Monday, December 12, 2011

Show me the Money! - Kids and Allowance

Today I'm talking about kids and allowance. Many parents are stumped when it comes to allowance. When? Why? How much?

Here are Two Easy Steps & some Real Life Examples to help you form your own Allowance Plan.

Step 1 - Allowance Philosophies:
There are three main philosophies regarding kids and allowance.

1. Kids get an allowance. They do chores because they're members of the family. Money and chores are not connected.
2. Kids get an allowance. They do chores because they get an allowance. Chores not completed = no money.
3. Kids do not get an allowance. "You're 8 now. Go get a job, Punk!"

Since I only know families who follow the first two philosophies, that's what I'm focusing on today.

Step 2 - Details:
Once you figure out your Allowance Philosophy, next you need to figure out two details:

1. At what age your kids will start receiving an allowance.
2. How much.

I polled some friends about their different approaches to allowance. Here are some Real Life Examples for inspiration.

Family A
Philosophy - #2 (Kids need to complete their chores to receive their allowance.)
Age - Began between 5-8 years old.
Amount - Kids receive the amount of their age each month. (ex. 12 years old gets $12.00/month.)
Pros - Money is a good motivator for kids to complete their chores.
Cons - If chores aren't done, kids may complain about not receiving their cash.
Extras - If kids want extra money, they can do special jobs around the house.

Family B
Philosophy - #1 (Kids get allowance. Kids do chores. Not connected.)
Age - Began allowance when oldest was 11 and youngest was 6 years old.
Amount - Kids get half their age per week. (ex. 12 year old gets $6.00/week.)
Pros - Easy system. Same amount every week no matter what.
Cons - May need to nag kids to do their chores more than with Philosophy #2.
Extras - No option for earning extra dough.

Family C
Philosophy - #1 (Kids get allowance. Kids do chores. Not connected.)
Age - Began between 5-8 years old.
Amount - Kids get their age divided by 4 each week. (ex. 12 year old gets $3.00/week.) Plus, kids earn % 5.00 compounded interest/month when they keep their allowance in the "Bank of Dad." They are able to withdraw and deposit their money whenever. Dad keeps track of it all on a spreadsheet he created.
Pros - Kids can earn a lot more money with the interest. (%5.00 compounded interest is better than a regular bank.)
Cons - It may take an Actuary to figure this system out.
Extras - Kids can earn extra money for bigger chores around the house.

Family D
Philosophy - None
Age - Unclear
Amount - Undetermined
Pros - Good for Mom. Doesn't need to remember allowances each week.
Cons - Kids say, "Show me the money, MOM!"
Extras - Mom buys them stuff anyway.

That's it! That's all a parent needs to know to create their own Allowance Plan. And in case you're wondering, we follow the same plan as Family B except we do give extra cash for some larger chores like raking, shoveling and cleaning the cat box!

No comments:

Post a Comment