3/13/2005

Advice from Nashville's leading Financial Aid Advisor Dave Ramsey

 
Dave Says
By Dave Ramsey
Author of:
Financial Peace and
The Total Money Makeover

"Pay children commission vs. allowance?"

Dear Dave,

You’ve commented before on paying commissions to children for doing household chores. I kind of have a problem with paying kids for doing chores they should be doing anyway as members of the household.

Also, I have two children with completely different ways of handling money. There really seems to be no way to do things fairly when it comes to handling money with them. My younger child is a worker who will work whenever there are chores to be done. The older one will work as hard or harder just to get out of chores. Last summer we tried paying them for chores – if they didn’t do the chores, they didn’t get paid – and it didn’t work too well, so we abandoned it.

Finally, how do you balance what you pay for versus what you make your children pay for? Our kids are seven and nine years old.

Jenny in Lawton, OK



Dear Jenny,

I actually agree with you. We’ve always tried to find a balance with our children. They should do some chores around the house just because they’re a part of the family and its part of their family responsibilities. However, if you do that all the time, you miss the opportunity to teach them that money is equivalent to work. You’ll miss some very teachable moments. I meet 54 year olds all the time who still don’t get the concept that work equals money. Work is a sure-fired money-making scheme.

In addition, paying them for commissions gives you another teachable moment when you help them decide how, when and where to use that money they’ve earned. And they really do spend, save and give money differently if they’ve worked to earn it than if you just give it to them as an “allowance”. However, I also don’t want to get into a situation where every chore becomes a union negotiation.

With regard to the different personality types and how to handle money with them “fairly”, it’s the same way with everyone in our society. There are always those willing to work and those who aren’t. The older child actually tested you on this and you flunked the test. You have to be firm and tell them, if they didn’t do their chores, they can’t go to the movies because they have no money.

When it comes to finding a balance of what you pay for and what you make them pay for, you have to set those rules in advance. Otherwise, it will feel unfair. Let them know that from now on they will be paying to do this specific list of activities. Let them know they can’t come whining to you later if they haven’t worked and can’t afford to do those things. And they will test you – they will come whining about how everyone else is doing or buying something.

Set your rules and goals and then stick to them.

-Dave

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