Allowance
Moms View Message Board: General Discussion: Archive May 2007:
Allowance
Do you give your children and allowance and is it tied to chores? We give each of our girl $5 a week not tied to chores. 10% goes to church $1.50 goes to savings and the other $3.00 they can spend. I'm just wondering when we should give them a "raise" and how much of one? My oldest dd is almost 12 and the younger one is almost 9. They are to the point that they like to buy stuff on their own (Webkinz and such). Should we just have a chore jar where they do extra chores to earn money? They make up their beds, put their laundry away and keep their rooms clean. They also obviously pick up anything around the house that is theirs and put it away but I was wondering if they should have the option of warning extra money by doing chores like unloading the dishwasher, vacuuming, cleaning the bathroom. Just wanted some input from you guys.
I think you have a good plan with the chore jar. They could have regular jobs that are done just because they are a part of the family, and of course still get their $5.00 allowance, and AFTER their family jobs are done, you could have a chore jar where they can earn extra. That way, it is up to them to earn the extra money. If they don't earn that extra money, then it is their fault. Good luck with whatever you decide to do. 
Yes, ours are not tied to chores either. It's to help them learn to budget, save and manage money. They are required to put 10% in a long term savings account (ING) later to be moved to a Roth IRA (They must be earning income, but a parent can fund the IRA - just $1,500 a year will net over 1 million in 50 years.). Our 9yo receives $9 every two weeks - he's saved over $100 in ING in less than a year. The 10% savings rule applies to ALL money they receive - gifts, etc. At age 10 I will start our oldest on his own budget, gradually.
I think the earning extra money with extra chores is a great idea for both of your kids. It teaches that if a person wants 'extra' they need to earn it and save for it. Our 9yo just spent 2 months earning the $60 for Heelies by doing extra chores.
The 12yo is probably ready to have her allowance increased and to open a checking account with a debit card. With your help in the beginning, she can learn to budget her needs and pay for her own school lunches, clothing, sports, personal items, etc - needs rather than wants. You could start on a weekly basis, then move to monthly, later to yearly quarters, etc, once she has the hang of it.
You'll need to know what you already spend on her needs, and you'll have to decide how much you will give her as allowance for her wants - or whether you'll include the allowance for wants with her budget for needs.
I agree, both with the regular allowance, and periodic raises, and the chore jar. As for the raises, I think you need to look at what you expect them to buy with the money and what that is likely to cost. For example, with your 12 year old, is she in middle school? Does she get together with other kids (hopefully other girls) after school and stop for a soda or ice-cream or something after school, and if so, what does that cost? Does she pay for milk at school? Or even lunch? That should all be part of her allowance, to help her even more to learn how to budget money. Every expert I've read agrees that a regular, reliable allowance with expectations of what it is supposed to cover is the best way for kids to learn how to handle money - that having to ask for money for each need doesn't promote learning money handling at all.
I think the chore jar is a good idea, though I personally preferred a list of chores that changed based on what I needed/wanted most to have done, in order of my priorities. But I also think that as they get older, their list of expected and unpaid chores, as members of the household, should be expanded. I would think loading/unloading the dishwasher and dusting and vacuuming are things that can be added to their "normal" chores as they are a normal part of household/daily living, and if it were me I wouldn't think of them as paid chores. Ditto on the bathroom, because I wouldn't want to have to wait each week to see if one of my children needed money enough to clean the bathroom so that I wouldn't have to. Chores that were on my list of paid chores were things like washing windows, clearing out and cleaning and organizing cabinets, washing/cleaning the outside of kitchen cabinets, outside work, and stuff like that.
I disagree strongly with Mia on the debit card at yur dd's age. I think 12 is still too young to handle "plastic" money. There is a "not real" feeling about using a plastic card, and it is hard for a lot of adults to keep track of how much money they are spending (and how much is left) when they are using plastic instead of physical money.
But the idea of a clothing allowance is probably a good one. You might start with setting up a fixed amount and helping her work out a list of what she needs to buy with that amount, with you doing the paying the first time or two so that you can double-check and advise - and allow her to make an error or two as part of the learning experience - before you move to just giving her the money or even temporary plastic.
I know that by the time kids are ready to go to college and away from home they do need to know how to deal with plastic money, but I think 12 may be too young. It is, however, a good idea to have that learning experience before they leave home. I'm sure there is some way to set up something like that so if the kid overspends s/he doesn't get hit with huge over-balance fees, though I haven't explored it.
I always tout ING as a place for savings. They pay one of the best interest rates available, there is no minimum balance or minimum deposit, and because you have to wire-transfer funds out of the account it isn't available for really impulse spending but it is fairly quickly available at need.
Ginny you could be right about the debit card - I rarely use physical checks anymore, so debit card is what I think of. But maybe the 12yo should use checks if she isn't mature enough or experienced enough to understand that a debit card equals cash.
I was a very mature 12yo and had a job when I was 13, but I know a lot of kids probably wouldn't be ready for the checking account at 12.
ING also has some great information for kids about money and how it all works - links are on their website.
My dks, 9 & 7, get $3.00 a week. They are responsible for cleaning up their rooms, picking up their bathroom(I think they are still too little to use cleaning products to actually clean it) setting/clearing the table, picking up after themselves, putting away their laundry, and taking out the trash.
They can do extra chores to earn more money. In the past they have raked leaves, pulled weeds, helped dh wash the cars, helped dh clean out the garage, cleaned patio furniture. I have also let them vacumm, and do my cleaning jobs, but that is when they have approached me on my cleaning day and asked me to do it. Usually this happens in summer when they are home all day.
Right now, my dks are just responsible for buying things they want. They do put money in savings each month. They each have a high interest savings account through our bank. I will say that my dks have become much more responsible about money since we started this a few years ago. They are very careful about what they buy.
If You Made a Million is a book my son loves. A great resource for teaching kids about spending, saving, loans, and banks.
http://www.amazon.com/You-Made-Million-David-Schwartz/dp/0688136346
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