Why we don’t pay our kids allowances and how we use that fact to teach them money management and fiscal responsibility.
As our children age, their awareness of money becomes greater. They begin to notice the adults in their lives paying for things with some form of money, be it cash, checks, or credit/debit cards.
And they begin to want some of their own.
Whether it starts out because they want a certain toy and you say no and they realize if only they had the cold, hard cash to buy it with, then they wouldn’t have to go through you (faulty reasoning though it may be) or whether they begin getting cash for Christmas and birthdays from relatives and realize they can buy their own presents with that money, at some point they become aware of the fact that their WANTS could become their POSSESSIONS if only they had MONEY (again, faulty reasoning, but foolishness IS bound up in the heart of a child).
From this stems the discussion of an allowance and whether or not the children of the home have full possession over their money or do mom and dad still have some control?
And what about chores? Or odd jobs? Do you pay for these jobs or are they an expected part of living in the household?
This is such a personal discussion and decision, I don’t want to tell you there is one right way, but over the years we have been asked all of these money questions and more from other parents, and I thought you might be interested in how we handle the finances of our children.
1. We do not give our children an allowance. Since we are raising adults, we take our reasoning from the adult world. Most people do not get an allowance. They work for their living. Therefore, our children do not get “free money” either.
2. We do not pay for chores. Again, taken from the adult world…anything that is part of the normal day-to-day operations of the household are not compensated monetarily. I don’t get paid for cooking the meals and changing dirty diapers and my children do not get paid for washing the dishes and taking out the trash.
3. We DO pay for jobs that are above and beyond the normal household duties. For instance, we pay for cleaning out the garage, washing the car, babysitting for an extended period of time, and doing any job we would have to pay someone else to do.
4. We pay for any little businesses our children are trying to create. My children give foot massages and back rubs to their poor achy mama and their daddy pays them for it. It’s not a booming business, but we feel that if they work hard at something in the effort to make a little money on the side, then that is a noble cause and worth payment. I also pay them for any blog work that I need done that they are capable of doing. In the adult world, this is called being a Virtual Assistant and because I would have to pay to have this done, I am willing to pay them.
5. They are expected to help pay for WANTS. We require our children to pitch in with WANTS. When our oldest son wanted to go to Space Camp, we had him pitch in half the cost. When our younger boys wanted a new computer, we had them provide some of the funds for it. Space Camp was something extra and our old computer was working just fine for school stuff. That put both of those things in the WANT category.
NOTE: We do allow these types of wants (like my daughter’s new camera) to be given as gifts or gift money to go toward them, but our philosophy is that a WANT means so much more when you have to work to pay for some of it.
6. As they near adulthood, they are expected to help pay for NEEDS. Our kids don’t get cell phones until they need them, but when they do, they pay for the extra line. They buy their own cars and pay for their own insurance as soon as they are able. Some of our kids have even paid rent because they were too busy outside the home to pitch in enough to “earn their keep” as adults.
This is a case by case scenario in our home, but we slowly, but surely try to guide them toward adulthood and what that means financially. I know some families who require children who are working outside the home to help with electric bills, water bills, and more.
Ultimately, I do not want my children blindsided by how much it costs to be an adult on their own. I don’t want to overwhelm them with bills, but I do want to slowly introduce them to the “real world.”
7. They are expected to be generous. Whether that means they pay for an occasional ice cream for little brother or they pitch in with the Samaritan’s Purse shoebox, we expect them to not be tightfisted when it comes to their money. They give at church, they help buy things for people in need, and they buy presents for each other. We want them to be fiscally responsible without being Ebenezer Scrooge.
8. We hold on to their money until they are 7-ish. When Christmas or Birthday money comes around, we, as parents, take control of that money and store it away for them. If they want something and that want is reasonable, then we dole the money out accordingly. We don’t really have a set age when this ceases, I just said 7-ish because my 7 year old does take care of her own money now. The reason we do this is twofold:
- Young children are notoriously irresponsible. Piggy banks become something fun to play with around here, so if we take charge of the money, we can be assured the money is safe from floor vents and baby’s mouth.
- Young children need a lot of guidance on what to use their money for. They seem to be unaware of the fact that they already own a whole truckload of toys. Mom and Dad know much better where their money needs to go.
