Developing an allowance program
I’ve been really working hard at developing an allowance program for my kids. In case you missed it, here are some of the recent articles I have written:
- Should you give your kids an allowance?
- Should allowance be tied to chores?
- Incorporating your money values into your allowance program
- It’s important to teach your kids about money
Five parts to an allowance system
There is no perfect system. The key is to create a plan that makes sense for you and your family. Your plan must adopt for family values and your money values. Regardless of the details you want to incorporate into your system, I thought I would share the 5 things I looked at for our plan.
Timing; When should you start your children an allowance?
I’ve heard lots of different things from age 4 to age 8. I’ve decided to start three of my kids on a new program at the exact same time despite their age difference – Robbie is 7, Connor is 5, and Jason is 4. Some think age 4 is too young but I really feel Jason really wants to be like his older brothers.
The amount: How much will the allowance be?
Although I am starting the kids at the same age, I think they will get different amounts. Robbie can earn up to $2.00 per week, Connor can earn $1.50 per week and Jason can earn $1.00 per week.
Frequency – how often can they earn money?
I think it makes sense to monitor this on a weekly basis. I like the idea of monitoring and even paying daily but I think it’s just too busy. When I think about how often adults get paid, it’s usually bi-weekly but I think it needs to be more frequent so that we can monitor and enforce behavior and routine.
The conditions – what do the kids have to do to earn the allowance?
I still struggle with this one but I think I’m going to move to 5 days off and 2 days on the system. The 5 days a week when life is so much busier, they will each be responsible for certain chores that are not related to money (as part of their family responsibility and contributions). We will keep with our reward system on that basis. The allowance can be earned on the weekends when we have more time and will be tied to bigger tasks. That being said, if they do not do their chores during the week, they will get half the pay on the weekend.
Another part of the conditions I want to reinforce is to establish what can kids do with their allowance? The one thing I do not want is to encourage them to spend everything they earn. I really want to incorporate a savings program to teach them the importance of saving money. My thought is 10% of everything they make has to go to the BANK of DAD. They can spend the rest but I will help them manage the other 10%. In the future, I can see this 10% as a tool to teach them about interest, investing and compounding.
Tracking: How to track this
I’m a spreadsheet guy so I put together this spreadsheet to track the allowance program with our kids. It’s pretty simple but it gets the job done.Allowance Spreadsheet Template
Everything is a work in progress so if you have suggestions to share with me and with others, I would love to hear them.