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Teaching Kids To Save — The Rewards System

My husband and I believe that teaching our children about money at an early age will help them tremendously as adults. We want them to have a “savings” mindset versus a “spending” mindset to set them up for financial success when they start their trek into the real world. But where to begin? We’ve chosen a rewards system.

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Before we can talk about how to save money, our children need to HAVE money. Sure, we can give them a few bucks out of our wallets, take them to the bank, and let them deposit it into a savings account, but what lessons are they learning? Essentially, they’d be learning that all they have to do is ask for money, and out comes the wallet. In our house, we want to associate the idea of having money with EARNING it. To do this, we are big on rewarding her for her efforts—and we do this in a couple of different ways.

 First, we have a chore chart.

Our girl is five. On our chart are a few things that we expect her to do. Those get no rewards—homework, teeth brushing, picking up after herself—things like that. These aren’t things that we feel need to be rewarded because they are normal, everyday expectations. Then, there are the things that she can do to earn money: feed the dog, gather clothes for the laundry, help pick up/clean around the house, etc. These aren’t huge tasks—we aren’t having her vacuum, or actually DO the laundry—but at five years old, they’re things she is capable of doing. These are “for pay” tasks. If she chooses to do them, she gets a small amount of money per day, per item. If she doesn’t choose to do them, she gets nothing. We have one day a week designated as “pay day” when we go over the list, and she gets her pay for each completed item. There are also bonus items that we offer to her, as they come up. For example, I might offer her an extra $0.50 for helping me carry in and put away groceries. She earns a few dollars a week this way—which we put in a giant mason jar in our kitchen. (We chose the mason jar because it’s large and it’s clear—she can actually see the total growing in the jar as she earns more money.)

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 Next, we have a behavior chart.

I know what most of you are thinking here! If we expect normal, everyday actions like brushing her teeth to go unrewarded, why don’t we do the same with good behavior? Wouldn’t you just expect your child to behave? While we do expect good behavior, we realize that there is something to be said about rewarding better than good behavior.  Our chart is color coded: Purple is exceptionally good. Blue is above average. Green is typical, everyday behavior. Yellow means she needs to work on her attitude. Orange means there have been some warnings, and now she’s losing some privileges. Red equals an early bedtime because her behavior was much less than desirable. When she gets to blue or purple, she gets a smile on the reward chart. As she accumulates smiles, she gets rewards. At first, these were small toys, pencils, etc. Now, however, we’re moving into a monetary reward. Let me tell you why—in the real world (for example, in the workplace) exceptional behavior gets rewarded. In an annual review, employers desire to see their employees go above and beyond in everything from appearance to behavior to work ethic. The more exceptional the employee, the higher the annual raise. (Ideally, anyway…) So, in the real world, there IS a monetary value attached to actions and behavior.

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Lastly (now that our daughter is in school), we plan to reward her for good report card grades as well.

Right now, she’s in kindergarten, so there really isn’t much in the way of “grades” per se, but as time goes on, she’ll start bringing home letter grades. At that point, she’ll get rewarded for A’s and B’s. This is something my parents did with me when I was growing up. As a result, from a very early point in my school career, I knew there was value attached to working hard and doing well in school. Not only will hard work and good grades pay off in the way of scholarships and recognition, but the small monetary rewards throughout the years are little “pushes” to keep up the good work.

 When you’re dealing with monetary rewards, it’s VERY important that you set these based on what works for YOUR family. Things to consider:

  • Your child’s age (for instance, a 15 year old would likely be capable of more labor intensive chores).
  • Your current financial situation (you don’t want to put yourself in a bind when it comes to paying up).
  • How many children you have.

Right now, Lily earns $5-$6 a week. I have a friend who has a 7 year old who earns around $10 a week. You
may implement all of these and find your child is mostly solely motivated by the job chart,or the grade chart—and not so much by behavioral incentives. Instead, you may have three kids in your house who are completely motivated by the behavior chart. (I have had friends who swear that this works in helping their kids get along!) Tweak your rewards system as necessary to make it work for you!

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