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I’m Sierra. I live in the Boston area with my family.

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Kid's allowances: what's the right approach?

by Sierra on June 21, 2009 · 20 comments

in money,parenting,Uncategorized

Rio's allowance jars

Rio's allowance jars

This post at the Simple Dollar got me thinking about kid’s allowance money. It got me thinking too much for a blog comment over there, so you get to read all about it.

Kid’s allowances are one of my most regular cash expenses, along with groceries and gas for my car. All the frugal living tactics I know of would tell me to cut them out, just like I’ve canceled all my magazine subscriptions and club memberships. They’re a recurring weekly expense that is not strictly necessary, and they’re not helping me pay down my debts. That’s not a line item I want to see in my budget.

But I keep giving the kids an allowance. Why?

I want my children to share in the wealth of the household. Everyone who lives here gets a bed, clothes to wear, food to eat, time and space to do work they love and to pursue a social life, and the loving support of their family members. Everyone also gets a little pocket money, that comes from the income brought in by the adults in the house. I don’t consider this stuff everyone has a right to, it’s just the contract we’ve made within our family about how we run our household.

There aren’t any restrictions on getting the allowance. It is theirs whether or not they do chores, behave themselves, or spend it wisely. Just like the expectation that they will help clean up after meals and treat everyone in the house with kindness is there whether they’ve had a bad day or the other sibling really started it or they just don’t want to. It’s part of being in this family.

I understand that many people also use allowance money to teach kids about how money works, and if mine learn something from getting theirs, so much the better.

Here is how we do it: everyone over the age of 4 gets a weekly allowance equal to one dollar per year of their age. If you are a child, that allowance is divided into four categories: Savings, Spending, When I’m A Grown Up (this is known as Investing to adults) and Giving. Trent from Simple Dollar calls this approach The Money Savvy Pig Philosophy. I first read about it in a magazine where I think it was simply called “a good idea”.

We started giving an allowance to my older daughter when she started asking me to buy things for her that I did not want to buy – in particular a replacement for a pair of sparkly sequined shoes that had been given to her as a gift, and which she wore till the sequins rubbed off and the soles gave out.

When Rio began getting her allowance, she saved carefully for those sequined shoes, and after about two months was able to buy them. She was thrilled to buy them with her own money, but hasn’t saved up for a big purchase since. She has nearly worn out the new pair by now, and has plenty of money saved up to replace them if she wants to.

I got four glass milk jars from a local dairy and labeled them Spending, Saving, When I’m a Grown Up and Giving. Rio helped by decorating the labels with watercolors. Then I began giving her four dollars a week with the caveat that she needed to put one dollar in each jar. Now that she gets $5 a week she can choose where to put the extra dollar. Mostly she uses it to buy bubblegum.

Like Trent plans to do with his son, I started out giving Rio her allowance in Sacajawea dollars, but stopped when she got upset by that and said she wanted to get paid in “real dollars”. I may start again because someone gave her a Sacajawea dollar for her birthday and now she’s fascinated by them.

My teenage stepson also gets $15 a week, one dollar per year of age. This feels like a lot to me, but is also about what he spends on bus fare and a few trips to the cafe around the corner to get some quiet time away from his sisters. Unlike with the little ones, I don’t restrict how he spends or saves his allowance. I do model what I hope is good behavior with money, and talk openly with him about frugality. The other day we built a bicycle together out of spare parts so he’d have a summer ride, rather than buying him a new bike. I think he learns a lot that way.

Is he too old to just be handed money? I don’t think so. Right now he has perfect grades, a weekly volunteer gig and a heavy load of summer reading for his fall classes. I don’t want him to sacrifice any of those things to a summer job because he feels a want of pocket money, so I give it to him. I worked a lot in high school, and I don’t think it taught me anything useful about managing my own money or helped me build any career skills for my future. My time would have been better spent doing more volunteer work and creative skill-building, so that’s what I want my kids to focus on.

Serena, the toddler, got in on the allowance action when she saw me giving money to the other kids. She wanted to be part of that ritual so badly she actually learned to say the word “Money”, or something like it with fewer consonants and more insistent hand gestures.

For Serena, I created a single allowance jar, also using an old milk bottle. I give her a few coins from my wallet each week. We put the coins in her jar together, and a few times a week when she wants to play with it, we take her jar out and she gets to dump all the coins on the floor and carefully pick them up again and put them back in the jar. She gets real value out of the money I give her – as a toy! And she doesn’t feel left out of the allowance system.

I’m sure our system isn’t perfect, but we haven’t run headlong into any big problems with it so far. Except the recurring expense issue, and I can happily afford $20 a week for my kids’ allowances. Because I’ve learned to live frugally myself in so many other areas.

What do you do with kids and money? Do your kids get an allowance? How much? Under what conditions? Let me know in the comments.

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  • http://www.jenniferhunter.com/ Jen Hunter

    I like this idea, and we may implement it with Ilana. How long does Rio have to save the money in the “saving” jar?

