3 steps to a personalized income plan for your children
Photo by: wsh1266
This is a guest post by WJ, a husband, father, fellow Christian and frequent commenter here on Gather Little by Little. WJ had made a very informative comment on my article, 10 Ideas To Help Teach Your Kids About Money. I asked him if he might be interested in expanding further on how he helps teach his kids about finances by writing a guest article. Fortunately for us, he was kind enough to do so and I think he did a great job! Thanks WJ!
Here are 3 steps to a personalized income plan for your children:
1. Determine a fixed amount of weekly allowance
The first step is to decide on the amount of the allowance and what chores must be completed in order to receive this amount. For example, in order to receive ten dollars a week, our child must keep her room clean, place dirty clothing in the laundry room, as well as put away clean laundry. Even though the opportunity to earn extra cash is made available, we found it best to make this an all or nothing step. Choose what chores are most important for your child to complete, and then explain in great detail that all of the chores must be completed in order to receive the allowance. If all “normal” chores are not completed, we do not allow a chance to earn extra money.
2. Set amounts for other chores that need completed regularly
In our house (as well as most others I suppose), there are many chores that need done regularly that get neglected. Here is a quick list of some of the ideas we have used:
- Carry firewood into house for fireplace (rack holds about 12 logs): $2.00
- Help clean up after supper (usually amounts to drying dishes): $0.50
- Vacuum carpet in entire house: $5.00
- Dusting furniture and window seals: $3.00
There are a few more, but those are the regular activities that are used to gain additional income in our household. It is also important to set a maximum that can be earned in one week according to the family budget. If the budget allows for $100.00 a month max, then of course you do not want to exceed that. If that boundary is not placed (even if you have loads of cash to give) you will find your child trying to work 23 hours a day when that next Disney vacation package is advertised!!
One option to consider if your budget has reached its limit is to let the child talk to other members of the family. Grandparents often have things they would like completed as well as getting to spend time with the young one. If you are willing to set a schedule to encourage your child’s endeavor, the possibilities are limitless. There are several people in our neighborhood that will pay to have limbs removed from their yard before mowing; general landscaping (removing weeds, spreading mulch, etc.); walking the dogs, and so on. These are activities that I recommend adult supervision for, but they are a great way to encourage wage earning as well as entrepreneurship.
3. Encourage charity, saving, and investment.
Try using any system that will divide the money into categories. We simply use three mason jars. The first jar is for tithing, ten percent off the top of everything earned.
The second jar is the savings/investment jar. Start off with whatever percentage feels right to you and your child. Once a month we deposit this jar into an ING savings account and have set a goal to reach. After that goal is reached, we are going invest in higher earning accounts, and start the process all over. Our daughter danced for five minutes when her initial deposit earned sixteen cents!! It was a great experience to see that connection take place in her mind!!
Finally, the third jar is used for spending however the child wishes (within reason of course). It is important for anyone to enjoy the fruits of their labor.
A few final thoughts
Some of the benefits of this are obvious, others are hidden. One thing that comes into play is the extra amount of time that becomes available. By completing extra chores, your child will create time that was unavailable when the parents were taking care of everything. For us, time is the most precious commodity. That is one of the reasons we encourage opportunities outside the house; it increases time we spend together (more so in the spring and summer), as well as being able to network socially. I will say that it will not take long before opportunities are being turned down.
From glblguy: How do you manage allowance and chores with your children? Do they get a fixed amount, paid by the chore, or a combination of both? Do you make them save and/or tithe? WJ and I would love to hear your stories and perspective so please add a comment below!