teaching kids about money
Parenting

Whats A Good Allowance? How to teach your children REAL money lessons

When I was a kid, we didn’t get an allowance. Sure, we could earn money by doing extra chores or get a small allowance while on vacation to buy a souvenir or something special, but weekly or monthly just for doing things? Nope.

I’d like to give you parents an idea of what the average American gives their children, what the average American pays their children, and some ways to instill in your children an entrepreneurial and financially sound mindset.

My Dad is a business man. He has managed for JC Penny’s, Home Depot, Toys ‘R’ Us, and some other similar businesses. He’s also worked in sales, selling software and hardware solutions to governments and schools. Needless to say, he worked hard.

And we worked hard…

We weeded gardens, helped plant trees, I learned how to make straight rows, and we cleaned our entire house each week. The six of us children had the house organized into six ‘zones’ we would rotate cleaning. We had a rotating list of household chores too; sweeping floors, dust fans, take out garbage, wash dishes, set table for meals, mow lawn, etc.

This isn’t about cleaning though, this is about money, and how parents think about and use it. My friends at COUNTRY Financial whipped up this lovely little chart for me.

Chore U.S. Average
Mowing the Lawn $6.28
Cleaning the Garage $5.20
Doing Laundry $2.82
Cleaning a Common Area (i.e. living room, dining room, kitchen, etc.) $2.72
Be Responsible for a Pet (i.e. feeding, walking, cleaning up after it) $2.66
Vacuuming / Cleaning Floors $2.55
Cleaning Surfaces (i.e. dusting or washing countertops) $2.20
Doing the Dishes $2.03
Taking Out the Garbage $1.90
Setting the Table $1.31
Making the Bed $1.18

Americans are pretty good about wanting to teach their children about finance, but they want to teach it for the wrong reasons.

68 percent of Americans believe children should receive an allowance for completing chores. Furthermore, of the people who are currently providing kids with an allowance, more than half (54 percent) did so to teach their children money needs to be earned. A further 22 percent wanted to teach their kids the value of money, while only 12 percent said it was to teach them financial independence.

A Proper Allowance

$0. That’s just a fact. I’m being honest! Don’t give your kids money just for the sake of money.

The best reason to create and utilize a chore / payment type system is to teach your children that money is earned and that they can be financially independent. I’m not saying you should or shouldn’t pay your kids to do their chores, but at least having them do chores will help you teach them.

Independence

Independence is a skill that is taught, much like optimism, cooking breakfast, or welding. It takes time, patience, and a good teacher.

I recently was listening to Radical Personal Finance and his podcast about what he’s planning to teach his children when they turn 8 years old. His ideas were great! Here are a few of my own ideas too.

Teaching Skills

Spend time teaching your kids employable skills. They can learn to pull weeds, paint fences, sew dresses, clean toilets, cut wood, rake leaves, mow lawns, trim trees, keep pets, and more. Realize that each skill is something a child can do to make a dollar too! My father from a very young age would point out to me things I did that others would pay me to do.

I loved computers, and learned data systems pretty quick. Dad paid me to use his client database online: updating his contacts, notes, follow up appointments, leads, and referrals. He’d email them to me in a big spreadsheet as frequently as needed. He taught me that I could make money with my skills.

My dad at the age of 13 took me to the Flying Wrench class on fixing small engines. The next several summers I brought several lawnmowers back from the dead, replaced blades, fixed carburettors, shear pins, broken oil tanks, and a million other small repairs. Dad’s $75 investment was worth it.

Read also: 10 Ways to Save Money on High End Clothing

Teaching Entrepreneurship

You can cultivate the idea of entrepreneurship and business in a child. Who hasn’t done a lemonade stand? Let’s think bigger though. I read an article about a child who negotiated with his neighbours to talk their garbage out every trash day for a quarter. Talk about a business! If a 10 year old kid has 50 garbage cans, that’s $12.50 every time he takes out the trash! My dad taught me some valuable lessons about entrepreneurship.

When I was about 15, a fellow home-schooling family, which produced educational materials, had a shortage in little wooden catapults. After a short debate and a set on price per kit produced, a delivery of two-by-fours and wooden sheets arrived. I hired my siblings and got to work. I learned to keep a time sheet, to negotiate work schedules (okay, I’m dreaming a little bit), to build positive relationships, to use saws, drills, and sanders, and how to mass produce for time efficiency. Thanks, Dad. I ended up making about $25 an hour based on how much we were paid vs how much we worked on our time sheet.

There are so many ways to make money! Joshua Sheats from Radical Personal Finance says to build the entrepreneurial spirit, why not pay your neighbour to pay your kid to clean their bathroom? Why not see if your kid will take all those extra apricots from your tree and sell them to neighbours? They can learn to negotiate, they can learn about selling. They can learn about commissions. Tell them that you get a cut because it’s your tree. Or you get a piece of it because you bought the lawnmower. My friend Flia from the guest post told me that her brother outright bought his own lawnmower. That’s an entrepreneur.

