Teaching Children Responsibility, Work Ethic and the Value of a Dollar

Are you tired of handing out allowances to your children only for them to spend their money foolishly and come back for more? Put an end to this cycle by teaching your child to be a good steward of his/her money. Yes! It can be done.

Do you remember watching that episode of The Cosby Show when Theo thought that he could live the lifestyle of the rich and famous in "the real world"? Do you remember the lesson that he learned when everyone in the "real world" was taking his money in exchange for their services? My favorite part of that episode was when he walked into his bedroom "apartment" only to find that all of his furniture was gone. Theo never once thought that he would need furniture in the "real world". If only we can be as creative in our parenting skills as Dr. and Mrs. Huxtable! Well, folks, we can!

The first step is to set a realistic allowance amount that will not break your bank. Even if your child has to take a pay cut, limit their income to one dollar for every year of their age. Your ten year old should receive ten dollars, and so on. After everyone understands the allowance amount, make a chore chart that your child will not be overwhelmed by. Next to every chore, set a payment for that job. Payments should total the allowance amount. If the job is done completely to your satisfaction, your child has earned the entire payment amount. If the job is only done half way, pay them half the payment. If the job is not done at all, guess what?... don't pay them for a job not done!!!

Also, you should only pay on paydays. You choose when is best to pay. If handing out allowances every Friday is OK with your pocketbook, then pay every Friday. If you get paid every two weeks, then your child should be paid every two weeks. After you have put forth so much effort to organize this new allowance system, please do not let your child whine and complain about paydays. Has whining and complaining about your payday at work ever changed the date? This is the second lesson that your child will have to learn. It's a lesson called patience.

Now, I know what you're thinking. You know beyond a shadow of a doubt that your child will go straight to the store and buy $10 of junk on payday. That's fine...let them continue to do so. They will just have to learn to wait for the next payday. Please do not loan your child any extra money...that's called debt. Most Americans are struggling very hard to get out of it right now, don't teach the concept to your child.

For the child that hangs on to their money at least for a day, have three different "banks" to "deposit" their money into. If you do not want to buy "piggy banks", a simple small container will do just fine. (I keep my extra change in a plastic coffee canister. Just cut a slit through the lid.) One bank should be labeled SPENDING, the second should be labeled GIVE (either to church or charity) and the third should be labeled SAVINGS. You should also open a real savings account at a local bank to ensure the money is actually being saved, plus a savings account will collect interest. Set a savings goal of any choice amount. Each time that savings goal is met, bring your child to the real bank to deposit their money. (this will also make them feel very grown-up!)

If your child feels like they absolutely have to have a particular something, decide if they qualify for "in house credit". If you feel that they have honestly earned their desired credit limit, take the "payments" out of their allowance, until their debt is paid. That will teach them to use credit responsibly. What happens if they don't do their chores and get behind on payments? Do what any self-respecting bank would do...repossess! When they are caught up on their payments, then they may have the item back. Give your child the opportunity to do extra work...maybe your car needs a good washing, or maybe the leaves need to raked in the yard... didn't you see some weeds in your flower bed? Your child will learn that if they get too far into debt, they will need a second job.

I'm telling you, parents, if you stick with this plan, you will see financial changes in your children! They will grow up to be great money managers. How earlier can you start this concept with your kids? Why not start as early as a year? When you are folding clothes, let it be your baby's job to dump your laundry basket! How much fun would that be?! If you start your one year old at $1 a week, use it to build their savings. They will be $52 dollars richer by their second birthday.

We have been putting money in savings for our son. We've always given $1 every week according to the years of his age. We added the chore concept last summer when my son turned four. At first, his only chores were to help me deliver laundry to the appropriate rooms and to pick up his toys. His list of responsibilities grew as he matured. In a year's time, he has become responsible for several things: laundry delivery, cleaning his room, emptying his bathroom trashcan and setting the table. Every Sunday, when he gets dressed for church, he reaches into his GIVE bank and takes money for offering. He will usually fish out the quarters. Later on, we will learn about 10% tithes!

When we go to the store, he will always take money with him. He collects the Hot Wheels cars, so he will usually buy a car with his money, but sometimes, I'll ask him if the particular toy is worth the hard work of the chore. This is usually a trick question, because if I think it is worth the money I'll say, "Is it worth taking your trash out?" He'll say "yes" because that is a no-effort job. If I do not think it is worth buying, I'll say, "Is that worth cleaning your room?" With that he will usually answer a quick "no". At almost five years old, my child has learned the value of a dollar and I am very proud of him for that.

In addition to having a financially responsible child and a savvy saver, YOU will also be rewarded too! The more chores you hand out to your children, the less work you have to do!