Author Topic: What financial incentives do you give your kids?  (Read 1658 times)

Swdshstallion

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What financial incentives do you give your kids?
« on: May 11, 2019, 07:50:29 AM »
When I was growing up, my parents gave me $5 for every A I got on my report card and doubled the total for straight As.

I also got paid for mowing the lawn and shoveling snow, but not for any other chores.

On a related note, I also really like the idea of giving my kids interest on their savings to incentivize saving, similar to MMM (btw rather than a spreadsheet I found an online tool that helps me keep track of it www.guardiansavings.org).

What financial incentives do you all give your kids and how effective are they? Are there any downsides?

ZMonet

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Re: What financial incentives do you give your kids?
« Reply #1 on: May 11, 2019, 02:03:02 PM »
My 9-year-old is very financially driven.  We don't pay an allowance.  We also don't pay her for grades but we pay for any work/chores she does.  We started out paying her .25 cents every time she set the table, took trash cans down to the main trash, etc.  That was at about 5 or 6.  We would get everything out for her and all she had to do was literally set the table.  We moved that up to .50 cents a couple of years ago.  For the past year and a half, we also pay her the equivalent of $6/hour for any work she does around the house -- raking leaves, helping me hand drywall, painting a room, hanging shelving, etc.  I've told her that there will always be money for her if she is willing to work for it because there is ALWAYS something on the list to do.

On the Bank of Mom & Dad interest thing, that has taken off in a way we didn't expect.  We started off paying 1% interest per month to keep the math easy (she has to compute the interest).  My daughter puts about 90% of the money she gets into the bank and really doesn't take it out unless there is something she really wants, and even then it is just a few dollars.  She has also taken to selling on eBay/Craigslist (with my help to the extent necessary for an adult to be involved) gifts she gets after she is done using them -- old electronics, a bounce house she got when she was 4, a dollhouse, other toys).  Anyway, she has grown that money over 3 years to just over $1,000.  Yeah, she loves the monthly $10 payout!  We could lower the interest payment but I don't mind incentivizing the savings, even at an extremely subsidized rate.

At her request, we recently got her a Visa debit card (tied to a banking account in her name -- us as custodians) because she has been so responsible.  To date, she has used it with great care and I haven't seen any downsides to our arrangement.  And if she falters, we rather that lesson be learned now than when she is older...but I don't think she'll have any problem.

I don't think financial literacy is going to be a problem for our daughter.  Now we can just focus on the ten thousand other things that make being a kid today so ridiculously difficult!

TVRodriguez

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Re: What financial incentives do you give your kids?
« Reply #2 on: May 11, 2019, 03:44:20 PM »
I do a straight allowance for our kids.  They started having required chores about 2 years before I started the allowance, on purpose--I don't tie the allowance to the required chores, because chores are part of contributing to the family.  So they are supposed to clean the bathrooms, take out the trash, do a load of laundry, clear their own dishes, and some other stuff just because they should learn to do those things. 

They also have the chance to earn money with "extra" chores.  These change depending on what needs to be done.  One "extra" chore is collecting leaves from the pool.  I pay a penny a leaf.  The most I've paid in one week is $11.00.  That was when the pool vacuum was broken and it was peak leaf-falling season (not autumn, btw).  Another "extra" chore is mowing the lawn--I pay different amounts for different sections of the lawn (divided by bushes and trees).

I pay the allowance to let them learn to manage their own desires--short-term vs. long-term.  Our oldest managed to save enough to buy himself an Xbox One.  Our youngest saves up for a Lego set and then typically blows it all, but he's lately been leaning toward saving more.  Our middle is pretty well-balanced--she spends a little and saves most of it.  She buys books and art supplies and candy--lots of candy. 

I don't pay interest.  They save in a money box in their rooms.  I don't require any percentage to be saved or donated. 

I have clear memories of learning how to manage money through an allowance, so I guess since it worked for me then I want them to get the same chance. 

