For several years I was against paying our children for basic chores and responsibilities. Helping around the home is part of being in a family, I thought. As my parents had done, I felt my children could learn about budgeting when they got their first job. So I never even asked myself the question, “Should I give my kids an allowance?”
But in the instant-gratification and materialistic world that we live in, I have realized that teaching this life skill at 16 is too late. We must begin teaching budgeting and money management at a young age to instill the wisdom required for adulthood. The only way that I have found to do this effectively is through an allowance system.
Should I Give My Kids an Allowance?
If you are asking this question or you are unsure of how to properly give your kids an allowance, maybe our story will give you some ideas and help you determine what’s best for your family. Remember, every family and every child is different. So think and pray through what’s right for you.
Our Allowance System
My goal was to create a system as much like the real world as possible. With that in mind, each of our children (ages 8-14) receive a monthly salary. It is divided into five categories: tithe, taxes, savings, bills, and spending.
Now, stay with me. I know this seems involved and unrealistic for younger kids. Yes, this system is for older children who are ready to learn to manage money. If your children are younger, I encourage you to keep reading. These principles can be applied to kids of any age to some degree. You can find a link to our system for preschoolers at the bottom of this post.
In its simplest form, an allowance is given based on each child’s age-appropriate responsibilities in our home. Then, deductions from their salary occur if the chores are not completed.
Giving our children a monthly allowance teaches the following principles:
Young children love to take money to church for the offering. An allowance provides an opportunity to discuss that what we own is in actuality God’s and why we give back to God our first fruits (Deuteronomy 26:1-2).
2. Paying Taxes
Whether we like it or not, taxes are a part of life (Romans 13:6-7). By deducting this portion from a child’s allowance, she begins to understand the difference between salary and take-home pay.
3. Building Savings
Saving for a rainy day or setting aside money for a specific purchase teaches delayed gratification. It also encourages good stewardship of finances, as it enables one to avoid debt or living beyond one’s means.
In our home, each child is responsible for an age-appropriate amount of bills (e.g. a portion of music lessons, camps, and school expenses). This list gradually grows each year with the goal that by the time the child graduates from high school, he has had experience budgeting almost all small and large expenses. The child learns the tie between income and spending.
With a spending category, there is no longer the temptation to beg mom and dad to buy them something. I simply refer my children to their budget sheets to see if they have the funds to purchase the wanted item.
This system has worked well for our family and we’re proud of the skills our children are learning through this allowance system. But maybe this method is more than you are ready to implement or perhaps you have smaller children who are not quite ready for taxes and bills. Do some research, pray, and ask God what is best for you in this season.
Check out the details of the two systems we have used in our home: Money Management and Behavior System for Preschool Children and Chore and Budget System for Kids and Teens.
Is an allowance necessary in all homes? No. But if you don’t already have a system in place to teach children how to wisely manage money, one of these might be a solid option for your family.