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What's one way to teach children the value of money?
Allow them to earn money through chores.
After all, the home is a “mini economy”. House chores are essential to keep it running and thriving.
Letting your kids participate with payment for chores offers them an educational experience. It shows them the role of money from an early age.
Don’t be caught off-guard when your daughter asks - how do I make money for chores?
Be prepared with answers and guidelines on how to manage chores and money.
Two thirds of American parents give their kids an allowance.
But should chores and pocket money go together?
Some parents feel uncomfortable with the idea of chores for money.
Others swear by this practice for its educational values.
Let’s look at the pros and cons of each approach.
Mandatory unpaid chores at home communicate to kids the value of responsibility, accountability and connecting to the family.
The home is a “mini economy”. House chores are essential to keep it running and thriving.
These can be the first steps of becoming a beneficial force in society.
Teaching kids to help out just because it’s the right thing to do, not because they’ll get paid, is a lesson that sticks with them.
Remember, kids have different abilities and motivation levels at different ages. Make sure to pick age-appropriate chores for the best outcomes.
Paid chores, on the other hand, have their own educational merit.
First, allowing your kids to do chores for money makes for a practical and experiential way to teach them financial literacy.
Paying for chores connects the value of money with work.
It connects the value of money with work.
Second, money is a powerful incentive.
It can be used in motivating kids to share the burden of household tasks with parents and siblings.
There's also a middle way - parents can mix both practices.
Some chores are not compensated, while others are paid.
66% percent of parents give their children an allowance, and 86% of those believe their kids should earn it by doing chores.
Mixing paid and unpaid chores can teach kids about helping the family and managing money - all in one go.
This hybrid approach better mimics real-life interaction with society in adulthood. Work earns you money, while other life management tasks do not.
As a parent and the maker of the "mini economy" of your household, you decide the chores for kids to earn money.
You get to set chore rates according to your values and ability.
A basic guideline is $0.50- $1 for simple tasks, scaling up to $5 or more for complex tasks
Here are some guidelines to help you decide how much your kid should earn from chores.
It's important to be clear and upfront about how much chores pay for a few reasons.
First, to align expectations with your kid.
Second, to help you standardize fees, especially if you have more than one kid earning money for chores
Third, to help you manage and keep track of payment (more on payment management, later).
To decide how much to pay for a chore, think about how old your kids are and how tough the chores are.
Younger children can only accomplish simple tasks. These can be setting the table, or picking up their toys. For these simpler chores the compensation would be on the lower end.
Older kids and teenagers are capable of completing much more complex chores.
You get to set chore rates according to your values and ability.
For them, think mowing the lawn or even driving younger siblings to school.
These chores typically earn a higher rate.
Parents and kids can set up any method that makes sense for them.
Let’s review two popular methods for chore pricing: price by complexity and bundling.
One way to price chores is to create a chore list with tiered pricing in line with task complexity.
A basic guideline is $0.50- $1 for simple tasks for younger children, scaling up to $5 or more for complex tasks for older children.
Here are some examples.
Easy chores are best the best chores for 5 year olds.
Chores that people usually hire someone to do.
For example, driving, babysitting, and dog-walking.
It doesn’t mean that you should pay your teenager the exact same rate you’d pay a babysitter for watching over her little brother.
But it can help you determine what’s the right payment.
Bundling is a different pricing structure favored by many parents - including this TikTok momfluencer.
With this model, you list all relevant chores for your kid and pay them a fixed allowance for several completed chores.
For example, earning $1 for any four chores completed.
How common is allowance in the US?
According to a 2017 survey, 66% percent of parents give their children an allowance, and 86% of those believe their kids should earn it by doing chores.
According to this same survey, 20% of parents who give an allowance start it at age 6, usually on a weekly basis.
Teenagers, who typically get a larger sum, get their allowance every month.
Now let’s look at some common allowance and chore amounts.
the average hourly rate for children whose allowance is based on chores is $6
The rule-of-thumb weekly allowance for a kid is $1-$2 for each year of their age.
That's $10-$20 a week for a 10-year-old.
The average weekly allowance is $30, according to a 2019 survey published by the American Institute of Certified Public Accountants.
This survey also found that the average hourly rate for children whose allowance is based on chores is $6.
Keeping track of chore earnings is helpful for parents and children alike.
Having a strong visual of chores can promote a sense of achievement for the kid.
Here are three common tools for allowance and chore payment management:
Cash use is dwindling worldwide, but don’t dismiss the traditional piggy bank or coin jar.
They are especially beneficial for younger children as they help them understand the concept of money by making it more concrete and tangible.
Buy your kids a piggy bank so they can have a place to start saving and managing their own money.
A table or list of tasks and earnings is a valuable visual aid for all ages.
Place it in a common area, like the kitchen fridge, visible for the entire family. Just mark the fee earned for any task completed.
Pay your child periodically - weekly, biweekly or monthly.
Or you can pay when they reach a certain target, say $5 or $10.
Mobile apps streamline chore payments for parents, and they are also handy for tweens and teens - power users of their phones.
These apps can track chores, manage payments, and facilitate payment straight to a bank account.
Chore and allowance apps often come with debit cards for kids to use.
They help teach kids valuable financial lessons, including how to digital money management.
This can be a great first step before setting up their own bank accounts.
Getting kids to participate in housework not only relieves busy parents of some of the workload but also teaches kids valuable lessons.
Unpaid chores are tasks, but paid chores are work - and work teaches essential life skills: discipline, accountability, reliability, stamina, a sense of achievement, and the value of collaboration.
This is how kids start learning to be responsible grown-ups.
Doing housework builds character and self-esteem.
It teaches kids that not only are they expected to participate in the day-to-day upkeep, but that they are needed and valued.
Of course, kids are usually not big fans of doing chores. However, consistent paid chores can nurture a sense of accomplishment and achievement over time.
Paid chores contribute to building good money habits.
Kids really start to value money when they see how much work it takes to earn it.
When children and teenagers learn first-hand what earning money takes, they become better aware of the value of money. They’re also more inclined to protect it.
They can effectively learn how to budget and understand the connection between work and spending.
Kids really start to value money when they see how much work it takes to earn it.
Have a conversation with your kids about how they can use their earnings.
Teach them about saving, spending, and giving.
Building a good habit when they are young pays compound interest when they are older.
Kids may develop an appetite for earning their own money.
Mentor your kids and introduce them to other ways they can make money, including the classic lemonade stand.
Earning money from chores teaches financial literacy - not from a book or in class, but from experience.
Getting paid for chores is a real-world way for kids to learn about money
Understanding how money is made is the first step in learning how money works.
When kids have money, they can learn from an early age how to make more of it through responsible habits: budgeting, saving, and even investing.
If you want to take it to the next level, teach your kids about compound interest with the story of a penny doubling for 30 days.
Chores can be a powerful tool in teaching children about responsibility, the value of hard work, and financial literacy.
Whether or not to pay children for chores and how much to pay are decisions that every family makes based on their values, goals, and financial situation.
With the right approach, chores can be more than just tasks; they can be valuable life lessons.
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