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Allowance & Chores
 Teaching Kids About Money How one family does allowance, chores, the three jars and the first savings account. By Nancy Sikes, mother of two. |
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I am not a financial planner, a teacher, or an expert on anything except my own two kids, Anna
(11) and Nick (8). What I am is a mother who grew up in a house where money was never discussed,
learned everything about it the hard way in my twenties, and decided my kids would not. This page
is the system we've landed on after about four years of trying things. Some of it worked right away.
Some of it worked after we fixed it. Some of it was a disaster, and that part's at the bottom,
because it's probably the most useful.
Take what's useful and leave the rest. Every family's different, and every kid's different; Anna and Nick certainly are. [ The Three Rules | The Three Jars | Chores | The First Savings Account | The Lemonade Stand | What Didn't Work | Questions I Get ] |
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The Three Rules Everything else on this page hangs on these. 1. Allowance is not pay. It's practice money. The kids get an allowance because we want them to have money to learn with: to spend, to blow, to regret, to save up, to give away. You can't learn to handle money without having some. So the allowance comes every Saturday, on time, whether or not anybody has been an angel that week. 2. Chores are not a job. They're what it means to live here. Nobody pays me to make dinner and nobody pays my husband to mow. The kids set the table, clear it, feed the cat, keep their rooms livable and help on Saturday mornings because they are members of this household, not employees. 3. The allowance and the chores are not connected. This is the one people argue with me about, so I'll explain why below. Short version: when I tied them together, I got a kid who asked "how much will you pay me?" to pick up his own socks. Untying them fixed that in about a month. |
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The Three Jars Each kid has three glass jars on the shelf in their room, with masking-tape labels in their own handwriting: SPEND, SAVE and GIVE. (Nick's says "GIV." It's been that way for two years and I'm not fixing it.) How much: our rule is half their age in dollars per week, rounded up. Anna gets $6, Nick gets $4. It goes up on birthdays, which the kids consider the best part of the birthday. I pay it in quarters and dimes on purpose, so it can be divided. How it's split: for every dollar, 50 cents to SPEND, 40 cents to SAVE, 10 cents to GIVE. So Nick's $4 is $2 spend, $1.60 save, 40 cents give. Anna's $6 is $3, $2.40 and 60 cents. They do the dividing themselves at the kitchen table on Saturday morning; that was the first math either of them ever cared about.
Why jars and not a piggy bank: because you can see it. A kid can watch the SAVE jar fill up. A piggy bank is a black hole; the money goes in and it's gone, and that's exactly the habit I'm trying not to teach. Gifts from grandparents get split the same way, which Grandma thinks is a little strict, and which the kids accepted without argument because it's just "how money works" in our house. |
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Chores (Expected, Not Paid) There's a chart on the refrigerator; there is always a chart on the refrigerator. Every day: make the bed, clear your dishes, feed the cat (Nick, mornings) or the fish (Anna, evenings), homework before TV. Saturday mornings, one hour, everybody, including the grown-ups: vacuum, bathrooms, laundry sorted, yard. Anna is old enough to run the washer now, which she regards as a privilege, and I am not going to tell her otherwise. If a chore doesn't get done, the consequence is the chore gets done, right then, before whatever they wanted to do next. Not a fine. Not a lost allowance. (See what didn't work.) The point is that the chore is simply going to happen, the way it happens for the grown-ups, and the only question is whether it happens before or after the fun. Extra jobs for extra money: this is the one place where money and work do meet, on purpose. There's a separate list on the fridge of jobs I'd otherwise pay somebody for or put off forever: wash the car ($3), weed the front bed ($2), sort the recycling in the garage ($1), clean out the fridge ($3, and I mean clean). The kids can take those or leave them. This is how Anna's camera fund got a real boost last summer, and how Nick learned that weeding the front bed is worth exactly $2 and not a penny more. |
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The First Savings Account (Age 8) When each of them turned eight, we walked into the bank on Main Street with the SAVE jar and opened a passbook savings account in their name (with mine on it too, as the grown-up). Anna's was in 1996. Nick's was this past March. Why eight? Because that's about when they could understand that the money still existed even though they couldn't see it. Nick, at six, would have considered a bank deposit a theft. At eight, he watched the teller count his $23.75 in quarters, print it in his passbook, and hand the book back, and he understood. Mostly. He did ask if it was "his same quarters" in there. We had a talk about that. What the bank did for us: a savings account with no minimum balance and no fee for kids under 18, and a real passbook, the little blue kind, where the teller prints each deposit and, every quarter, the interest. The interest is tiny. It's a couple of dollars a year on what they've got. But the first time Nick saw a line in the book that said INTEREST, with money next to it, that he had not put there, he looked at me like I'd shown him a magic trick. That's the whole lesson, right there, and no lecture could have done it. We go to the bank about once a month, when a SAVE jar gets full. They fill out the deposit slip themselves. Anna has $212 in hers; the camera costs $150 and she's decided to wait for a better one, which was not my idea, and which I count as a graduation of sorts. One rule: the passbook money doesn't come out for anything under $50, and it doesn't come out without a week of thinking about it. The jar is for the small stuff. The bank is for the big stuff. |
