How to Teach Your Kids about Money WITHOUT Giving Allowances

I am a frugal minded mom, and I definitely want to instill the same money values in my children. If nothing else, I want them to learn the value of a dollar and how to manage their money. Some say the way to do that is to start giving them an allowance at an early age. I don’t follow this advice. I wasn’t given an allowance growing up, and I grew up knowing the value of money, but that is not the only reason my kids don’t receive allowances.

3 Reasons Why I don’t Give Allowances

1. Kids Haven’t Earned the Money: I’ve heard of giving kids a set amount of allowance each week based on their age. But this doesn’t teach kids that they have to earn the money. In the real world this won’t happen. They will have to work for their money. So am I really training them by giving them an age-based allowance? Not only are they not learning the value of earning money, but they are also more likely to spend the money with less thought. You are likely to be more careful about how you spend the money if it is something you have had to work for.

2. Chores Aren’t for Allowance: Another method of determining allowance is based on chores. In our household, mom and dad provide food, clothing and entertainment. That is our job as parents. As part of the family, the kids’ role is to do their assigned chores. These aren’t excessive chores, but simply things that need to be done so the house runs – like laundry and kitchen chores of loading the dishwasher and sweeping the floor after meals.

Of course the older kids complain that they have harder chores and should get paid for them. I explain to them that it is my job to train them so they can live on their own, and they do get more in terms of the cost of clothes and entertainment. Not only do clothes get more expensive as kids grow (especially since there are no hand me downs), but my 3 year old doesn’t ask for money to go to school football games while my 16 year old is provided that. Overall, chores are part of being a member of the family, not for getting paid. These are things you have to do to support the entire family, they are not choices.

3. It’s Hard to Keep Track of Extra Jobs: Several summers ago I tried implementing an “extra” chore chart that would provide a payment to the kids for jobs done above and beyond their regular chores. I even tried using an online app to keep track of it. Guess what? It didn’t work. With four kids, and one a baby at the time, keeping track of the extra jobs just wasn’t manageable for me. It actually led to disagreements between the kids as to who actually did the job. Not what a momma needs. So this way of earning extra money sort of fell to the wayside.

How I DO Train them to Value and Manage Their Money

1. Teach by Example: Shopping with my mom when I was young was how I really learned to value money. I also consider this one of the best ways to teach kids about money. Although it may be an inconvenience, couponing with the kids in tow is a great way to teach even the youngest the value of money. As I shop, I explain why we are getting some things and not others (in other words we get what’s on sale.) Also, once they learn numbers I tell them how much we actually saved by getting the sales and using coupons.

Now, some of my kids have called me cheap because of this, but I am quick to explain that it’s because we save on groceries and clothes, that we are able to do things of real value – like family trips. In other words, they learn that money is not a never ending resource. You have to save in order to spend on those things you really desire. That’s definitely a lesson every one needs to learn.

2. Give them Free Reign with Birthday Money (or other cash they might receive): Just because the kiddos don’t receive an allowance doesn’t mean they don’t have any money to spend. They are often given birthday money, do an odd job for a neighbor who pays them, or sometimes I’ll play cleaning games with them where the reward is money. In these cases they are given free reign with their money. I don’t force them to place it in a savings account, but do explain the benefits of saving it for something big. If they want, they can spend it on little things here and there. Just don’t complain when you aren’t able to get that big item you want!

With this method they see that spending their money at the pool vending machine or picking up a pack of gum provides only a temporary satisfaction. On the other hand, when they save it for a bigger purchase they might miss the instant and short lived satisfaction, but instead, be rewarded with something they will enjoy for years.

3. Have them Get a Job and Give them Control of a Bank Account at 16: My son started his first job the other day. He didn’t necessarily want to, but mom and dad insisted on it. Not only is it important for him to learn to be responsible to someone other than his parents, but he will also be working to earn money that he can now manage on his own (with a bit of oversight by mom and dad.)

In addition to the job, we also opened a non-custodial account in his name. That means it truly is his money. He has worked to earn it and wasn’t just given it. He now has a debit card he can use, and also a savings account that a set amount will be transferred to each week. This will be a true test of how he values money, and will definitely give him experience managing that money. Allowing him to have a debit card while he is still in our household is something I think is important. Many times, college age kids get in trouble with debit and credit cards. Since mom and dad are still here to guide him a bit, I’m hopeful he’ll learn the frugal ways to use it before that time.

So that’s how I teach my kids about money without giving them an allowance. What about you? How do you help your kids learn about money?

Frugal Minded Mom Kim is a stay at home mom to 5 ranging in age from teen to toddler. She loves to share how you can raise a family and still save money. Find her on Facebook, Google+, Pinterest and Twitter