic and hilarious to ease the tension of not hiring them. But, the conversations work. The kids know the expectations. And they know if they don’t get hired, it’s because of their own actions.

My daughter has meticulously calculated how much money she needs to earn each week to get that camera before vacation. She knows if she loses a Saturday of extra jobs, she may not get the camera in time.

As I struggled with the best way to handle kids and money, I hated the age limits everyone set. “Start paying your kids at 7.” “No, 4!” My kids are very different from each other. A blanket age simply wouldn’t work. One kid was ready for money way earlier than another! When I started treating it like a job, it worked perfectly.

When they can’t fulfill their basic age-appropriate assignments without whining, crying, or throwing a fit, then they’re not mature enough to handle earning the money. As a parent, I love this method because it puts the onus on them. I don’t have to decide arbitrarily when they are ready. They do it.

And, of course, they will now grow up to be successful millionaires. I’m awaiting my “thank you” letter from each of them…

So, what do you think? Is my “don’t give your kids an allowance” title way off? I really like the idea of hiring my future kids to do tasks instead of just shelling out cash. The next question is…how much do you pay them?

Live differently, your bank accounts will thank me later. -M$M

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14 comments… add one
  • Maggie Sep 21, 2015, 8:59 am

    Thanks again for hosting me!

    • Millennial Money Man Sep 21, 2015, 9:18 am

      No problem!!! Glad to have you on!

    • Our Next Life Sep 21, 2015, 9:59 am

      What a great system, Maggie! Kinda wishing I’d grown up this way. 🙂

      • Maggie @ Northern Expenditure Sep 21, 2015, 1:27 pm

        My parents did a sort of version of this. Though actual allowance was involved. For being alive. But I do remember one time I had to give a detailed presentation about why I deserved a “Raise” to my allowance. I remember my mom trying not to laugh the whole time… but I earned a raise!

  • Alyssa @ Generation YRA Sep 21, 2015, 9:13 am

    Maggie,

    I think this is a great approach! I cannot say from experience (no kids yet – but in the future!), but this is something my fiance & I are trying to learn a great deal about before we start to build our family. Since we are adamant on learning & building a strong financial foundation – how do we relay that to our children at such a young age? I think providing the age-appropriate jobs/chores makes the concept known that money doesn’t just appear out of nowhere! One of the biggest lessons we are trying to create too is how interest affects people, bringing light to credit cards, loans, mortgages, etc. Great approach, I’m definitely going to remember this! 🙂

    • Millennial Money Man Sep 21, 2015, 9:19 am

      Totally agree. Definitely something I’ll think about going forward too!

    • Maggie @ Northern Expenditure Sep 21, 2015, 1:31 pm

      As the kids age, we will create a broader discussion about interest. Right now, they know only a little about credit cards. We’re focusing on starting the discussion with an important foundation of having the money BEFORE we buy things. We’ll go from there. 🙂

  • Kelby Sep 21, 2015, 10:49 am

    This is a great idea. My little ones are really young (both under two) but I plan to implement this as soon as possible. This should definitely curb the entitlement mentality!

    • Maggie @ Northern Expenditure Sep 21, 2015, 1:33 pm

      We came up with the idea when the kids were pretty young because our oldest was ready to earn money when she was younger than 4 (she’s a born-adult type). So, we knew we wanted to teach them that it was up to them. We were there to help with that, but they had to be the ones to decide if they were ready.

  • Amanda @ My Life, I Guess Sep 22, 2015, 8:29 am

    I love this idea!
    Growing up, my mom did something similar to this. When my sisters and I were all around age 10, we despised doing the dishes. So instead of getting an allowance, we put this money into a savings account until we had enough to buy a dishwasher! Then as teenagers, we agreed to give up our allowance in exchange for getting this new thing called the Internet.
    When I have kids,I intend to do a combination of what my mom did and what you do in this post. I think it’s so important that my kids understand they need to work for their money and for what they want.

  • Nicole Sep 22, 2015, 8:50 am

    Great approach! Kids learn so much from us and having those honest conversations about money, expectations and their goals is a good way to teach them about responsibility. I love that your daughter knows exactly what she needs for the camera and is planning accordingly! It’s so easy (and all too common) for parents to walk into a store and buy what their kids are asking for. Having them decide what they want to save for and work toward is a fantastic idea. I don’t have kids yet, but will be keeping this strategy in mind!

    • Maggie @ Northern Expenditure Sep 23, 2015, 12:29 pm

      I agree with you that honest conversations are the key. If we give our kids everything they want, they start thinking they deserve everything they want. Then they leave our homes and go into debt to get everything we want. It’s a viscous cycle we start because we think the best way to show them we love them is to buy them things. That is wrong! Honest conversations about how much things cost, where we get our money, how we earn money, and what money can do for us helps them realize the possibilities as well as the realities.

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