I have a four year old and I am a huge sucker for him. Up until recently, I bought him pretty much anything he asked for. Of course, what he was usually asking for cost, on average, 50 cents, so it wasn’t a huge problem. But recently his requests have gotten pricier (a $199 LEGO set, for example).
I also feel obligated to introduce concepts to him that I’m still trying to teach myself - budgeting and impulse control.
Introducing an allowance to his life has two benefits - on one hand it teaches him patience, restraint and how to properly manage money, and on the other hand it gives me an easy out when searching for reasons that we are not going to buy the $199 Barbie Dream House.
We started trying to give him allowance in the form of play money (that was backed by parental gold, aka whatever’s left in our bank account) sorted into plastic boxes marked “spend,” “save” and “give.” He was three years old, so we started with $3 per week. I remembered to give him money for exactly one week. I moved onto a search for an app-based allowance program because, well, that’s reality.
I tried a few apps and finally landed on Rooster Money. The ultimate selling feature for me was family sharing - I have a login, my husband has a login, and when Dexter is old enough, he can have his own login. If I upgrade to to the paid PLUS version of the app, I can add other relatives, chores, a budget and put an interest rate on his savings. Currently all we have set up are a couple goals that he’s saving for (lots and lots of legos).
I am firmly against paying for chores after numerous studies that show that it’s not the best way to teach a kid to participate in the family. See Why parents who pay their kids for chores are getting it wrong and Why you shouldn't pay your kids for household chores for good examples.
However, I’m also opposed to telling my kid: if you want that $199 LEGO set, you’re going to have to wait 50 weeks of accumulating $4/week, or hope the grandparents give you a few extra bucks each holiday. Extrapolated to the real world, this is like collecting a weekly paycheck on salary with no variability, while crossing your fingers that your company will give you a good bonus this year, or maybe you’ll finally buy that winning lotto ticket.
Nothing against salaries. They can be great in the right situation. It’s nice to have a steady paycheck. It’s nice if that paycheck is large enough to support the life you want.
However, what if it’s not? Clearly making $4 per week is not supporting the lifestyle that Dexter wants. If it’s going to take you 50 weeks to save up enough money to buy your dream LEGO Batman set, well.... if you’re four years old you probably won’t even want it anymore by the time November rolls around.
Whether you are on salary, hourly or a total freelancer, there are always creative ways to add side hustles to your week in order to hit goals - whether it’s buying something or putting more money away in savings, retirement or investments. Besides restraint and budgeting, this is a skill I would like to teach my child.
So I think a lot about how to hook Dexter up with extra money here and there. Following my rule that we don’t pay for chores makes this difficult.
I by no means have this completely worked out, but for now I have made a deal with Dexter that if he does a side hustle with me, he gets paid $1. So far this week he has gone on three audits with me (more on this later). He now asks to do “gigs” because he really, really wants the LEGO Batman food fight set, and he only needs a very attainable $20 more for that goal.
I should add the the upgrade in the Rooster Money app allows family members to offer gigs to the kid. I have no problem with grandma paying Dexter to come over and shovel snow someday (but at my house he will do it for free).
I’d love to hear any other creative ideas in the comments.