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Money and Kids: Teaching Kids to Earn Money
By JLP | January 23, 2012
Before kids can spend money, they have to have some in their pocket. How do your kids earn money?
The avenues that children have to earn money are very limited, and every parent has a slightly different philosophy about how their children should earn money. Here are the pros and cons of some common ways cash finds it’s way into the little pockets of our kids:
Grandma
Birthdays, Christmas, Granmda sneaking money to the kids when you’re not looking. Sometimes kids just get gifts. Obviously this doesn’t teach them about earning money, but it’s a good opportunity to teach kids about generosity and gratitude. (Please teach your kids to write thank-you notes. It’s worth it.)
Allowance
Lots of parents give their kids an allowance – a certain amount of money each week to spend. An allowance implies that they receive the money no matter what – they haven’t necessarily “earned” it. Often kids are required to do chores and contribute to the household, but the two things may not seem related – especially to very young children.
One positive thing about giving kids an allowance is that they know how much money they’re going to have and when they’re going to have it. I think that can teach some good planning habits in older children and teens.
Commissions
According to Dave Ramsey, a better way to teach your kids to handle money is by giving them comissions for the work they do. They are earning each penny by doing work. (They can also lose money when mom or dad has to do their chores for them.) This is a good way to teach kids that money and work go hand in hand. It also helps them feel like a contributing and profitable part of the family.
The downside here is that the amount of money the kids get may vary from week to week. It can also be more difficult to manage than a weekly allowance.
We use the Chore Pad app on the iPad to track what our kids have earned. Each chore is assigned a value and rewards can be customized to fit your family and your kids. Highly recommended.
Entreprenuership
Kids can be very creative. Ours recently decided they needed money for a new video game. They gathered all the toys they no longer play with, wrote signs on construction paper and taped them to fences around the neighborhood (made the neighbors very happy, I’m sure). Then they sat in the driveway waiting for people to come buy their used toys. They were frustrated no one wanted to pay $5 for the broken remote control car, but this was an excellent teaching moment.
Sometimes kids can work for others outside of their home in order to earn money. Grandparents are a great place to practice (and are usually very generous). I love watching the creativity in our kids when we give them the chance to come up with their own ideas.
Especially in our affluent society, kids need to learn that there are things in life that you have to work for. The more successful we as parents are, the harder we will have to work at making sure our kids don’t grow up feeling arrogant and privileged.
Teaching kids how to earn money isn’t the same thing as actually training them to get out there and do it! Parents should require their children to earn their own money for some things that they want. Many parents buy their kids everything they want, but I think it’s important for children and teenagers to feel the pain of not being able to “afford” something – until they work to earn the money themselves.
My personal opinion (currently) is that the commission format works best for younger children, while you’re teaching the correlation between work and money. As they get older, I think kids need the consistency of knowing how much money they’re going to get. That’s what we’re currently doing and it seems to be working for our kids. Every family is different, though, and it’s up to the parents to decide what works best for their kids.
How do you teach your kids about earning money?
Topics: Kids and Money | 1 Comment »
January 23rd, 2012 at 11:23 am
We have a lot of fun teaching our 2-year-old son about making money. I have a jar of change on my desk at work and every day I bring home a few coins and announce that I’m back for work and got money, waiving it around to celebrate. He runs and says “I worked too Daddy.” I ask what he did and he usually says “I helped Mommy [clean, take care of the baby, sweeping, etc.].” So then I give him is “money” for doing the work and we put it right away into his piggy banks (one for saving, spending and giving).
We also teach him that the best place to go to get money is “to work,” (he’ll answer that) and “work get money, don’t work…don’t get money.” We stole those quotes from Dave Ramsey.
Yes, I know it’s sad, maybe overkill. But my son loves it. As he gets older we’ll slowly get more complicated. For now, I like that he sees me come home from work with money and makes the generic connection between work and money.