You should have seen the bike I bought with my own money when I was 12! A purple and white “freestyle” BMX bike with sweet mag wheels and pegs on the front fork to “pogo hop” on and those little flare-out things on the frame so you could stand on it and “surf” with no hands because it was perfectly balanced and a rotor so you could spin the handlebars all the way around without snagging up the cables from the hand brakes. It was not just an ordinary BMX bike. It was a 1987 GT Performer! Which back then was the gnarliest bike you could get.
I saved money from two Christmases and two birthdays and all my allowance for almost two years to afford it. Then we had to drive all the way to Evansville to pick it up. That purple GT was my prized possession as a kid. I wouldn’t even jump it off our homemade wooden ramp because I didn’t want to scratch it up. In my mind I was the coolest kid in the neighborhood.
Saving for that bike was a good lesson for me.
That memory flashed in my mind a few months ago when our younger son started asking us if he could start getting an allowance. Our older son never even brought it up, so Kelly and I honestly had never even had the conversation before. So I had to do some research and start asking how other parents handle it.
My financial advisor friend Andrew told me the main thing to teach kids when it comes to money is “spend less than you make and set a precedent to start saving money early, consistently and systematically.”
My friend Ashley told me about a chart system she put on her fridge with different amounts for different chores, but her daughter only wanted to do the small change chores so they haven’t quite found a good system yet.
Kelly saw a cool thing on Pinterest where one mom pinned up baggies of money for each chore, which was written on a slip of paper inside the baggie with two quarters or a dollar bill. So as the kid finished a chore, they took the money.
I had several people tell me certain chores are expected of their kids as part of keeping the household going because a family is a team effort, but there was also the option of earning money for additional chores.
My friend Phil, whose kids are adults now, told me he took it a step further and put timelines on each chore for compensation. For example, take the trash out on Tuesday. Feed the dog before 5 p.m., etc. “That way they learn time management and responsibility.”
Then my friend Jonathon, who is a huge Dave Ramsey fan, told me that Dave calls it “commission,” not allowance, because kids only get money for the work (chores) they do. It’s more real-world scenario than just handing kids money. I liked that concept so I borrowed the Smart Money, Smart Kids book, which I haven’t finished yet, but I’ve read enough to get started.
The Ramseys recommend using a simplified three-envelope system for kids. Give first. Save second. Spend third. But like most things in the May house, we don’t always go “by the book.” Beau didn’t see the point in having actual envelopes. “Why can’t I just put my ‘spend money’ and my ‘save money’ in my wallet. That’s like an envelope, right?” Good point. Fine with me. I was going to warn him, though, that if you put your save money in your wallet, you might spend it instead. But that’s a lesson probably better learned from his own experience that from me warning him.
So here’s what we came up with: the boys can earn up to $5 per week for a list of chores that need to get done. Payday is Friday, but they only get paid for the chores they complete. Kelly wrote out an “invoice” for them to write their chores on each day.
It leads to some interesting conversations. The first week we tried this, Beau needed two more dollars to buy a stuffed animal he wanted. I saw him thinking hard, then he said, “Can you give me two dollars and I’ll owe you two extra chores next week?”
That became a lesson in debt. And sure enough, he worked it off the next week.
One week, Luke wasn’t interested in chores or commission. So he didn’t have a payday that week. But then another week he bought something with the money he earned and we talked about how much different it feels to buy something with money you worked for and earned yourself. (Just like that purple GT.)
My friend Rae gives a “bonus” at the end of the week on payday if her kids get all their chores done and do a little extra or have a great attitude or do something else above and beyond. Other parents give bonuses for A’s on report cards. (But don’t tell my kids that because we’re gonna stick to the freebies from restaurants for A’s.)
Another incentive Dave Ramsey recommends to encourage the power of saving is doing a match for a large purchase with saved cash. For example, in the Ramsey house they match dollar for dollar what one of their kids saves for a first car. So if their 16-year-old saves $2,000, they’ll match it so the kid then has a $4,000 budget for their first car. We’re a few years away from that, but I could see it working in a similar way if our boys saved for souvenir money for our next vacation or something like that.
Jonathon and Andrew both told me the best way we teach our kids good money habits is to model how we save and spend wisely by letting them see us do it. We’ve been pretty open with our boys about things like cutting back to save for vacations, paying the Catholic school bill in one lump sum to get the discount, and driving cars that are paid off until they fall apart instead of taking out another loan for a new car. They know we use the envelope system ourselves and we celebrated paying off all our debt except the house. Now that they’re earning and handling their own money, hopefully those real life connections will make more sense to them.
Our boys now drop their own money in the collection basket at church, spend their own money on toys, and save for bigger purchases like video games.
We’ve just started giving “commissions,” but one of these days we’ll be celebrating one of their big purchases or savings milestones. And my inner 12-year-old will be smiling on the inside, thinking back to that proud, purple GT.