Since teaching our children about financial responsibility has been a priority of ours, we recently instituted weekly allowances in our household. Also, knowing how to teach kids about money can be rather tricky. I wanted their allowance to not only teach them something about money, but also learn a little work ethic. I integrated their allowance with a chart/behavior chart, since I wanted the to be able to earn if they so desired, but I also wanted them to be able to have money taken away for not doing what was expected.
What I did was create three charts, one for each child, on our wall chalkboard. Under each child’s name I put some basic, age-appropriate chores and certain behaviors that are expected of them. For example, for Ethan I want him to put his dirty laundry in the dirty clothes hamper and use good manners at the dinner table. Then I put a weekly allowance amount – for Ethan and Anna it is $1.50, for Megan I did $3.00. I then put a value next to each chore and behavior, so again for Ethan the dirty laundry is worth $.10 and good manners at the table is worth $.15. At the end of each day we go through and check off each of their charts with them. For those chores and behaviors they followed through with the got a check mark, for those they did not to do well with then the value was deducted from their weekly total. For instance, if Ethan did not put his dirty laundry away then I would right a -.10 at the bottom of that column.
I also gave them opportunities to make more money by creating an “extras” list. This list had items on it such as put dirty dishes in dishwasher, throw away food scraps and water the garden. Water the garden was something geared more towards Megan since she is 9. At the end of each day we would discuss if they did do any of the extras and put that as a + at the bottom of the column as well. At the end of each week we then go through and calculate what their earnings are. Megan, in one week brought her allowance up to $3.90, and Anna and Ethan had both of theirs at $2.25.
Each week we visit the bank where they have junior accounts set up. We have them put half of their allowance in the bank for savings and the other half is for them to use as they want. Each child has something they each want to get when they have enough money to do so.
This helping them learn how to budget since they often get distracted with wanting other smaller things along the way to getting that item they are saving for. They are starting to learn if they spend all of their money on some of these smaller things, they will not get to that big item the really want.
This has also been teaching them that you cannot purchase something just because you want it if you do not have the money. This is starting to click a little more with Megan than Anna and Ethan. Megan likes a lot of things and wants to do everything. She also loves to go out to eat, however, we have been on a very tight budget now for quit sometime. I am constantly saying no to her since we cannot afford it. This has helping that area now too. She is starting realize that money does not just magically appear whenever you want or need it to. You sometimes have to skip other things so you can afford the items you really want.
Disclaimer: Article written using Genworth Financial Educational Resources.