Kids' allowance: 2 approaches you probably haven't tried
Posted
Mar 04 2008, 04:45 PM
by
Karen Datko
Rating:
Why not incorporate lessons of finance and capitalism into allowance to give kids a taste of the real world. Jeff at Wise Money Decisions explains two ways to do that -- one his dad used when he was "Little Jeff," and the other an idea borrowed from another family.
Not only are these methods creative, but Jeff's post is wise and funny stuff.
In Jeff's case, his dad used a Lotus 1-2-3 spreadsheet to calculate each kid's allowance based on age and other factors that are still a mystery to Jeff. He writes, "Dad, if you read this and if it's no longer a trade secret, please feel free to disclose the other factors in the comments." Jeff does know that money was subtracted for bad behavior, like not completing chores.
One of the rules was that you didn't get allowance if you had a job. Jeff recalls: "In fifth grade I got a paper route. I never got allowance again. It was a smart rule that kept my parents solvent through eight kids."
In the other family, the parents would have their children submit competitive bids for household jobs, with the lowest bidder getting the job and the money. Among other things, the kids learned that jobs requiring more skill, effort and time are worth more.
Jeff is not sure if this approach would work in his home. He writes: "I'm curious how long it would take my kids to figure out they could drive up the price through collusion. Then I'd have to set up antitrust laws. If it got really out of hand, I'd impose communism and assign jobs at a price determined by the state. If nothing else, they'd learn to appreciate capitalism."
