Kid’s Allowance: It’s Not How Much, It’s How!

The amount of allowance you give your children is less important than how you give it to them. By meting allowances in ways that teach financial lesions, children grow to be more responsible spenders and better savers. Here are some ways to manage allowances that will save you from overbuying for the kids and teach them smart money habits.

Compensation For Grades

Make school grades determine the amount of cash the kids receive for their allowance. Pay your children for each A grade that they earn. Give money for B grades as well, but not as much. Mostly A grades with no more than two B’s are reasonable to expect. Don’t put a cap on the allowance amount, but give no more for all A’s than you do for A’s with no more than two B’s. These grade expectations are certainly reasonable and are high enough to develop the child’s potential, but not so high that it causes undue stress. Every C grade should cost the child 20% of his allowance, and any D grade should eliminate allowance altogether. This will motivate your children to continuously challenge themselves. They will likely achieve their academic goals, and may even end up getting scholarships if you are lucky. Compensating children for their grades allows them to shape their own futures. They control how much they earn by how well they do in school

Household Duties / Chores

It is important that kids have responsibilities. Performing tasks at home will not only benefit the kids, it will also benefit everyone else living in the home. The following method makes for a low stress means of encouraging children to obey, as well as a means of saving money.

First, place a sheet of paper on the refrigerator with a list of household chores that each child is responsible for. There should be a section on the sheet to record fines. An example is shown below.

Duties (No Reminders)

Bed must be made before school
Trash is to be taken out after dinner
Straighten living room each night
Dishes are to be washed Monday, Wednesday and Friday
Bedrooms much be cleaned thoroughly each Saturday
Yard must be mowed weekly


Failure to take out the trash on 5/12/10 – $2
Failure to mow the yard on 5/15/10 – $2
Sum of fines for the week – $4

If a fine of $2.00 does not motivate your child to do his chores, the amount of the fine should be doubled. If he is still is not motivated, the fine amount should be doubled again. These fines are a nice little bonus for parents and a great motivator for kids. You also save time this way because it only takes a couple of seconds to record the fine deduction. Hounding your kids to do their chores seemingly takes forever. Most importantly, this plan will make your child to be more obedient.

Giving kids household duties allows parents to rest more. Parents are less stressed, making for less stress on the kids and the whole family when everyone pitches in. This added rest will give parents more energy, allowing them to do more with the family, such as cooking meals instead of eating out.

This system will work if you follow it. The Government has been using fines since the colonial days and they work very well. Make this the case at home too. Yelling and screaming will not yield positive results and only upsets the family. A fine system creates a consequence for actions that changes disobedient behavior and prepares kids for the real world.