I do not pay for good grades.  That's a whole other topic, but in short I want them to focus on learning, on balance, and on overall health rather than focus on grades.  I saw a whole lot of anxiety and/or cheating in AP and honors classes growing up, and I do not need to add more pressure.  In fact, my oldest already stresses about his grades, which I find needless (he's in 6th grade), and I almost jumped for joy when I saw a B on his latest progress report--his first one ever.  Everyone is different, but for him I need to coach him to find balance rather than to chase another A.

Michael in ABQ

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Re: What financial incentives do you give your kids?
« Reply #3 on: May 12, 2019, 10:26:05 AM »
No allowance for our kids put I do pay interest on their money weekly. It's a very generous 5% but most of the time they have between $5-25 so it's usually a buck or two per kid per week at most. I'll pay for  certain tasks like raking leaves at $1 per trash bag. Or sometimes for picking weeds. I try to tie it to performance rather than time. Normal chores like cleaning up the table after dinner, unloading dishes, etc. aren't compensated. It's just part of the work that's expected for the whole household.

Our oldest is 10 and the three oldest boys have a pretty good grasp of managing money. We've got one natural saver who usually has about $50 while his brothers consistently spend most of the money they've saved.

Blueberries

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Re: What financial incentives do you give your kids?
« Reply #4 on: May 14, 2019, 09:15:14 AM »
I have found this to be a difficult balance for me.  Right now we're giving a small allowance to our children for doing some chores, but we don't give money for all chores.  We try to impress upon them the importance of hard work no matter what and that not everything is a monetary transaction (some things we do to help the family unit).  We also deposit a much larger chunk into a Fidelity free fund (FZROX) every month and have them view it periodically.  We did a combined account for the purpose of generating the most money and we will split it when they are eligible for their own Roth accounts.

sideHustler

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Re: What financial incentives do you give your kids?
« Reply #5 on: May 14, 2019, 09:53:28 AM »
My 9-year-old is very financially driven.  We don't pay an allowance.  We also don't pay her for grades but we pay for any work/chores she does.  We started out paying her .25 cents every time she set the table, took trash cans down to the main trash, etc.  That was at about 5 or 6.  We would get everything out for her and all she had to do was literally set the table.  We moved that up to .50 cents a couple of years ago.  For the past year and a half, we also pay her the equivalent of $6/hour for any work she does around the house -- raking leaves, helping me hand drywall, painting a room, hanging shelving, etc.  I've told her that there will always be money for her if she is willing to work for it because there is ALWAYS something on the list to do.

On the Bank of Mom & Dad interest thing, that has taken off in a way we didn't expect.  We started off paying 1% interest per month to keep the math easy (she has to compute the interest).  My daughter puts about 90% of the money she gets into the bank and really doesn't take it out unless there is something she really wants, and even then it is just a few dollars.  She has also taken to selling on eBay/Craigslist (with my help to the extent necessary for an adult to be involved) gifts she gets after she is done using them -- old electronics, a bounce house she got when she was 4, a dollhouse, other toys).  Anyway, she has grown that money over 3 years to just over $1,000.  Yeah, she loves the monthly $10 payout!  We could lower the interest payment but I don't mind incentivizing the savings, even at an extremely subsidized rate.

At her request, we recently got her a Visa debit card (tied to a banking account in her name -- us as custodians) because she has been so responsible.  To date, she has used it with great care and I haven't seen any downsides to our arrangement.  And if she falters, we rather that lesson be learned now than when she is older...but I don't think she'll have any problem.

I don't think financial literacy is going to be a problem for our daughter.  Now we can just focus on the ten thousand other things that make being a kid today so ridiculously difficult!

Whoa, this is next level kid finances. lol My son is 18 months and I'm trying to think of ways to start him off right once he understands what currency is.

StarBright

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Re: What financial incentives do you give your kids?
« Reply #6 on: May 14, 2019, 10:14:17 AM »
My older child is very financially motivated and also constantly asks for things so we've started paying for certain chores.