Cultivating a successful atmosphere

How do you create that success in your child? It takes some commitment as a parent. It takes genuine desire for your child to become great and independent. You have to give them a vision and work at it every day. You also have to be an example.

I’m not a parent yet, but I’m grateful for the example my mother is. My mother made her own way. She paid for school working three jobs and paid for piano, voice, guitar, and cheerleading on her own. What a REAL entrepreneur. She had a dream. When you have a dream, you can accomplish amazing things. She is an example to me by always teaching piano, guitar, voice, and volunteering her time to what she loves. Storytelling is her passion, and she started her own scary story contest, and her own Utah’s Biggest Liar’s Competition. And she has 6 children.

How can you teach your kids about money?

How can parents educate their children financial awareness in a practical manner that will benefit them for the rest of their lives? Children begin learning the minute they are born. At initially, this learning is dependent on imitation, such as following a parent’s lead to grin, track objects, and pronounce their first words. They are learning and adopting your behaviours whether you are aware of it or not.

Even if you don’t educate your children about money, they will learn about it in some manner. If you wish to play a significant influence in moulding your children’s sentiments, thoughts, and values regarding money, you must instill financial literacy in them from an early age.
Discuss how you make the money you have to spend. Every time you are paid, you receive a particular amount of money. Your earnings must cover the necessities, such as food, clothing, and shelter.

Ask your preschooler to assist you in clipping coupons before you go shopping. Hand them the coupons and ask them to keep an eye out for the goods while you’re in the shop. This will make kids feel helpful, and it’s a simple and enjoyable approach to discuss money saving. In the end, having an open and honest conversation about money (within reason) can go a long way toward building healthy and responsible money habits. This is particularly true when your children become older and may obtain a credit card, a part-time job, or take out school loans.

How can I teach my kids about digital currency?

As a parent, you should communicate to your children about current market trends that will benefit their future. This makes your children more informed and intelligent than others their age. This will also encourage kids to always discover new things. It is preferable for kids to understand about their surroundings, including how bitcoin works. There are many various sorts of currencies, and knowing about them can help students comprehend what it means to buy or sell. The more they comprehend, the wiser their judgments will be, and the more they will learn about their money and what they can accomplish with it.

One of the first money management skills we teach our children is to take excellent care of their wallets and cash. This must be explained clearly in a world where we offer children access to digital money through stored-value goods or cellphones. Remind your child that these objects, like their real wallets, contain money that may be spent in the same way, only in a new form. Because most digital wallets take money straight from bank accounts, your youngster may believe that digital money may come from anyone. Correct this notion gently by assisting them in understanding that digital money is still money and that it may run out if you overspend.

Teach your child about the technology that powers cryptocurrencies such as blockchain. While there are certain drawbacks to overexposure to technology, it is likely to continue to play an essential part in your child’s life. As a result, you should address the breadth of technology on a frequent basis, how it may change, and how they may make the most of it.

Why is entrepreneurship important for kids?

Entrepreneurs often have large ideas and even greater aspirations, and they almost always think outside the box in order to achieve those goals. Entrepreneurship requires hard labour, excellent communication, and tenacity in the face of failure. Early exposure to business will help a youngster to learn how swiftly things change throughout their professional career in the twenty-first century. It also introduces kids to one of education’s most effective learning theories: experiential learning. This is large-scale learning by doing, particularly if your youngster observes the ups and downs of operating a company.

An entrepreneurial goal does not have to wait until you graduate from college. It takes years of studying, practise, and making errors for your children to become professionals, and the same is true for entrepreneurship since you will not wake up one day and be the ideal entrepreneur. Even if you can provide enough for them, older children in their adolescent years may be put to work. During the summer, kids may undertake odd tasks or work in a café or store to supplement their income. This teaches kids the importance of hard effort and earning their own money, which aids in the development of entrepreneurial attitudes.

Your child may be required to work as part of a team, whether for a school assignment or in the workplace. As an entrepreneur, your kid will need to collaborate with others to ensure the success of their firm. Working also exposes children to the real world, which helps them develop interpersonal skills and teaches them how to interact with people from all cultures and backgrounds.

Last Words

I’m calling for parents to look for ways to craft their children into financial freedom, independence, and the ability to find satisfying work that will give them optimism, control, and confidence.

Share with me how you’re doing that! Share with me what your parents taught you!

AboutKara

I’m a writer, new mom and foodie. I love sharing what I know while making others feel beautiful. On this blog, I share my healthy lifestyle, simple meals, fitness tips and experiences.

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