After a number of years of procrastination, we as a family finally set up a pay system for our kids. Part of the reason for my delay was not really knowing how to wisely distinguish between expected chores, systematic allowances, and commissioned jobs with our kids.
So what follows is what I’ve self-titled our Kids Self Employment System.
Full disclosure: I’m no expert, and I have approximately 6 months of real life results backing up what we’ve been doing. For all I know, we could be setting up our kids for financial disaster. So, reader beware. Also, I’m sure I’m more heavily indebted to others than I realize, but two big sources come to mind as we implemented this: Ron Lieber, with his book The Opposite of Spoiled, and the podcast when Justin Castelli hosted Frazier Rice.
The Background
Some context probably helps. We have four kids – currently at ages 10, 7, 5, and 1. We have our self employment system set up for the oldest three. We also have a separate expectations list of things they’re to do that don’t make their way into this system and that they don’t get paid to do (take dishes to sink, brush teeth, etc.). We view this as just being part of the family unit and carrying some weight. Lastly – when our kids are gifted money from other family members, that money gets put into their own investment account. It’s separate from this idea entirely.
The System
My wife and I discussed certain tasks that we think each kid should reasonably be asked to do, could do themselves, and approximately ball park what that job should be worth. I created a Google Doc with three tables – one for each kid with specific jobs and payment amounts for that job. Since some of them might be completed multiple times, I just created stars next to them that the kids will fill in when they do them. You can see the current list above, but it includes things like vacuuming the floor, feeding the dog, unloading the dishwasher, putting laundry away, and making their beds. We then print and post this on the fridge each week.
We print and post a weekly sheet on the fridge for each of the three oldest for them to fill out as they do certain things. Each kid has slightly varying tasks, with varying amounts of pay per task. It’s currently voluntary. If they don’t do it, they don’t get paid. I pay them at the end of each week after I tally everything up (and remember to go to the bank to actually have cash on hand).
The Intention
We struggled with the idea of paying kids a set allowance. I understand families that do, but it seems to have the potential to create an idea of entitlement that we didn’t want to flirt with. After launching Fident, and with both sides of our family coming from self-employed families, entrepreneurship is a passion that I wanted to nourish. We want the kids to take initiative, and to see reward for their work.
The Jobs
These jobs have rotated and have been modified, both to the kid and to the season we’re in. Our 10 year old is capable of doing more than our 5 year old, so her jobs reflect that. Sometimes the kids lobby to do another’s job, and we allow for that. We also create space in the bottom of each table for the kids to create something else not on the list that they would want to do, and we “negotiate” an amount of pay for it. Sometimes it’s also my wife or I making on the fly suggestions as well that get recorded there.
The Wages
This was pretty hard to decide on, and we might be a little skimpy on some of these. But we wanted to start low, because we figure it’s going to be way harder to back down our prices later if we were to start too high and break our own personal budget paying our kids. So some things are worth a nickel, some things are worth fifty cents. Each task doesn’t amount to much, but we just calculated how much each kid would earn if they did every single task (which none have done to date) for the week, and set it there.
The Payment
I joked earlier about remembering to go to the bank, but that legitimately is an issue. We hardly ever have cash laying around the house. So that was a systems change we needed to make. I know there are electronic apps out there that can handle kids payments/allowances – but I think it’s hard for kids to really wrap their mind around that. So we stuck with cash.
I sit down with each of them, go over the chart, praise them for what they did well, and count the cash in front of them. Sometimes I’ll go over how they did this week compared to weeks in the past. They then decide how much they want to allocate towards three buckets below.
The Buckets
We went with the typical Spend/Save/Give breakdown, which works for the older two but not so much with the 5 year old. For him, we lump it altogether and monitor his spending currently. Anything that the older two designate towards Spend they can use whenever and on whatever they choose to. Anything in Save needs to be set aside and only used for something that they ask for permission to buy ahead of time. Anything in Give they typically wait until they have some money saved up and give it away at church.
To sweeten the incentive a little bit, if they contribute at least $1 to Save, we will give them fifty cents on top of that. I initially had a 401k-type contribution calculation that was based on percentages, but none of them understood it – so I just keep things simple. A little nudge not to spend everything.
The Verdict
We’re way too early into this system to really know how it’s going to impact our kids view of money, but there are some preliminary results that have come up. First is the their awareness that life costs money. Buying snacks at the grocery store costs money. Buying a Lego set costs money. I took it as granted that they knew this, and my old-man-bemoaning of how money doesn’t grow on trees didn’t do a lick of good in communicating this. So that realization was encouraging to see.
It also was insightful to see, especially with the older two, where they gravitate towards with money. Our daughter is a natural saver, our son is a natural spender. The 5 year old – who we don’t even segment out his money yet – has the grandest of all savings plans. He wants to save up enough money to buy a cement truck. Not a toy – a real cement truck. So that he can “rent it out to my friends and make money off of it.” Not going to lie, that comment may influence potential nepotism down the road.
As with a lot of things – this is what is currently working for us as a family, and feel free to take it, tweak it, and make it your own to make it work for you and your family. I’d imagine down the road we’ll need to increase the payment amounts, shuffle the jobs, and potentially give more guidance on their breakdown of buckets – but we’re open to that. The key is to just get started, and adjust as you go.