We basically have baseline things that are unpaid and are expected (bedrooms must be generally neat enough to walk through, setting table, clearing table, putting school things away correctly), and then we have extras that we pay for when the kid wants to earn money (totally clean bedroom at the end of the weekend is $2, generally a quarter at a time for helping with chores like dusting, washing baseboards, weeding the flower beds).

This mostly helps because somehow DS7 is a child who constantly asks for things  even though we are not people who buy toys (we do live in a very UMC area though and his friends often get new toys every week.) When he asks we'll generally offer some chores to do to earn money. He has been saving for almost two months for a pricey Lego set.

better late

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Re: What financial incentives do you give your kids?
« Reply #7 on: May 14, 2019, 10:43:02 AM »
Kids are older (in college) but Iíve been matching their Roth 401k contribution up to $1000.

Laura33

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Re: What financial incentives do you give your kids?
« Reply #8 on: May 15, 2019, 10:22:45 AM »
I think it depends on your kid.  E.g., my DD is a spendthrift, so all of my "lessons" have focused on living within her means.  For example, in 2nd grade, she discovered both money and the school cafeteria.  We had been thinking of starting an allowance, and I wanted her to have enough money to buy things now and then, but not so much that she was eating crap every day.  So I think we gave her $7/week, which was enough to cover a couple of lunches.  Within a month she had figured out that the school lunches weren't worth her limited funds.

Once she got old enough to have a (very) part-time job, the only thing we mandated was that a big chunk goes into savings.  It was hard the first year and she was perpetually broke, but she was saving for a summer trip, and it was nice to see her really struggle with herself and focus to save that money, and she even exceeded her goals.  She then blew all of it on the trip, of course ;-) -- but at least she had saved it first.  The other added benefit of that approach was that she has discovered that the best way to manage herself is "out of sight, out of mind":  if the money is in her checking account, she will spend it; but if it is in her savings account and she doesn't see it, she won't touch it.  I think that is the most important lesson she could have learned, because next year she will no longer be under my daily supervision, and she needs the tools to manage herself independently.

DS, OTOH, is fairly tight-fisted to start with and likes having a stash of money.  He has required far less effort to date.  ;-)

Sugaree

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Re: What financial incentives do you give your kids?
« Reply #9 on: May 16, 2019, 06:41:30 AM »
We do an allowance.  We started a couple of years ago when he wanted this gigantic Batman castle thing.  It was just after his birthday and I told him that if he wanted it then we'd start doing an allowance and he could save up for it.  We didn't really have room for it and I didn't really think he'd do it.  Joke's on me.  He saved his birthday money, and allowance, and money he "earned" from grandma for feeding her cats while she was on vacation.  And charged his dad loan shark rates to borrow money (don't get me started on how a 5 year-old is better with money than his dad).  After that, we opened up a savings account at the bank for him.  I require that he put half of his money in the account every "payday" (every two weeks), but most of the time he just wants to save all of it. 

DadJokes

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Re: What financial incentives do you give your kids?
« Reply #10 on: May 21, 2019, 07:25:07 AM »
I'm so excited for my child to grow up, because I have so many ideas to teach him about finance and will hopefully get him off to a much better start than I got. However, as all things with children, I'm sure nothing will go according to plan.

I want, as early as elementary school, to teach him what things cost. I would like to include him in my budget planning and grocery shopping. By the time he is in middle school, I want to give him money every month to spend on his own necessities. He would be in charge of budgeting for haircuts (or letting us cut it for free), clothes, school lunches, school supplies, activities, and any other expenses. Anything he doesn't spend, he would get to save or donate. I'll try to spend a lot of time impressing upon him the importance of investing, perhaps by showing him the growth of our own investments. If he's learned the value of a dollar, he'll hopefully understand the power of compound interest. I'll eventually hire him in my business and will give him a sizable investing match, depending on our own financial situation at that point.