Teaching kids about money by paying them a weekly allowance seems like a no-brainer, win-win situation. They get to earn spending money for things they want that you would otherwise veto, and you get to teach them the value of hard work while getting a little extra help around the house (and maybe some good behaviour).
Anyway, that was the theory.
When we first attempted to introduce the concept of an allowance to our Kindergardener, it was a disaster. Like completely backfired so badly that we didn’t revisit the idea of a weekly allowance until much MUCH later when we had all recovered from the trauma.
Let me share the story.
As newbie allowance payers, we decided to keep it simple. I don’t remember the exact numbers, but it was something like a dollar a day (or even 50 cents a day) to tidy up her toys AND listen when she’s asked to do something, like going to bed without making a fuss. The second condition was where it all went horribly wrong.
You see, getting our stubborn little girl to tidy up her stuffies was the easy part. It was the listening without the “why’s” and “I don’t want to’s” that posed a challenge. On the disaster day in question, she proceeded to fuss about something and I remember saying in a stern, but not angry voice, “Oh buddy. I don’t think you’ve earned your allowance today.”
The words that I will never EVER forget because the next thing I know my little girl had silently toddled off to her room and came back teary-eyed, clutching her piggy bank containing her entire savings, that included both her previous allowances and gift money from grandparents.
“Here. Take it all. I don’t deserve it.”
And that was the end of the weekly allowance for a long, long time.
Starting Your Kids on an Allowance
Besides learning from our obvious mistakes, here are a few tips on starting your kids on an allowance:
Get a Little Help — Download the TD Family Allowance app developed by TD Lab (available for iOS and Android devices). Designed for and by moms (like me) to teach kids about saving money, the app lets kids set up savings goals, check off allowance tasks and track savings progress, and it lets parents assign chores by child, track chore completion and see allowance payments.
Be Realistic — Match your family allowance program to your family style. If you aren’t the type of family to stick to a weekly routine, use the Family Allowance Up for Grabs option to set a rate for individual tasks that anyone can choose to complete to earn extra money.
Set Savings Goals — Have each child pick something to save for so the app can show them how they can achieve their savings goals by continuing to save. The app even shows kids how many allowances they need save to be able to afford whatever it is they are saving for.
Keep It Simple — Set a day of the week to review the chore lists and pay out allowances. Set a task reminder in your calendar if you think you will forget until it becomes part of your weekly routine. Payday is also a good day to sit down with the kids and review their savings progress.
Motivate, Don’t Overwhelm — Don’t assign too many task to begin with or introduce unnecessary barriers to them successfully earning their allowance. Use the Up for Grabs option for eager earners who want to do more for a particular savings goal.
Be Consistent — Once you start paying kids a weekly allowance, stick with it. In doing so, not only are you teaching kids the value of saving money, but that saving is something that is best achieved over time. It’s better to have one or two weekly tasks and a correspondingly small allowance than no allowance at all.
Let Them Spend — Try to not edit their spending choices too much beyond banning unsafe or inappropriate purchases. There are many important life lessons to be learned in overspending on a frivolous purchase that delays them reaching their bigger goal. Plus, controlling what they spend their money on is one of the perks of earning it.
Disclosure: This post was sponsored by TD Canada, but, as always, opinions are my own.