Should you give your kids an allowance? While some parents may disagree with this concept, I say yes. Offering your kids an allowance is a great way to help them learn how to manage money and set financial goals.
My son has used his allowance to save up for purchases and he feels a sense of pride knowing that he can buy something for himself. While I don’t guarantee an allowance, I do believe that it can be earned if my son completes certain chores and follows other directions during the month.
There are a few different ways to give your kids allowance. If you’re looking to start, here are a few options you might consider.
1. Give, Save, Spend Model
Right now we are using the give, save, spend model when my son gets an allowance, and it’s working perfectly. Just like it sounds, this method can train your child to break up their allowance into three main categories. I got this strategy from the book, The Opposite of Spoiled.
Kids should learn that all their allowance shouldn’t be spent frivolously each month. Instead, they can prioritize saving a portion, giving to a cause they care about, and then spending the remainder on something they want.
When teens and young adults start managing money, they learn soon enough how important it is to have a budget with specific categories. For example, you can’t blow all your money on food or video games. The give, save, spend model helps kids put this into practice early on. Plus, it encourages your kids to be generous givers and support causes they care about.
My son likes to use his ‘give’ category to donate to our church or give money to a homeless community member. The ‘save’ category helps him save up for something he really wants or needs in the future. Or, it can go to his junior savings account at our local credit union.
2. Commission-Based System
Don’t want to just pay your kids a guaranteed amount each month? You don’t have to. Financial guru Dave Ramsey is not a fan of traditional allowances. Instead, he recommends that parents use a commission-based system with their kids.
Once your children are old enough to do basic chores, assign them a few things to go around the house. You can pay them only if they complete the work. The commission system doesn’t include regular household chores. Dave believes kids shouldn’t always get paid to do things around the house that an adult wouldn’t get paid to do. Adults all know that no one pays us to make up our own beds, wash dishes or empty our own garbage.
However, there may be some other tasks around the house that deserve a commission. Recently, my son asked me if there was any extra work he could do to earn $10.
Normally, I don’t always agree to give him money on command or allow him to earn it. In this case, he really wanted to buy something on his video game and was willing to do extra work (outside of regular chores) to earn it.
I had a project lined up that weekend that involved cleaning out our outdoor shed, and it was a massive job. So, I told him he could help with that. This experience will teach him that if he wants to earn and have money, he needs to do some work just like anyone else.
3. Job Application For Chores
This is another one of my favorite ways to give your kids allowance. I haven’t tried it personally yet because I think it’s best for parents with more than one child.
How it works is you choose a chore or assignment that you’re willing to pay an allowance for. Then, advertise the work with an actual job ad. You can spend a few minutes writing up a job ad or making a simple flyer. Then, ask your kids to ‘apply’ for the job they want.
I’ve even seen some parents go as far as to interview their kids and ask them about their skills and experience. This may seem a little overboard, but it’s also a clever way to get your kids to think about their skill sets and prepare them for a real job interview someday.
4. Use an Allowance App
If you’re wondering how you’ll pay your kids an allowance, there are more options than just handing over cash.
BusyKid is a free app that allows you to assign and track chores for your child. They can see each task and the age-appropriate allowance that you choose. BusyKid also comes with a prepaid card option (for $7.99 per year) if you want to load your child’s allowance directly to the card.
Plus, you can set a payday for your kids and there’s the option to invest or donate a portion of their allowance.
FamZoo is a prepaid debit card that you can use to pay your kids an allowance as well. They don’t have chore tracking features like BusyKid, but it’s still easy for family members to transfer money.
Summary: How to Give Your Kids Allowance
Giving your kids an allowance can be a great thing if you do it responsibly and decide on a system. Make sure kids know that they are a part of the family and are expected to do certain things without being compensated.
Don’t feel as if you need to give an allowance if certain tasks have not been completed. Also, use allowance as an opportunity to teach your kids more about money.