This week on the Southern Colorado Moms Everyday, our resident tax expert referenced reporting income that your children earn. She cautioned us to remember to track their income especially if they receive a W-2.
It’s a great reminder that our children can become income tax payers at a young age, but it also triggered that old debate in my head about disposable income for kiddos…a.k.a. ALLOWANCE! Some of you moms may be years away from this topic and others may have astutely handled it years ago, but I’m in the thick of it right now. I see both sides of the debate.
Theory 1: Children should earn pocket money for doing basic chores and this fosters fiscal responsibility.
Theory 2: No one pays me to do the laundry or empty the dishwasher; it’s just part of family responsibility. If you need some money, ask me.
I can’t subscribe 100% to either theory, so I’ve ended up with a system that’s in between, but I’m not sure it’s the best idea.
My Theory: No one pays me to do the chores, it’s part of being in the family. I want to teach my children fiscal responsibility and give them practice managing money. So my husband and I came up with this compromise: we give each child (ages 11, 10 and 7) $5/week as part of the family budget. Then each child decides what amount of the $5 to save, donate to charity or keep for spending money.
As you can imagine, we have three different types of fiscal managers. We have the saver…his bank account has quite an impressive total, the spender…the money just burns a hole in his pocket and the middle of the road gal.
I guess it’s an OK system, but as the older ones are nearing adolescence, I’m not sure it’s making the impact I want. So moms out there, what do you do? What has worked for your family or what do you plan to implement as your kiddos get older?
I’d love to hear your thoughts on the allowance debate!