9. When it’s gone, it’s gone. We don’t do loans. Again, looking to the adult world…we live debt free and it is our belief that teaching children that mom and dad can “float them a loan” teaches them to be impatient and irresponsible. This kind of thinking leads to Pay Day Loans and bad credit with bills they cannot pay. Debt is a curse. Even when you are 10.
10. Family finances are not a secret. This past summer vacation, we required our son to tally up every single receipt along the way in order to get a grasp of how much it costs for our family of 8 to go on vacation. We did this in the spirit of TANSTAAFL (see Whatever Happened to Penny Candy for more info on this rather useful acronym that stands for There Ain’t No Such Thing As A Free Lunch).
It is important our children understand the value of a dollar and just how much their everyday lives cost. Yep, goes back to that adult world again!
11. Money is NEVER more important than people. Ty and I have always made an effort to put people before money. When my father was sick with Alzheimer’s and we lived 3 ½ hours away, my husband was adamant we be available to head back “home” at the drop of a hat. Many people made fun of our “burning up the road,” but my father was more important than the almighty dollar. The money to make one more trip was always there, and I will forever be grateful for the time I got to spend with him.
And that, my friends, is my humble $.02.
Originally posted in 2011. Updated in 2024.
Melisssa Howard says
A very thoughtful and helpful post. We already fully subscribe to one and two and have been trying to work out three and four.
Thanks for this post.
Sheila Gregoire says
Hi Amy,
Great thoughts! Thank you. What I’d add is that when kids reach a certain age, I also expect them to take responsibility for their own expenses. So when they reach 13, we give them a clothing allowance, which they are expected to make last for a year. And the kids have done so well with it! They’ve fallen in love with thrift stores so they can keep the extra money.
The other thing that I’ve found absolutely essential with teaching about money is to not buy your kids stuff every time you’re out. If you’re always picking up an ice cream cone for them, or a chocolate bar, they have no incentive to want to have their own money, so thus no incentive to do these extra jobs. You have to make them WANT that money! 🙂
I love how you’ve distinguished between needs and wants. So important. And teaching generosity is, too. Have a great Monday!
Jacki says
While our kids are still young we compile all their money in a piggy bank on a bookcase (they enjoy putting the money it in abd the bookcase keeps it off the floor…they haven’t tried to climb it yet so we are still good). This completely verbalized what we want to do with them when we get older. Thank you for posting this, I will be showing my husband later.
Lauree says
I LOVE this post Amy!! I never thought of having my son (the only one who earns money right now)save up to pay for half of a “want”, like a camp! We’re going to do that. There is a Christian camp he wants to go to next summer and that will be perfect! We also don’t give “free allowances” and they all do chores that are just considered part of running a household and being part of a family. He earns money by special chores, etc. and gets paid when Daddy gets paid. I love the foot massage idea!:)
Renee says
Beautiful post! thank you for sharing with us. We do the same about not paying for doing chores, we do however teach them that if they don’t work (do their chores) they don’t eat.
This might sound harsh, but they learn at a very young age the value of hard work and work ethics… and by all mean none of our children have starved nor being lacking nourishment! They have learn to pick up their toys before a meal, in order to eat it, that’s all!
Betsy M says
Thanks for this post. It has been a much debated topic in our house lately. My oldest (7 yr old) is begining to grasp the money idea -and wanting to earn it. I really like that idea of foot massages for Mom and Dad and the kids tracking the expences for vacation – smart!
We have pretty much the same system as you – but our kids are still young so I was not certain if it would work or not. I have two older neices with absolutely NO money sence and want to avoid that with my kids.
I must agree 100% with that last bit about how people are more important than money. My Dad is also sick and we head home to visit and help out sometimes twice a week. The funds are tight but life is short and money is only money after all.
Christy dR says
Thanks for the post! I’m not really there yet, but my 4 year is VERY aware of money and right now he’s saving for a helicopter. 🙂 Good thing he is starting young! I really like having a stipend when I got my permit ( my older sis could drive with me). I was responsible for everything accept food and lodging. I bought my own shampoo and cosmetics and such. I think it really did help me learn HOW to spend. So I second the suggestion, though I personally will hold off until they are driving so they don’t have to rely on me to get them to the store.
brandy says
Love your thoughts! My daughter is an only child at 7. She is the only grandchild on both sides of the family. Even though I try to keep Grandparents from doting on her if they find out there is something she wants they give it….So Money hasn’t been a big interest of hers. Though she always wants to take her purse and pay for dinner when we go out.
