Allowance

A friend asked my wife recently about allowances for kids. Having done it for nearly fifteen years, we're pretty familiar. There are many ways to skin this cat, but here's how we've done it.

First, we didn't tie the allowance to anything. It's one of those bennies of being in a family. At the same time, they have chores to do that also come with being part of the family. They do not get paid for them. Their allowance is not tied to those chores at all. If chores aren't done, they may suffer some form of discipline, but we do not touch the allowance.

If a child does want to earn more money, then they can do additional tasks above and beyond the chores (car washing is a good one...maybe they can just do the headlights when they're young). Pay for a job well done. If it isn't well done, then teach them how to do well. If they still don't do it well, pay them accordingly. They'll get the idea.

We began the venture when each of our kids was six years old. Any younger and their money comprehension skills just aren't there.

Second, we use their allowance to teach God's principles about money.

Principle #1: It's all God's. Psalm 24:1 states plainly, "The earth is the LORD’s, and all its fullness, the world and those who dwell therein." Our kids need to know right from the beginning that our money, all of it, is God's in the first place. Ultimately, what He has given us is stewardship over that money. We are merely caretakers of that which is God's.

Principle #2: Because it is God's, the first thing we do with our allowance is to honor God with it. This principle lies within the Levitical law and the bringing of the firstfruits or the first part of the harvest to God. The first part was the best; it's not the leftovers (Malachi 1:6-14).

Paul carried out this principle with the Corinthian church when he said, "On the first day of the week let each one of you lay something aside, storing up as he may prosper, that there be no collections when I come" (1 Corinthians 16:4). Heart attitude is important, too (see 2 Corinthians 9:6-8).

Here's how we fleshed this out: We purchased a plastic recipe card box that would fit small envelops in it. We labeled three envelops "#1-Offering," "#2-Saving," and "#3-Spending." Let's say you gave your child $6. Give it to them all in $1's so they can split it up easily. Show them to put that $1 into their offering envelop to be given to God the next Sunday. It's a mindset. The first part is always God's.

Let me say at this point that the amount you give for an allowance will vary from family to family. Really, the amount for a wee little one, unless they are spoiled rotten, will not matter; they'll simply be thrilled to be entrusted with money (initially, your supervision is imperative. They will feel entrusted, but you will still have ultimate authority).

Be consistent. My paycheck was the 1st & 15th of every month so that is when they got their allowance. Make it a ritual with them and sit down and divide the money.

Principle #3: Save! This really covers two points. One is delayed gratification. It's a principle that will ultimately save tons of money in adulthood by avoiding debt and its associated costs. The other principle is regarding the preparing for future needs, or in their case, wants (Proverbs 6:6-11).

Going back to the example of a $6 allowance, we already allocated $1 as an offering to God (lots of good teaching lessons from the Bible associated with this principle). Next, save to save, you are saving money for "long-term" savings. Long-term to a child might be three months, but this is money the child won't touch.

We had our kids use this money for big purchases. Back then it was a Gameboy (first version, yellow screen). But we would not let them get it when they had enough saved for it, we had them save half again as much. In other words, if it was a $50 purchase, we had them save $75 dollars. That way, they never left themselves on "E".

As with grown-ups, this, like our offering, is really a small fraction of our budget (for that is what we are teaching our kids), so we would have them put $2 from the $6 in the "#2-Savings" envelop.

We can also teach our kids about debt avoidance herein, too.

The final $3 goes into the final envelop, "#3-Spend." This is for your child to spend on what they would like. Without your guidance, it would be gone on your next foray through Wally-World, but you can teach them to hold on to it until there is something that they would truly like. Perhaps there might be a missionary come through your church and they want to take some of their "spending" money and give it to that cause. Perhaps they want to channel it into their "savings" envelop to get them closer to their Oakley sunglasses or BMW.

Teach them to discipline themselves with their "spending"money. Sometimes, it will be a good lesson to let them squander it. Other times, you would be wise to run interference for your child and say, "No," when they want to fritter away their few coins. But your the parent. That's why you get the big bucks!

Kind of a lengthy blog, but I know there are young families with young kids just getting to this point. We started when they were six and ended at sixteen or when they get their first job whichever occured first. Also, when they hit ten, we increased their allowance a bit.

Please let me know if you have any questions. Also, if you have some advice for young parents and allowances, please comment. Lots of good books and articles from Crown Financial Ministries and others in Christian finance. I've also found good advice from Kiplinger's Personal Financial Magazine.

Oh, and we didn't use Monopoly money.