Saving money is not something you just learn when you are an adult. It is also important to teach children the importance of money management. The system that has worked for us is one created by Dave Ramsey. He has a great way to help your children. The crazy thing is that it works!
In March of 2011, we purchased his child money management system. In fact, we went ahead and purchased two sets — one for our six year old and another for our four year old. The thing we both loved about the way Dave Ramsey presents money to children is that it is not an allowance. Instead, he calls it commission. Commission earned for jobs completed — just like adults experience in the real world. For us, that was a great concept and one we could easily share with our children. We actually took the general concepts of his chart and turned them into our own. Our chart includes categories for responsibilities, bonuses and fines. Here is how we apply each one.
RESPONSIBILITIES: Our children are three, five and seven.Therefore, we decided that each should have the same number of responsibilities as they are in age. We picked things that they could do on their own. It includes things such as make your bed, put away your clean laundry, pick up your toys, set/clear the table, keep your shoes in your room, etc. Simple things. Easy things. We then assigned a weekly value to each chore (for the week. For instance, if they make their bed every day they will earn $2 for the week. However, if they miss one day, the forfeit the entire value for the week. You can of course assign a daily value if you would like – it is up to you.
BONUSES: Who doesn’t love a bonus? I know that my kids do. And so, we have a section just for this. We are trying to teach our children to take initiative and not be told to do things — nor do things only because they have to. We want them to see that the toys need to be picked up from the front room or that there are still crayons on the table at dinner time and put them where they belong without mom or dad askign them to do so. These items earn bonus dollars. We assign a value to each bonus completed and they can earn extra money when they complete bonus tasks for the week.
FINES: Ahhh, yes. The fines. If you are caught speeding, you may get a traffic ticket and get a fine. The same goes for our children. We add the area that they may have a problem with, be it fighting, whining at bedtime or talking back. These events are assigned a fine value. Each time they do something that earns them a fine, they get a checkmark by that item on their chart. This helps them visualize what they are losing by doing things that mom and dad may find less than desirable.
When “pay day” arrives each Sunday evening, we don’t simply add up the total they have earned (adding in bonuses and deducting fines). Oh no! We make them sit down at the table and be involved in the entire transaction. We first review their chart and go through the responsibilities and help them add up the total that they earned for the week. We then pay them that amount by laying it on the table in front of them (we stick to using one dollar bills and quarters).
Once they have earned their base pay, we look at the chart and see how many bonus items they completed. In our house, the bonus is one value that you can earn if you complete a bonus item every day. For instance, if our daughter always picks up something without being told each day, she will earn $3 for the week. However, if she misses a day, she loses the entire bonus. We then lay down more dollar bills to pay her for the additional chores she completed. We then have them count the money in front of us. And then…..come the fines……..
We have our childre each look at thier charts to see the fines they had for the week. We do them one at a time. As we come to a fine, we tell them you owe me “X.” They must pull out the payment from the cash/change on the table and place it in my hand. We do this for each and every violation. This is the hardest part of payday for our children. It is very difficult for them to have to give us back the money they just earned. However, this is teaching them a valuable lesson — there are costs associated with doing the wrong things in life. We hope that this is helping instill morals and values that are so important.
Once they have settled up with mom and dad, we help them count what they have left. They each have 3 envelopes: Save, Give, Spend. They are required to put a select percentage into Give and Save and the rest goes into Spend. They can use the Give money to place in the collection basket at church or to give to someone in need (however they usually just take that money to church each week). They can use Spend money on whatever they want (within reason, of course).
Our daughter recently wanted a Lego set and had the money to pay for it. When it came time to part with her money, she ended up with only a couple of dollars and change after she paoid the cashier. She was very upset – but she learned a lesson. Just because she has money, she doesn’t have to spend it. So now, we are heading out to the store tomorrow and she has already shopped on-line to learn the prices and know what she wants to buy. She also already said that she is not spending all of her money on toys – which makes me so proud of her.
If you are interested, you can actually download a Responsibility Chart which I have created. Head out to your FedEx or UPS Store to get it laminated and you can re-use the same form over and over again — saving you paper and ink costs.
Everyone can talk to their children about strangers, drugs, and reproduction. However, parents tend to forget about money. It is just as important as everything else. We feel good knowing that our children already know the importance of earning money as well as how to save and give and even how to spend it wisely. It is our hope that by the time they are adults that this is normal to them and they will always continue to be wise when it comes to managing their money.