Introducing your children to how money is earned early can set them up with a healthy work ethic that will serve them well later. In addition, they will understand the importance of having to work for the things you want in life.
Developing an allowance plan for kids can also give them more pride and a sense of accomplishment when using their hard-earned money to purchase something they want.
Allowance plans can look different for every family based on finances and creativity. If you are not sure where to start, below are some ideas to help you develop an allowance plan for kids, as well as tips for what might not work for your family.
Keep It Simple with Chores
Parents will often have their kids help with age-appropriate household duties to earn money. However, there are some great benefits to establishing a plan for your kids to help with chores and earn money.
For one, it teaches them the structure of doing work for money. It also teaches them how to perform specific household duties that they’ll be able to carry with them for the rest of their lives. Additionally, parents can have help around the home to give the kids an incentive to help out.
One downside some parents find with implementing an allowance for chores is children who will only help for payment or children who opt-out. However, approaching your kids about why it’s essential to learn how to do chores can circumvent these issues.
You also want your kids to understand that allowance is just a bonus for doing their chores, and they should not do them halfheartedly to get money. They are part of your family, so they should be willing to help to keep things running smoothly.
A Flat Allowance with The Option to Earn More
Some kids will earn an allowance from chores, and some parents will give their children an allowance. There is no issue with either of these options, but you can choose to combine them for an exciting allowance plan that helps children learn how to do household chores but doesn’t associate them only with money.
The way this works is that you can designate a certain amount that your child will get every week, which can be based on your budget. You can also implement certain chores into their everyday routine that have nothing to do with earning money, such as making their bed and putting their laundry in the hamper.
If they want to earn additional money, you can have certain chores available for them to volunteer for each week. These could include doing the dishes after dinner, vacuuming, cutting the grass, and several other things.
Give Them “Freelance” Work
You can implement this idea to allow your kids to earn some extra money outside of chores or outside of their designated allowance. They can opt into this freelance work when they hope to earn some extra money.
These freelance jobs can have a designated amount of money attached to them, and you can also offer advice on how you want the job done. This can also incentivize them to help with more intensive jobs around the home that you may not do every day or every week but still need help with.
Consider jobs like pulling weeds out of the lawn, washing the windows, or decluttering their room. But, of course, you do not want to give them dangerous jobs when they are young.
Implement Lessons About Saving
Regardless of how your child earns their allowance, they will know that money must be earned in some regard. However, if you want to implement an extra lesson in your allowance plan, consider teaching them about saving money as well. This could include having a piggy bank or container that they put a certain amount of their allowance in each week to save.
This could give them a kickstart to having a good amount of savings for when they get older, at which point they can use it as they wish. However, you can give them the option to take out of their savings if they choose to but be sure to teach them about the benefits of saving for more significant purchases or when they get older.
It can also be a way to teach them that sometimes, it takes time to afford the things we want. They will also learn how avoiding impulse buys you the opportunity to reflect on whether you must have that big-ticket item.
Teach Your Kids About Money
Letting your kids have some freedom in how they choose to use their allowance is a good idea. This lets them learn to appreciate what they buy and learn the potential consequences of impulse buying or spending money without thinking.
It would also be beneficial to teach your kids about money early. Teach them how to build a budget, show them how to compare prices at different stores, and show them how good it feels to save up for something they want. Then, you can implement budgets with them when it comes to school shopping or let them have part of the grocery budget to shop for school lunches.
You can implement innovative financial literacy lessons in many creative ways so that they can understand them for their age, helping to set kids up for a healthy financial future.
Don’t Overpay Your Kids
Even if you have a lot of wiggle room in your family budget, you do not have to give them a ton of money for their allowance. It is not as crucial for them to have a lot of money. Moreover, it is more critical for them to learn ways to appreciate their money and how to spend and plan purchases wisely.
- Even if the parents down the block give their kids $20 a week, it does not mean you have to follow their plan.
- Instead, agree upon a number that works for your family with your partner or your own, and stay consistent with that amount.
- One of the popular methods for determining how much money to allot for kids’ allowances is one dollar per year for their age.
- For example, if they are five, they will get $5 for the week. How much you give them might also depend on what method you choose to develop your allowance plan around.
Start Your Allowance Plan Early
The general age at which most parents agree it is safe to start giving allowances is around five years old. This is a good age because your kid is receptive to learning new things, and they are probably already starting to want certain things.
Having money management be a part of your child’s life early will help them realize how important it is to learn smart money habits. While their whole lives shouldn’t be centered around earning money, knowing how to view money healthily will hopefully deter them from experiencing too much financial stress later in life.
Don’t Only Let Certain Kids Earn Allowances
This might seem obvious, but if one kid earns an allowance, all of them should. They should also be earning an allowance the same way. You do not want your kids to grow up thinking they are less or more deserving than others.
If you decide to use the dollar per year allowance plan, be sure you take the time to explain to your kids why the older kids earn a few dollars more.
There is not an allowance plan that will work for every family. You might have to brainstorm some different ideas that you believe your kids will respond to. Have them be part of the process, so they understand that allowance plans are not just about earning money; they are learning skills that will help them in the future.
They will also feel like their input is valued as part of the family unit, solidifying that vital lesson that contributing to the family with chores and helping around the house is a part of being a family. It is not just an excuse to put them to work. Finally, they will appreciate the sense of accomplishment and the effort you put in to set them up for success in the future.
Photo credit: [kate_sept2004].