Monday, 14 March 2016

Teaching Kids to Handle Money

I don't spend much money on my kids. They have healthy, homemade food and a huge yard in which to explore and play. Their grandparents in Newfoundland usually send them money at Christmas and with it we have purchased a trampoline and a swing and slide set. When we go to stores my kids are taught not to grab things and not to ask for things. Our regular grocery store gives a free cookie and our water store gives out suckers. These are treats that they look forward to each week. My kids have 2 rabbits, 2 cats, a dog, and four sheep to care for. They help feed their animals but on the coldest days (and most mornings) I do the chores myself as, frankly, it is often more work getting them bundled up than it is to run out and do the feeding. Now that the weather is warmer they have been helping with more of the outside work.

The boys now clean their dishes off the table after a meal (and they always thank the cook for the meal and ask if they may be excused!) but I really want to teach them responsibility and the sense of accomplishment that comes from completing a task. It is also important to me that they learn to handle money responsibly. I realized lately that pinching pennies doesn't actually accomplish anything unless you then budget the money you have saved and keep track of where it is going. I would like my kids to figure this out for themselves before they are almost 40 with a mortgage and kids to feed!

Enter a chore list and weekly allowance. I have been told and have read that paying an allowance is the best way to teach your kids to handle money, so I'm taking a leap of faith here. I cannot express to you how counter-intuitive this is for me. My instinct is to deny them money, ever, and teach them to get used to doing without so that when they are older they will know how to deny themselves the instant gratification of "stuff" and "gadgets" and consumerism. But it does make sense to me that never trusting them to make decisions with their own money will not teach them good spending habits, nor will it give them a sense of pride and value in work and reward. So I started a little chore system a few weeks ago and I must say I'm happy with how it is going.

6 year old: clear table after meals, wipe out bathroom sink daily, put boots/shoes
in closet before bed and put all craft supplies away.

4 year old: gather all dirty laundry from bedroom and put in laundry room, sweep kitchen floor (I have to change this one before he knocks someone's teeth out), gather all mitts and toques and put in closet before bed, and tidy couch cushions before bed (they are usually piled on the floor in a fort of some kind)

With regards to teaching my kids responsibility, I confess that I mostly want a more effective means of getting them to help out. They are usually quite helpful but it sometimes comes down to shouting and threatening consequences to get them to do as they are asked. They are always, always, happier and better behaved when they have a purpose and some structure to their days. So I have hatched a plan to give them each a chore sheet to be completed every day (four simple tasks each as they are 4 and 6 years old). They can put a check mark by the task when it has been completed that day. After 7 days of completed tasks they each get 2 dollars, a loonie (a Canadian dollar coin--ridiculous name, I know!) for their piggy banks (which is being saved to eventually go into their bank accounts), and a loonie for their own spending-jar which they get to spend as they wish.

The "spending as you wish" is going to be a challenge for me. I do not want them hauling more made-in-china plastic junk into this house. But I have already made suggestions like saving to go swimming at the pool (very attainable at $3.50 each. If they do their chores nicely they can go swimming once a month!) or a movie at the theatre. I think the theatre is too loud and too expensive, but it is a great treat to go with daddy to see a new movie. So although in all my frugal tips I mention having movie nights at home, I also want to stress that saving for those occasional treats not only makes them more special but it can be part of a healthy budget. Being frugal doesn't mean being a drag!

Their decorated money jars :)

I admit that I've struggled with the decision to give my kids an allowance. I don't want to teach them that they don't have to help out unless they are being paid. I very much want them to be the type of people that pitch in whenever they can. They routinely pick up toys, help with cleaning, dusting and sometimes vacuuming. They quite often help fold clothes and they always put their own clothes away. I could have made any of these the chores that they are paid to do--my goal, really, is for them to learn that when you agree to do something for money you must do it or you don't get paid. And if you do have some money you must learn how to use it wisely. It is a win-win because now I am budgeting for their allowances rather than trips to the swimming pool etc. I budget $4/week and they must budget from there :)

I really want it to become part of my kids' routine to tidy up as they leave a room either after a meal or before bed, rather than leaving it for someone else (me!) to do! I'm finding it very pleasant to have the porches tidy and the cushions where they should be when I come down for tea after the kids are in bed. Those are tiny details that show pride in our home and make me feel more organized and on top of things. As the kids get older I will add more to their chore lists (I can't wait to have them hauling wood into the basement for me, except for the thought of how much older I will be when that happens!).

So what do you think? I am interested in opinions on this one, as I can really see it from both sides. I don't want my kids to feel entitled and be spoiled and expect money for everything they do. On the other hand, I don't want them to expect to go to the pool or theatre and not realize that it costs money and money means someone has worked for it...I'd like to know what other parents are doing as far as allowance/chores go!


  1. People have wildly different opinions about this topic. But I do think that if you don't give children an allowance (or money that is their own) it is extremely difficult for them learn on their own. Having said that I think you have to also provide guidance and not just give them cash.

    Few things to consider:
    1) Be consistent and follow through. If their allowances are based on the chore chart, and they don't do their chores, are you going to look at their cute puppy-dog eyes and still give them the money? (This is key I think because if you do, then you will have thrown away a lot of your hard work.)

    2) Similar to the above, if you have told them that they can spend their money, are you going to let them. Far better for you to set rules for *how* the money is spent now, than for you to say no or get annoyed later when they spend it how they want. And as a parent you should set some rules on how they spend their money. Not draconian rules since they are kids but something is okay.