    [Reply]

  • http://www.jenniferhunter.com Jen Hunter

    I like this idea, and we may implement it with Ilana. How long does Rio have to save the money in the “saving” jar?

    [Reply]

  • Cordelia

    With my kids it’s similar, but the rule is $1/year of your life/week until you are 5, then $5/week. I’ve considered upping it to the age/week for the Big Girl, but so far we haven’t changed it. So far she only has two categories — save and spend, only it tends to always go into savings until there is something she’s really ready to buy. For big items we may not always make her save up the full amount, but we tell her what her savings target is, and kick in the rest when she reaches it. (She saved up $50 of her own money to buy a scooter, but needed a heavier scooter that cost $80, so we spent the remaining $30-odd.)

    [Reply]

  • Cordelia

    With my kids it’s similar, but the rule is $1/year of your life/week until you are 5, then $5/week. I’ve considered upping it to the age/week for the Big Girl, but so far we haven’t changed it. So far she only has two categories — save and spend, only it tends to always go into savings until there is something she’s really ready to buy. For big items we may not always make her save up the full amount, but we tell her what her savings target is, and kick in the rest when she reaches it. (She saved up $50 of her own money to buy a scooter, but needed a heavier scooter that cost $80, so we spent the remaining $30-odd.)

    [Reply]

  • http://www.rebeccaweger.net/ Rebecca Weger

    While I do not have children of my own, how my parents handled money with me while growing up made a *huge* impact on my life.

    I don’t remember how my allowance worked as a child. I believe I was given a set amount a week that had some fair system by years, and there were no chore requirements that went with it. As I got older, my parents paid me an hourly rate to mow the lawn (which was a fairly substantial undertaking) that was in addition to my allowance. Once I was in high school, the allowance calculation shifted. I believe at one point my allowance was probably as high as $25 or possibly $30/week. Before folks exclaim that was high – especially back then – also understand it was not practical for me to work very much, and my parents did not ever hand out money to me.

    A percentage of it (let’s say half) was mine to do with as I pleased. For a while, I had a boyfriend who was a long-distance phone call away. I had to pay the phone bill for that and saved my allowance money to do that. Or perhaps it paid for me to go to a movie with my friends.

    The other amount was allocated for expenses. Mostly that was school supplies and food (I was a pretty involved kid and was out of the house 3-4 nights a week). That amount of money was subject to negotiation based on my actual expenses. If I remember correctly, I could petition for a raise by providing 2-3 weeks worth of receipts for those expense and proposing what I needed.

    Essentially, I also had an allowance in college. It was given to me in a lump sum for each semester. There were some expenses my parents would reimburse me for (I was an art major, so the structure of my school expenses was atypical). But the key word there was reimburse. I had to collect receipts, annotate them, and send them home with my accounting. They would review them and deposit the corresponding amount in my checking account (for which they had deposit slips).

    I learned so much from all of that, and I wouldn’t trade it for anything. I never had anything like your milk bottle system, but it sounds fantastic. It provides an additional dimension about values that I’m still grappling with as an adult.

    [Reply]

  • http://www.rebeccaweger.net Rebecca Weger

    While I do not have children of my own, how my parents handled money with me while growing up made a *huge* impact on my life.

    I don’t remember how my allowance worked as a child. I believe I was given a set amount a week that had some fair system by years, and there were no chore requirements that went with it. As I got older, my parents paid me an hourly rate to mow the lawn (which was a fairly substantial undertaking) that was in addition to my allowance. Once I was in high school, the allowance calculation shifted. I believe at one point my allowance was probably as high as $25 or possibly $30/week. Before folks exclaim that was high – especially back then – also understand it was not practical for me to work very much, and my parents did not ever hand out money to me.

    A percentage of it (let’s say half) was mine to do with as I pleased. For a while, I had a boyfriend who was a long-distance phone call away. I had to pay the phone bill for that and saved my allowance money to do that. Or perhaps it paid for me to go to a movie with my friends.

    The other amount was allocated for expenses. Mostly that was school supplies and food (I was a pretty involved kid and was out of the house 3-4 nights a week). That amount of money was subject to negotiation based on my actual expenses. If I remember correctly, I could petition for a raise by providing 2-3 weeks worth of receipts for those expense and proposing what I needed.

    Essentially, I also had an allowance in college. It was given to me in a lump sum for each semester. There were some expenses my parents would reimburse me for (I was an art major, so the structure of my school expenses was atypical). But the key word there was reimburse. I had to collect receipts, annotate them, and send them home with my accounting. They would review them and deposit the corresponding amount in my checking account (for which they had deposit slips).

    I learned so much from all of that, and I wouldn’t trade it for anything. I never had anything like your milk bottle system, but it sounds fantastic. It provides an additional dimension about values that I’m still grappling with as an adult.

