Teaching Children About Financial Responsibility

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child hand holding down dollar bills on white background

Parents have so many things to teach our children.  We all do our best to ensure they grow up to be smart, compassionate and take care of themselves.  Part of that includes the importance of money management.

We had originally tried a system for our children, which didn’t work.  The reason was that they were just too young to really grasp the concept of money and what it could do for them.  So, we used our Ticket Reward System.  Now that our oldest has matured, she understands and so we are moving her into a different method.  One that rewards and penalizes her for behaviors.

The money our daughter earns is referred to as commission.  We don’t call it an allowance.  She earns commission for the work she completes, just like adults experience in the real world.  It is an easy concept that she can understand.  We created a chart which works for us based upon our system of rewards.  Our chart includes categories for responsibilities, bonuses and fines. Here is how we apply each one.

RESPONSIBILITIES:  Our daughter is now 9 years old.  She has 7 – 10 different items for which she is responsible every day of the week.  However, her chart does NOT include the items that she has to do.  She has to make her bed, brush her teeth, clean her room, etc.  We tell her that is just part of living here.  She earns money for doing OTHER things such as setting the table, keeping her blanket in her room (something she struggles with doing).  She even has one for eating a fruit and/or veggie with every meal.

Of course, what you decide to do for your kids is up to you.  There is not a right nor wrong way to do this.  It is smart to make sure your chores are in line with your child’s age.  For our younger kids, it did include 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.

Each item is assigned a value — 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 daughter does!  We’ve got a section on our form 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 asking them to do so. These items earn bonus dollars. We assign a value to each bonus completed, which results in additional money 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 children each look at their 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).

When our children want to purchase something, we make them take their own money to the store.  I won’t forget the time our oldest purchased a LEGO set with her own money.  She had just enough to cover the cost, which left her with around $1 – $2.   She was very upset – but she learned a lesson. Just because she has money, she doesn’t have to spend it.  Now she understands the value of money and if she wants to spend it or not.  She actually saved and was able to purchase her own iPad mini.  She knew that it meant parting with most of her spend allowance, but she was OK with it because she had worked hard (and received birthday money) and was willing to spend it because of the reward.

If you are interested, you can actually download a FREE Responsibility Chart to use yourself.  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.

Comments

  1. Hi there! I am very interested in using your method with my 9 and 5 year old sons, but a needing a little help in coming up with the Commissions and the Bonuses. Would you be willing to share some examples that you use with your kids? Also, I know you commented that they don’t earn money for making their beds or brushing their teeth, so do you not even put this on their charts?