I was never taught much about handling money as a child or teen–and fortunately I have the common sense to know to spend less than I have–but I want my kids to learn how to handle money early on in their life.
Using A Commission System for Household Chores
To help my kids understand the connection between working and earning money, we’ve implemented a commission system similar to what Dave Ramsey teaches. The kids have chores that they do simply because they’re a part of the family. This includes making their beds, picking up toys and keeping living areas tidy. But as any parent knows, those chores simply keep the house looking nice; they’s plenty more work to be done.
Create A List of Chores that Earn A Commission
So to give the kids a chance to earn money, they can tackle some of the more challenging and unfavorable tasks that keep our house looking nice. Included on this list are: washing the dining room chairs, scrubbing the toilet and washing the baseboards. Money Saving Mom has a great list of chore ideas for young kids.
Track Completed Chores
Complete tasks are kept on a chart (Tip Junkie links to some free printables) and a dollar value is assigned to each one. At the end of the week, the money is tallied up and money is dispersed.
Pay Commissions Regularly
I’ve learned that younger kids are most encouraged and eager to keep working when they’re paid upon the completion of a chore. By the time kids are in second or third grade, though, you can transition to paying them once a week.
To keep money management simple for the kids, we require that 10% is set aside to give to charity, 20% is saved for a short term goal (a dress for a friend’s birthday) and 20% is saved for a long term goal (a new bike or college). The remaining 50% can be spent or used to accelerate saving for a goal.
Give Kids the Opportunity to Spend
Once you’re system is in full swing, you can put a stop to all the requests for ice cream and cheap-o plastic toys by requiring the kids use their spending money to purchase the items. Allow your kids to bring their spending money on trips to the store so they can buy something if they really want it.
Do you have your kids on a commission system to earn money? Share your tips and successes in the comments below!