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Trying to teach my daughter about money

September 1, 2012

I hope she’s a princess with dress up, but not with her money.

I had two proud father moments this past week. The first was Saturday night when my almost 5-year-old daughter Quincy wouldn’t let me into her room to help her clean so she could clean it all by herself. The second was Sunday morning when she was so proud to give her first dollar to the collection plate in church.

My wife Kerri and I began giving Q an allowance this past week. I had read a variety of plans by experts with a wide variety of ideas. Basically, when it comes to an allowance, people generally fall into two camps.

The first camp is the “you need to work to earn it” camp. With this group, all allowances are based on children completing family chores. Some even call it a commission as opposed to an allowance.

It is pretty easy to see the merit in this. By rewarding kids with money for completing their chores, they can see the value of hard work.

The second group believes an allowance isn’t for a lesson in work, but in handling money. This group will give children the same allowance very week, but then make sure there are some basic expenses children have to cover with their allowance.

The idea is the allowance is focused on using money, not on earning money. Also, the belief is that there are certain things everyone has to do around the house because they are part of the family, not because they will get paid for doing it. This group believes that you can actually destroy someone’s motivation to do something by giving them money for it, and there are some research studies shown in the book “Drive” by Daniel Pink, which backs up this notion.

Given these two logical arguments, we decided to adopt a hybrid allowance for Q. She will get $1 a week for being a part of the family. For every night she completes her cleaning chores, she will get $0.50 toward her allowance. So, every week she can earn as much as $4.

How did I pick $4? One piece of information I read consistently is people have had good luck making the allowance the same as the child’s age.

What does Q get to do with the money? Every week, she needs to save some, spend some, and give some. When she earns $4, she needs to save $1 for a long-term purchase, give $1, and she can spend $2 to spend on her own. Even though a forced giving and savings make take a little away from the idea behind it, I think it is important to build these habits early.

Can Q buy whatever she wants with her money? No. Her purchases do need to be approved to ensure they are appropriate for her. We still are her parents. That being said, we will let her spend money on what we may consider to be a bad purchase. I hope she makes a mistake in buying the wrong thing for a couple of dollars while she is still young instead of for thousands of dollars when she is a little older.

Why did we start now? Up until now, I don’t think Q thought about money a lot. With her birthday coming up in a couple of months, she already is starting to look at items she wants, but when we tell her she can’t have everything she wants as a gift, it kind of opened up the lessons I think will be valuable to her in terms of being responsible, earning money, giving money and saving money.

If you have any other questions, please post them on my blog at I do feel we have had some early successes. Q has done a better job of cleaning the rooms she is responsible for, and she had great pride Saturday night. When it came to giving her first dollar away to the church, she was actually excited to do it and to tell pastor she did it after church.

I know we’ll have some difficulties along the way, so I’ll continue to update you as they progress. If you have good tips for allowances, please post them on my blog.

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