    [Reply]

  • Rich Wilson

    Did you mean to put a link to Simple Dollar at the beginning? I don’t see one, but it sounds lik there should be one.

    [Reply]

  • Rich Wilson

    Did you mean to put a link to Simple Dollar at the beginning? I don’t see one, but it sounds lik there should be one.

    [Reply]

  • http://www.beingshadoan.wordpress.com/ Rachel Shadoan

    I like your system! Do you regulate how the “Giving” bottle is distributed?

    What I would like to do is implement a faux economy within a household, separate from an allowance system and using fake money. (I believe the Lancastrian school system used something similar.) Basically, every transaction has some value attached to it. If an individual does chores, each chore is assigned a certain value, which they receive in faux currency. (Bottle caps is a good choice for Fallout fans, but I’m pretty sure that anything would work, including just a spreadsheet.) Bonuses can be awarded for particularly good jobs. Any service rendered for an individual in the faux economy “costs” currency. Services rendered being like, doing laundry, cooking dinner, driving, etc. I think it’s useful for teaching children how our economy works, and it might potentially make them appreciate the work involved in running a household.

    On the other hand, it is kind of mercenary, and you can’t exactly not feed your 4 year old because they’ve run out of faux currency… So the system maybe needs some tweaking.

    [Reply]

  • http://syntacticsugah.blogspot.com Rachel

    I like your system! Do you regulate how the “Giving” bottle is distributed?

    What I would like to do is implement a faux economy within a household, separate from an allowance system and using fake money. (I believe the Lancastrian school system used something similar.) Basically, every transaction has some value attached to it. If an individual does chores, each chore is assigned a certain value, which they receive in faux currency. (Bottle caps is a good choice for Fallout fans, but I’m pretty sure that anything would work, including just a spreadsheet.) Bonuses can be awarded for particularly good jobs. Any service rendered for an individual in the faux economy “costs” currency. Services rendered being like, doing laundry, cooking dinner, driving, etc. I think it’s useful for teaching children how our economy works, and it might potentially make them appreciate the work involved in running a household.

    On the other hand, it is kind of mercenary, and you can’t exactly not feed your 4 year old because they’ve run out of faux currency… So the system maybe needs some tweaking.

    [Reply]

  • http://childwild.wordpress.com/ Sierra

    She doesn’t have to save it for an amount of time: it’s a jar in which she can save for specific things. I think it took her about two months to save for her shoes, and another month to save for holiday gifts at the church fair. Since the holidays she has spent very little money, so her jar is just accumulating dollars. Presumably she’ll have them when she finds something she wants to buy.

    Lately she’s been using her spending money to buy gum and go to yard sales. If she runs out of ready cash in that jar, she may get more motivated to form long-term savings goals, but since she basically just stockpiled dollars for six months she has a cushion.

    [Reply]

  • http://childwild.wordpress.com/ Sierra

    She doesn’t have to save it for an amount of time: it’s a jar in which she can save for specific things. I think it took her about two months to save for her shoes, and another month to save for holiday gifts at the church fair. Since the holidays she has spent very little money, so her jar is just accumulating dollars. Presumably she’ll have them when she finds something she wants to buy.

    Lately she’s been using her spending money to buy gum and go to yard sales. If she runs out of ready cash in that jar, she may get more motivated to form long-term savings goals, but since she basically just stockpiled dollars for six months she has a cushion.

    [Reply]

  • http://childwild.wordpress.com/ Sierra

    I don’t regulate how the giving bottle is distributed – I told her we’d pick a thing to donate it to when it fills up. If she comes to me with an organization she wants to support, that would be great, otherwise I’ll probably present her with some choices.

    [Reply]

  • http://childwild.wordpress.com/ Sierra

    I don’t regulate how the giving bottle is distributed – I told her we’d pick a thing to donate it to when it fills up. If she comes to me with an organization she wants to support, that would be great, otherwise I’ll probably present her with some choices.

    [Reply]

  • bernadettenoll

    I love this and the expansion beyond just the Spend, Save, Share. We don't do allowance but the kids get money from here and there: gifts, babysitting, tooth fairy, etc. I love that your $$ given isn't attached to any thing else such as chores or behavior. Having to figure it out any other way as a parent seems like it'd be a difficult task. Thanks for the post.

    [Reply]

  • bernadettenoll

    I love this and the expansion beyond just the Spend, Save, Share. We don't do allowance but the kids get money from here and there: gifts, babysitting, tooth fairy, etc. I love that your $$ given isn't attached to any thing else such as chores or behavior. Having to figure it out any other way as a parent seems like it'd be a difficult task. Thanks for the post.

    [Reply]

  • bernadettenoll

    I love this and the expansion beyond just the Spend, Save, Share. We don't do allowance but the kids get money from here and there: gifts, babysitting, tooth fairy, etc. I love that your $$ given isn't attached to any thing else such as chores or behavior. Having to figure it out any other way as a parent seems like it'd be a difficult task. Thanks for the post.

    [Reply]

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