I bet you never thought of your children’s allowance as welfare. Think about it welfare gives you money when you don’t work, so does an allowance. In the US it’s common practice to give our children money as an allowance. You might be saying,” What’s wrong with that? I love my children, a few dollars won’t hurt them.” How wrong we are. We are in fact fostering an attitude that tells our children it is okay to not work. You will still get money.
Is that what we want to teach our children? Remember they are the future. Do we want lazy adults? No, we want them to grow up and be productive adults. How do we go about getting this done? First off, do away with allowances. Start early and give your children chores to do around the house and pay them. Two-year-olds love to “help”. One chore they can do is help you put away their toys. Granted, you’ll be doing most of the work, but they’ll put a few toys away and be very proud of themselves. Pay them for their work. Simple chores like that help children to start learning the value of work and money. If they don’t help, they don’t get paid. As they get older, increase their chores and pay them accordingly. You can put a Chores Chart on your refrigerator with chores they can do and how much they get paid for each chore. As they do the chore, they can check it off.
At thee end of the week, you can have a payday and pay them according to the amount of chores they got done. The next thing is to have them divide their money into three categories giving, saving, and spending. Give them some plastic jars to separate their money into those three categories. The first portion should go into their giving jar. This is God’s first portion. They can put 10% to 20% into that jar or more. Then, the next amount goes into the savings jar. Let them put between 50% to 60% into this jar. The rest goes into the spending jar. If they put 10% into the giving jar, then they should put 60% into the savings jar. Then, 30% goes into the spending jar. If they put 20% into the giving jar, then 50% goes into the savings jar and again, 30% goes into the spending jar. Open a free children’s savings account at the bank or credit union and have them deposit their savings into that account at least once a month, weekly is better. Their giving should be given to their church every Sunday. They can spend their spending money anyway they want. If they are saving for something and don’t have the money when the item is available, tell them they have to wait until they have the money or give them extra chores to earn the money. Occasionally, you can cover their deficit, but don’t do this too often because that teaches them that they don’t have to save Mommy or Daddy will cover their shortfall.
Encourage them to do this with all the money they get. If they receive money for their birthdays, Christmas, etc., have them divide it into the jars using the above percentages. This will foster good habits for them. When they get older and are able to get a job, have them continue doing this method. When they do get a job, open a Roth IRA for them and have them transfer their savings account money into the Roth IRA. Then, the amount they save each payday should go into their Roth. They need to start contributing to the household expenses. Determine what is a fair amount for them to pay you for shelter, food, and transportation. Then, have them pay you when they get paid. It does not have to be a large amount. This is especially helpful for single parents. Having a couple of extra $100’s each month can go a long way. If you are comfortable and don’t really need the money, collect it from them anyway and put it into a Money Market account or into their college savings account. Don’t tell them that you are doing this for them. It will be a very nice surprise for them. Also, they will need to start building an Emergency Fund, so they can cover their living expenses. When they move out, they need to make sure they have that money set aside in case of emergency.