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Unlock Money Lessons with Allowances, Chores, Commissions

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Teaching kids about money is SO important.

However, we go through our life focused on the demanding task at hand. It is easy to put off teaching kids with money especially when decisions have to be made on chores vs allowance vs earned money (commissions). The need to teach kids about money is real and better to be handled sooner rather than later.

This is a tough subject and very personal to each family. There is no cookie cutter formula that works for everyone.

So, let’s uncover the differences first.

Insider Guide to Allowances, Chores, Commissions for kids. The necessary tools to teach kids lifetime money lessons. Understand the difference between chores and allowance. Also, the difference of allowance vs commissions. Teach kids about money. Printable allowance Chore Chart. Chores for money ideas. Teach kids money lessons with allowances, chores, commissions

Definitions from the Merriam Webster Dictionary:

Allowance: a share or portion allotted or granted

Chores: the regular or daily light work of a household/farm or a routine task/job

Earned Money: to receive a form or denomination of coin or paper money as return for effort and especially for work done or services rendered

Now, go back and reread the definitions again. Which life lessons are you teaching your children?

The way in which you receive money as a child will stick with you from life. My dad was famous for saying, “Money doesn’t grow on trees.” But, still as a little child, I thought it did because I had no concept of how money worked. Understanding how money works is crucial to kid’s success with money; that is a full blog post I will write in the future, but that is not the focus today.

The statistics vary from study to study on whether children or teenagers learned personal finance from their parents. The underlying question is do children truly understand the concept of money and budgeting before living on their own. Most of the studies say 50-90% of adults did not learn about money from their parents. That is a frightening stat regardless of the exact percentage. One thing rings true – we must, as parents, teach our children about money. Hint: it works better when the teenagers are still under your roof. Double hint: it works even better when the children still think your word is gold.

Coming Soon: Two Key Money Lessons Kids Need to Learn
CIT Bank 6 Month CD

Steps to Unlock Money Lessons of Chores, Allowance, and Earned Money

1. Allowance – Defining the Criteria

Are you going to allow allowance in your house?

There is nothing wrong with allowance if the boundaries are very clear on how allowance will be granted. For instance, as parents, we will give you $50 a month for gas to drive yourself to and from school and activities. If you lose car privileges for any reason, you will not receive your gas money allowance either.

2. Determine Chores

What will be classified as chores in your household? Read the definition of chores again.

The two key words to focus on are regular and routine. Let those two words guide your division between chores and earned money. The things in the household that must be completed each and every day regardless of anything else.

For instance, in our household, anything related to the kitchen is considered a chore or we call them tasks. Eating is necessary to live and it happens a lot. So, setting the table, cleaning the table, emptying the dishwasher are all chores in our household. Same with picking up toys and personal belongings.

Recommendation for the Number of Chores:

Five daily chores. Regardless of age.

Here is the reason why to stick with just 5. With younger children, the focus is on building habits like cleaning up the toys. As they grow up, many of those chores are now habits and the chores change to become more age-appropriate tasks.

Side note…If you want to include habits on your list, that is fine. Reading 20 minutes a day and homework completed are okay to include in a cross off list. Just separate them from the chores list.

Bonus Tip: If all chores are completed, then a 30-minute technology coupon is earned!

3. Determine Jobs for Earned Money (Commissions)

For kids to truly understand the correlation between work and money, the kids must earn money for work done. Determining which jobs qualify for earned money, that is a decision to be made. Again, there is no cookie cutter formula. You must decide what works in your household.

As a guide, take the jobs that don’t qualify as routine and regular. Also, remember a week is a very long time for a kid.

As adults, we may consider a weekly job to be routine because it has to be done one time each and every week. However, for kids, especially young children, there are six days in between that time frame. For instance, taking out the trash can be a paid job.

Related Post: Join the Save Age Challenge for Kids



Most importantly, the reason to pay your children is for them to understand the correlation between work and money. It is a stepping stone for learning. Start the baby steps to financially success!

Also, it allows them freedom on how to spend their earned money. In our household, the kids spend money is treated like the adult’s slush money. Children still need guidance on making spending decisions. However, they need to learn from their money mistakes at the $1 level and not the $1,000 mistake.

Related Post: 4 Rules and Advantages of Slush Fund (Pocket) Money

Bonus Learning Materials:

Kids learn by watching and doing. Paying them with dollar bills is crucial, but then what happens next?

That is almost as important to teaching them to earn money. First, open a high interest savings account. Start teaching the concept of saving money at a young age.

Additional ways to further kids learning:

Teaching children to be smart with money is very crucial to their financial success with money at adults. Children as young as 3 years old can begin learning. As parents, we want the best for our children. So, why not teach the foundation to understanding money.

During your next monthly money huddle, take time to discuss how allowance, chores, and earned money or commissions will work in your household. Go back again and re-read the definitions for allowance, chores, and earned money.

Which life lessons do you want your children to learn?

**Earned Money in this example does not qualify as earned income under the IRS tax laws. For a child, wages must be earned through an employer for services rendered to qualify as earned income. As parents, we are here to teach our children how to earn money. For more info, go here.

Insider Guide to Allowances, Chores, Commissions for kids. The necessary tools to teach kids lifetime money lessons. Understand the difference between chores and allowance. Also, the difference of allowance vs commissions. Teach kids about money. Printable allowance Chore Chart. Chores for money ideas. Teach kids money lessons with allowances, chores, commissions

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