    3) Following on #2, they need to make mistakes. They may learn from them or they may not - a lot of this is outside of your control. But far better for them to make a money mistake at age 12 than at age 30. (The fact that you know cheap plastic sucks isn't something they will know until they buy something and it breaks or they realize it isn't worth their money.)

    4) I think your kids are pretty young for some of your expectations. (I've worked with kids so I do not say this completely out of turn.) What may actually help right now is if you give yourself an allowance as well - as a teaching tool. So you sit down with the boys and walk through your thinking process - why you would choose x over y.

    5) Following on from #4, at some point, it would be good to have them hear you discuss money generally and how it is spent in your home. Kids pick up on so much but having a sit down where they just listen (or they sit and eat/drink cookies and milk, while you talk or you and hubby talk can be invaluable). It doesn't have to be major, it could just be you talking about grocery shopping as well as water, electric, gasoline etc.

    Kids need to have a good understanding of what bills have to be paid (and why) and I think the best way to do this is informally where they are around but not yet part of the discussion. So they hear it. Then when they are older they can gradually take part in the discussion. And they learn very quickly that all the income rapidly disappears.

    Similarly, they can learn about how you are saving and why you are saving.


    1. Thanks Pru! I totally agree. The whole exercise, really, is to allow them some freedom to make choices and use those as opportunities to learn...perhaps I expect a lot of them (on paper, at least) but usually things are very fluid and although they might forget (and I might too) a chore one day, the idea is to learn commitment and make sure to do it the next day. If they consistently don't do their chores when reminded they know that the pay day won't happen and there would be discussion about keeping our word in an agreement and how jobs/pay works etc. It's such a small amount of money but really just a tool to initiate all of the conversations and situations that will arise.

      I guess they do hear us talk about money, very often in fact, although I hadn't thought of how they might absorb it. I was proud one day when my son was about 4 and was drawing on his magna-doodle with my dad. He piped up and said "we use this board so we don't waste paper or any of daddy's money" LOL. I've talked with them a bit about why we aren't buying some of the snacks and things they like, and why mommy isn't buying fabric (!) and just about how things are uncertain for many families and how we are very grateful to be a team who works together etc. I don't want to scare them but J especially is very sad when his dad has to leave for work and I need to connect the work/survival thing for him. Right now it's nice to see them excited to run around completing tasks and giving themselves check marks :) We will see how it works out in the longterm! Thanks for your point of view I do think it's bang on. Although others might see it very differently and have good reasons why. It's a good conversation to have!

  2. I've read lots of stories of how people (as children) sat with their parents on pay day as the checks were written so that they saw where every penny went. It allowed them as children to appreciate the work their parents did (and the correlation of how hard their parents worked for so little especially after taxes) but also gave them a good understanding of running a household and what was required. (And for many of those people it was not a special meeting just something that the family did every week or every 2 weeks.) I personally know some people who bought a home and despite growing up in a house had no idea of all the expenses that home ownership (more specifically house ownership) consists of. It's a shame - especially their first winter!

    I think it's like when parents send their kids off to college and the child has never cooked before or done laundry. When I went to university it was usually the young men and it was always funny in the laundry room when you would have the internal debate of "do I tell him what bleach is and what it does or should I let him find out and learn a lesson?" (I always told them but it was amusing!) :-)

    1. Your example of kids leaving for university unable to cook or budget is exactly what I'm trying to avoid!

      My worst nightmare is having a child misuse their things and expect it to be replaced. Most kids in our culture/community have so much that I think it's setting them up for a shock when they get out on their own. How about we learn to appreciate the basics and take very good care of what we have, work hard and save for what you want. If they are used to that growing up then they will always have those skills even if they live differently than I have encouraged. It amazes me that people don't teach their kids basic life skills like budgeting and cooking etc. It's a wonder they survive! Lol

      It's very true that kids will learn from what they see going on around them--whether it is fear and avoidance of bills or the process of paying things on time to avoid interest etc. Everything is a teaching opportunity :)

  3. My kids got a small allowance each payday. It was never tied into chores and pitching in to help because everyone is expected to contribute to family life in the home. We let them spend their money as they pleased. It was difficult at first. Those cheap plastic made in China toys broke or didn't work from the start. That taught them the value of quality. Wanting to buy quality taught them the value of saving money and patience.

    Both of the kids (they're now grown women who support themselves in all ways at 22 and 31) worked in my home-based business. They labeled soap, printed and packed orders, carried boxes to the van on shipping day and other age appropriate jobs for both the soap company and market farm. They were paid as employees and expected to save 50% of their hourly wage.

    Our world is in a financial nightmare. Kids can't learn these skills too soon. Some of the lessons, like cheap broken toys are hard to watch but life is sometimes hard.

    They're both frugal, pick and choose their purchases wisely, and don't deny themselves valuable/quality things they truly want and can afford.

    1. Thank you for your feedback Robin--it is very helpful. I agree that kids really need taught from the beginning to value quality and have patience. I see your point about not paying them to chip in as it should be expected of everyone--that's why I'm not paying them to help feed their animals. Now that I've started the chore chart and it's going well I'll probably leave it as is for now. But when they're a bit older and it's time for a change I will probably follow your example. I want the type of kids that work hard and help out :) thanks so much for your feedback!