When I think back to all of the things my parents taught me – how to be a good person, honesty, ethics, etc – I find one thing missing. I find that my parents did not really teach me about finances. I had bills and I guess they just assumed I’d figure it out as I went along. I really wish they had taken the time to teach me how to manage my money as I probably would have never made some of the (poor) financial decisions I had in my younger days. As a result of my own financial hiccups, my husband and I wanted to ensure our own children never made those same mistakes. As a result we are teaching them how to Give, Save and Spend their own money. Money which is truly earned, not just handed over to our children each month.
Rather than refer to our children’s income as an allowance, we call it commission. Commission earned for jobs completed — just like adults experience in the real world. This is a concept our own children can understand. Of course, in life, you also might have a chance to earn a bonus. As adults we also pay fines for the things we do wrong. We put these ideas into a form we now use to help our children earn money each week.
Our children are four, five (nearly six) and eight. For us, it works for us to have the same number of weekly responsibilities as they are in age (i.e. our four year old has four things she must do each week whereas our eight year old has eight jobs). We selected tasks they could easily do on their own such as make your bed, put away your clean laundry, pick up your toys, set/clear the table, keep your shoes in your room, etc. Simple things. Easy things. We then assigned a weekly value to each chore (for the week).
For instance, if they make their bed every day they will earn $2 for the week. However, if they miss one day, they forfeit the entire value for the week. We are teaching them that they have to show at up at their job each week and do what is expected of them, or they won’t get paid.
We all love a windfall or a bonus! The same holds true for my own kids. We have a section on our chore chart just for this!! The reason is that we want to teach our children how to take initiative and not be told to do things — nor do things only because they have to. We want them to see that the toys need to be picked up from the front room or that there are still crayons on the table at dinner time and put them where they belong without mom or dad asking them to do so. These items earn bonus dollars. We assign a value to each bonus completed and they can earn extra money when they complete bonus tasks for the week.
As an adult, if you are caught speeding, you may get a traffic ticket which includes a fine. The same goes for our children. Each week we look at the area where they need improvement. One week they may need to work on not back-talking to mom and dad and another week it may be going to bed without whining. We in turn assign these events a fine value. Whenever they do something which is “fine-worthy”, we place a checkmark next to that item. This helps them see what they are doing wrong.
Each Sunday evening is Pay Day. For us, we don’t net the total commissions, bonuses and fines. Instead, we go over each section individually. We first pay them the commissions they have earned. We then pay them any bonuses. And then…..come the fines……..
We have our children each look at their charts to see the fines they had for the week. We do them one at a time. As we come to a fine, we tell them you owe me “X.” They must pull out the payment from the cash/change on the table and place it in my hand. We do this for each and every violation. This is the hardest part of payday for our children. It is very difficult for them to have to give us back the money they just earned. However, this is teaching them a valuable lesson — there are costs associated with doing the wrong things in life. We hope that this is helping instill morals and values that are so important.
Once they have settled up with mom and dad, we help them count what they have left. They each have 3 envelopes: Save, Give, Spend. They are required to put a select percentage into Give and Save and the rest goes into Spend. They can use the Give money to place in the collection basket at church or to give to someone in need (however they usually just take that money to church each week). They can use Spend money on whatever they want (within reason, of course). (Some parents may opt to add in a 4th envelope – Investing – but we do not opt to do that with our children at this time).
Our daughter recently wanted a Lego set and had the money to pay for it. When it came time to part with her money, she ended up with only a couple of dollars and change after she paid the cashier. She was very upset – but she learned a lesson. Just because she has money, she doesn’t have to spend it. So now, we are heading out to the store tomorrow and she has already shopped on-line to learn the prices and know what she wants to buy. She also already said that she is not spending all of her money on toys as she knows when she has to purchase birthday gifts for her brother and sister. We are proud that she is learning the importance of how to make money work at such a young age.
If you are interested, you can actually download a FREE Responsibility Chart which I have created. Head out to your FedEx or UPS Store to get it laminated and you can re-use the same form over and over again — saving you paper and ink costs.
Everyone can talk to their children about strangers, drugs, and reproduction. However, parents tend to forget about money. It is just as important as everything else. We feel good knowing that our children already know the importance of earning money as well as how to save and give and even how to spend it wisely. It is our hope that by the time they are adults that this is normal to them and they will always continue to be wise when it comes to managing their money.
Picture by FreeDigitalPhotos.
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