Kiddipedia
Why give your kids money for nothing when you can pay them to do chores! As well as having a clean home, you’ll be teaching them valuable skills that will help them throughout their lives.
Pocket money does little to teach kids about the value of money unless they have to do something to earn it and then proactively manage those earnings.
This is where the value of tying pocket money with household chores comes in. It teaches kids about:
- the value of money
- investing their time and effort into completing a task in order to receive a financial reward
- different values attached to different tasks (just like in the world of work).
Without these important life lessons, they’ll spend their lives thinking that (your) money is an effortless, endless supply.
Tailor chores
It’s a good idea to tailor the type (and amount) of chores with your child’s age as well as their physical ability.
For instance, youngsters often like to help load the washing machine; older primary schoolers can wash the car; teenagers can listen to music on their headphones while mowing the lawn or using the blower vac.
Nominate a dollar value depending on the task’s difficulty and/or “likability” – chores that are harder, take longer or need more incentive to complete can be worth more than those that are quick, simple and “fun”. This helps to instil the concept of working harder for bigger gains.
Give them visibility
Visibility over their money and how it can grow over time will help kids grasp the concept of saving.
Young children typically do better with cash, which they can see and touch. For older kids and teens, the temptation to spend frivolously (such as on junk food) may be too much, making a bank account preferable.
Set savings goals together
Many adults struggle with saving money their whole lives, which is why mastering this skill at a young age is so valuable.
Their buy-in comes from savings towards something they REALLY want.
Set realistic goals with your child: ‘you can buy this if you save that much’. Then break down that goal into how to achieve it, so that it doesn’t feel insurmountable.
If they are saving up for a $50 pair of shoes and they earn $10 for washing the car, ensure they understand that to reach their savings goal, they will need to wash the car five times.
Spend their ‘pizza’
I like the analogy of budgeting as sharing a pizza – each slice is money being spent on something different.
Everyone needs a slice to avoid going hungry. Some people eat more than others, so they will need a bigger slice. Once all the slices are gone, there is nothing left.
Choices are different when we spend our own money, which helps kids learn the difference of wants vs needs and branding vs functionality.
You can also apply the pizza analogy to your household, demonstrating how you divvy your portions towards mortgage/rent, bills, groceries, savings, and fun money.
Do something for others
Money can be used to help teach another important life skill: generosity towards others.
My great nephew collects bottles and cans for the 10 cent recycling scheme, then splits the proceeds with a donation to the local Scouts. There may be a particular cause or charity that is important to your family.
There is a good feeling that comes from giving, and kindness is a trait that will bode your child well throughout life.
Hold them accountable
The lessons about money here are in the doing. So conversely, if they don’t do their jobs, it’s important to hold firm and keep them accountable for their actions (or lack of them).
If the task isn’t done, or is not completed to your desired standard, withhold payment until it is.
Prevention better than cure
Certain issues can arise that upset the apple cart, so be proactive in planning for these in advance. For instance:
- You may need to allocate alternative resources (your time or money) to complete tasks if your child is unable to for a given period through illness, injury or time away from home.
- Manage expectations around chores and payments: some may be paid while others are expected of everyone.
- We all have different financial situations, so your child’s friends may earn more or less for the same task. Explain these dynamics with them and that you’re paying them what you can afford to.
- Don’t allow your child to borrow or receive pre-payment – this encourages spending beyond their means and living on credit.
- Discuss cause and effect of their spending beyond money, such as the health effects of splurging money on lollies.
Ultimately, good money habits learned young in life will help your kids for the rest of their days. You might even find your own habits improve by working through things with them, helping yourself as well as them. Win-win!
Helen Baker is a licensed Australian financial adviser and author of the new book, Money For Life: How to build financial security from firm foundations (Major Street Publishing $32.99). Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at www.onyourowntwofeet.com.au
Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754.