Just this last year she begged for an American Girl Doll. Well I knew they were outrageously priced….but Daddy said…that if she would earn 1/2 the money we would pay the rest. It took her 7 or 8 months to earn her 1/2. We don’t do money for holidays so she helped in the yard, helped at several yardsales, helped clean at MaMa’s beauty shop.
We have really been talking depth about how much things cost, why we buy this and not that, why we need to wait till we have a coupon or a sale, etc. So we are now starting a Dave Ramsey like money program at home. We talked about why we use money and this is what she and I came up with: Savings for the future(at the end of the year deposit into college savings), Saving up for something special(doll, ipod, etc), Charitible giving (church, Humane Society, friend in need, etc), and spending (Friday ice cream at school, Other school stuff, candy, etc).
We are decorating recycled containers to be her “bank”. I have high hopes.
Amy @ Our Own Village says
Wonderful points and ideas!!! Thanks for sharing!
Alana of Intentional Womanhood says
Such a timely post! My son is only two, going on three, but I just experience his first display of greed. I just bought him a new toy the other day and he played with it a mere 5 minutes before asking for another toy he wanted from the store. I placed his new toy on a high shelf and explained that he should be thankful for the toys he has. I also told him that he would be receiving no new toys until his birthday {beginning of Dec}. I spoke to both sets of grandparents {who constantly buy for him} and all are on board.
I am going to keep all of these points in mind as my son gets older and as more children join our family {hopefully} in the near future. Thank you for sharing!
Ginger says
That is exactly how we handle it! Exactly. What are the chances!
We pay our kids to clean out the van or make my bed or tidy my bathroom, but we don’t pay them to do their own chores.
I also learned not to say “I’ll buy this toy for you and you can pay me back later”. That’s debt! After doing that once and realizing she didn’t even have enough money at home (thus it became my job to give her enough chores to work it off); I realized I was actually teaching her to carry debt. Lesson learned.
Melissa says
I hadn’t thought of this as teaching them to carry debt! What an excellent point!!! I also have forgotten to transfer the money out of their account and ended up forgetting what amount I was supposed to move for them. Lesson learned to mama – deal with it right away!
Lauri B says
tracking right with ya!!! We do these same things!! how wonderful to find somebody we click with in terms of finances!!!
MissMOE says
You’ve been nominated for the Versatile Blogger Award. Come check it out.
http://missmoe-thesearethedaysofmylife.blogspot.com/2011/10/i-have-been-nominated-by-lovely-latasha.html
Theresa says
I really like all of this!! Thank you so much for posting, I plan to share this with my husband.
Melissa says
Another wonderful post Amy! I love your thoughts on this. We are still trying to figure out what will work for our family, as our oldest is only now old enough for this to become a concern. I don’t want to pay for their regular chores. I think there is a danger in them then deciding ” I don’t really want money for anything right now, I get to avoid chores.” Pitching in is part of family life, BUT I do want them to learn to use money responsibly, so they need to practice now while they are young and their mistakes don’t come with the large stakes that adult ones can. I let my children choose things to buy with their gift money, and we discuss making wise decisions. Sometimes, after a purchase turned out not to be quite as fantastic as they had anticipated, we also get the chance to discuss regret and help them learn to make a wiser decision the next time.
In the area of money, my proudest moment of my son was when he sold a large ride-on toy he no longer wanted. He wanted a DS, and sold the toy to save money towards it. he had enough money for a new one, but I had to point out that he would then have no games to play ( they dont come with any). He decided to buy a used one, and had enough left over for two games ( also used). I think he learned a great lesson.
Danielle B says
Yep, we only give out money when they go above and beyond their chores. And they MUST tithe and give offerings out of that money.
As for the people joking/making fun of you all for burning up the road. So sad! Obviously they’ve never had a sick family member. I would not consider them to be friends anymore. You do NOT make light of that kind of situation.
Nutmeg @ the Godly Photographer says
I very much like your idea for Samaritan’s Purse!
Monica says
I admire the way you’re incorporating real life in how you’re handling money and chores with your children. My husband and I have discussed this extensively and have come to many of the same conclusions.