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The Lemonade Stand Lesson Last July, the kids announced a lemonade stand. My husband's first instinct was to buy the lemons and cups and let them keep whatever they made. I said no, and I'm glad I did, because it turned into the best money lesson we've had. The deal: I would lend them the money for supplies, written down on an index card, and they'd pay me back out of sales before they kept anything. They went to the store with me and picked out what they needed: a bag of lemons, a bag of sugar, a package of paper cups, and (Anna's idea) a poster board for the sign. Total: $8.14. On the card it went. They argued about the price for an hour. Nick wanted 10 cents a cup because "then everybody will buy one." Anna did the arithmetic on the back of the card and figured out that at 10 cents they'd have to sell 82 cups just to pay me back. They settled on 25 cents. It was hot, our street gets some traffic, and the mailman bought two. By suppertime they'd sold 41 cups: $10.25. Then the reckoning at the kitchen table. $10.25 in, $8.14 out to Mom. Profit: $2.11. Two kids, four hours, $2.11. Nick was outraged. Anna was thoughtful. And then came the questions, all on their own: What if we'd charged 50 cents? (Fewer cups, but maybe more money; we worked it out.) What if we used the lemons from Grandma's tree next time? (Then your cost is just sugar and cups.) What if we'd made a bigger sign and set up by the park? What if we sold cookies too? Anna wrote all of this down on the card. They did it again in August with Grandma's lemons and a bigger sign, and cleared $9.80. That's the lesson: the money you make is not the money you keep. Costs come first. Price matters. Location matters. I could have said all that in a sentence, and it would have gone in one ear and out the other. Instead, they figured it out with $2.11 in their hands. (Another young businesswoman on GeoCities.us has a whole page about her stand, The Lemonade Stand Ledger, which Anna reads for ideas and, I suspect, competitive intelligence.) |
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What Didn't Work (Honestly) Paying per chore. Our first system, when Anna was seven: a chart with a price next to every job. Make the bed, 25 cents. Set the table, 25 cents. It worked for about six weeks, and then two things happened. First, Anna started negotiating: "How much for the bathroom? What if I do it twice?" Second, and worse, she started declining. "I don't need money this week, so I'm not making my bed." She was right, by the rules I'd made. That's when we split chores from allowance for good. Fines. For a while, a chore not done meant a quarter out of the allowance. This turned every Saturday into a courtroom, with appeals. It also taught exactly the wrong thing: that you can buy your way out of your responsibilities for 25 cents. We dropped it. Now the consequence of not doing a chore is doing the chore. The 27-item chart. I got ambitious one January and made a chart with everything on it: brush teeth, say please, practice piano, read 20 minutes, with stars for each. It lasted eleven days. Nobody could keep track of it, including me. The current chart has five daily things and one Saturday block. That's all a kid, or a mother, can hold in her head. Advances. Nick, age 7, wanted a $6 toy with $2 in his jar, and I let him borrow ahead against next week's allowance. Then the week after. Then he was three weeks behind and Saturdays became a misery for everyone. No more advances. If you want it and you don't have it, you wait, and the waiting is most of the lesson. (Grown-ups should probably read that twice. I did, the year I paid off my credit card.) Commenting on their spending. When I let Nick blow his spend money on trading cards, every week, for months, I could not keep my mouth shut. "Are you sure? You could save that." And he'd get that look. The rule is it's his, and I needed to mean it. I bit my tongue. Around June he stopped buying cards on his own, because he'd decided he wanted a certain game more, and saved for it for nine weeks. If I'd nagged him into it, he'd have learned to please his mother. Instead he learned to want something more than something else, which is the actual skill. |
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Questions I Get Isn't it bribery to give them money for nothing? It's not for nothing. It's for learning. We give them books for nothing too. What if they lose it? Then it's lost. Nick left $1.50 in his pocket and it went through the wash. We found the quarters in the dryer and the dollar bill in pieces. He learned about pockets. What about when they're older? I'm figuring it out as I go. My plan for Anna at 13 is to fold her school lunch money and some of her clothing budget into the allowance, so it gets bigger and so does the responsibility. I'll report back. Do they know what things cost? Getting there. Anna grocery-shops with me and keeps the running total on a calculator, and she was genuinely shocked at what cereal costs. Nick still thinks a car costs "a hundred dollars," which is about what the water heater cost our neighbors, so we've got a ways to go. What do you tell them about your own money? More than my parents told me, less than everything. They know we have a budget and that some things are "not in the budget this month," and they know that's not the same as "we can't afford it ever." They know we save. They don't know the numbers, and they don't need to. |
Coming soon: our chore chart as a page you can print, the "extra jobs" list with prices, and
a page on Christmas shopping with allowance money (Anna has asked for a budget spreadsheet and I
have never been prouder).
Other pages on GeoCities.us I've found useful: The Lemonade Stand Ledger | Coupons & Rebates: The Refund Queen | Paying Off $23,000 in Debt | The First-Time Homebuyer's Diary (the water heater neighbors) | The Working Mom's Notebook | WallStreet neighborhood |
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 What works at your house? I'd love to hear it: [email protected] Last updated September 16, 1999. © 1999 Nancy Sikes. |