I see headlines on blogs all the time like, “giving your kid an allowance is the worst thing you can do.” I’ve also seen headlines promoting the opposite. I’ve seen things like, “stop paying your kids for chores,” as well. And I’ve read all of them.
Beth Kobliner, author of Make Your Kid a Money Genius, says an allowance is important, but you shouldn’t link an allowance with chores.1 She also says you shouldn’t “bribe” kids by paying them for good grades or behavior.2 Dave Ramsey, co-author of Smart Money Smart Kids, says an allowance is useless and you should put your kids on commission.3 They’re both great teachers, with great ideas, and great books (I’ve read them both).
The main things I’ve learned is that semantics play a huge role here, and everyone is basically saying the same thing: don’t pay your kids for no reason. That sums up most teaching you’ll see on allowance. And I agree. But I want to share the specific system we use with our five children.
We all know there is not a one-size-fits-all answer here, and that every family (and every child) is different, and so on… do I really have to say that? I have a lot of experience in this area, so I’ll share what I’ve learned. Hopefully it will help you decide how to handle paying your kids.
Rent Vs. Pay Check
Just as some people prefer the terms allowance or commission, we use our own terms: “rent” and “pay check.” Those are the two categories our kids’ pay falls into. Also, we use the term “chore” synonymously with “job,” as in a one-time job. Any one-time job they do is called a chore.
We want our kids to understand that it’s not free to live in a home. Of course, they’re not going to be evicted, and they understand—through countless conversations—why we do it how we do it. Here’s how it works:
- Rent – Each child has a certain chore, or set or chores (depending on their age), that pays their share of the rent. If they don’t complete this, they have to pay rent. If they do complete this, that pays their rent.
- Pay Check – Likewise, each child has a chore (or chores) that they are paid for. This is their weekly pay check. I’ll explain how the weekly pay check works below.
By the way, another point everyone agrees on is that you must be consistent with making these payments (whether you call it a pay check, commission, allowance, or whatever), and preferably on the same day each week.
How the Pay Check Works
When everyone is completing all their chores, everything goes well, and our home functions like any other home that pays their children for work. It’s when our kids start slacking that things get interesting.
If someone doesn’t complete their pay-check chore(s), they don’t get paid for that day. The older kids have multiple chores with an amount for each, so it’s possible to get paid for one and not another.
If someone fails to complete all of their pay-check chores for three days in a row, they can be fired. I say “can be,” because obviously different life events play a role here. If they’re fired, the other kids have the opportunity to apply for the job. We have a job interview (teaching interview skills as we go), and someone else takes on the responsibility (typically for one week and then the job goes back to the original owner).
What’s interesting is who pays the new hire. The child who got fired pays the child who took over their job. This is a week of reflection for that kid, and they’re more than happy to take their job back over, and stop paying their sibling, after that week. It helps them tie losing their job to financial hardship on their level.
FamZoo is what we use to track our kids’ paychecks. We show them the digital payments, and we don’t have to worry about pulling out dollar bills every week. First Kid Bank is a free tool you can use to keep track of your children’s weekly paychecks. We also use a spreadsheet on the wall by the door. That way they see it every day, remember to do their work, and we can easily mark off the work that has been done.
Running the “Family Business”
This may all sound like a complicated system at first, but it’s really not. it’s easy to implement. It took some adjusting, but now the kids love it. There isn’t any sort of unhealthy competitive spirit in our home.
Our kids don’t fight for other kids’ jobs or anything crazy like that. Maybe they would if we hadn’t explained why we do this system. Now they understand the basics of having a job, doing well to keep their job, and what it feels like to get fired.
Some parents love our system. Others have criticized us for being strict or for making our kids’ lives stressful. I think it would stress out our kids if we ran this business like dictators, but we do it out of love and education.
Seriously, our kids couldn’t be happier with this system. They have the opportunity to make quite a bit of money — even more than the weekly pay check, as I’ll show you below.
Our kids have learned more about work and life from this method than any other method we’ve ever implemented. It’s all in how you administer it, and how you make use of the important conversations that this method creates – that’s where the real value comes from: crucial conversations.
Odd Jobs and Negotiation Skills
I think it’d be great if we taught proper negotiation skills in schools, but we don’t, so it’s something to be taught at home. The best way we’ve found to teach negotiation, and give our kids the opportunity to earn extra cash, is through odd jobs.4
When one of our kids wants to make some extra money, they can look around the house to find extra work. If they see something that needs to be done, they come to us with a proposal: what needs to be done and how much they’re willing to do it for.
We can either accept their offer, decline their offer (explaining why), or negotiate. We prefer to negotiate, for their sake.
Here’s a recent scenario:
Child: I noticed there are a lot of rocks, from the gravel part of our yard, that have made their way into the grassy part of our yard. I am willing to pick up all those rocks for $10.
Us: Let’s go check it out.
We see that there are plenty of rocks scattered throughout the grass, which creates a problem for the mower and weed eater, so we decide the job needs to be done.
Us: We would like you to pick up the rocks, but $10 is high for a job that looks like it will take less than one hour. How about $5?
In the beginning, they would usually take whatever we offered, but we’ve taught them to at least try to negotiate.
Child: $10 may be too high, but the work is tedious and I’m saving you guys from having to do it. What about $7?
Us: $7 it is, but only if you do a good job, and get the vast majority of the rocks. If we have to come behind you and pick up several additional rocks, we will still pay you $5. Does that work for you?
Child: Yup! I’m on it.
In this scenario, knowing that they may make less money if they don’t do a good job, they will typically get every rock. They learn the value of negotiation, and the value of getting paid what your worth. The harder they work, the more they earn.
It’s Work for You and Your Kids
This system requires dedication. The main thing is staying on top of your kids, and keeping up with paying them.
It’s not something you can tell your kids you’re doing, and then forget about. They will take this extremely seriously, and it requires you to check (and check off) their work every day. If you tell them they can be fired after so many days of not completing their pay-check chores, then you must follow through.
Again, make sure you pay them consistently. Find a good day of the week (typically a weekend day), and hand out their pay check(s). Don’t forget to run by the ATM for the singles. There will be times when you forget and you have to postpone their pay check for a day or two, but keep this as rare as possible.
Another option is to print off pretend checks, and actually give them a pay check. This is great for kids to understand checks, and especially receiving a pay check. Plus, for younger kids, it may be better than having them personally keep track of dollar bills. Don’t forget to make sure you’re keeping track of how much you’re allocating to them as well so you’re not blindsided when they want to get their money later.
You can download printable educational checks here.5
If you take a system like this seriously, so will your kids. It’s a great outline for you to create your own similar system, or use this exact system. Find what works for you, implement it, and stick with it.
Further Book Reading
- Teach Your Child to Fish by Holly D. Reid
- Make Your Kid a Money Genius by Beth Kobliner
- Money Monster or Money Master? by Norma LaFonte
- Moneybags: A Guide to Teach Your Kids About Money by Wendy Gillespie
- Smart Money Smart Kids by Dave Ramsey & Rachel Cruze
Last Updated: June 27, 2020
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- Kobliner, B. (2017, January 13). Should I Give My Kids Allowance? BethKobliner.com
- Kobliner, B. (2017, May 2). Should I Bride My Kids for Good Grades or Behavior? BethKobliner.com
- Ramsey, D. (2013, October, 27). Paying the Kids. Ask Dave.
- We got this idea from Cameron Herold’s TED talk.
- Thanks to Education World for providing these pretend checks.
You CAN Raise Money-Smart Kids!
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