Commissions versus Allowances

With our children, we decided to have jobs instead of chores, and commissions instead of allowances.  OK, I decided to do so and my wife has gone along with it, sometimes more eagerly than at other times.  What is the difference?

Obviously, when you have children you suddenly have a lot more to do in the household since there are now three or more people making messes instead of just two.  While this means a lot more work for you and your wife when the children are young and simply can’t pick up after themselves, as they get older they need to start 1) cleaning up whatever they have messed up and 2) help with the family responsibilities.  An example of the latter would be feeding the pets, or mopping the floors, or cleaning the gutters.

With many families, the children are expected to do certain chores , where chores are generally things that need to get done to keep up the house.  In these families, children are then either given an allowance, or ask their parents for money whenever they have something they need to buy.   If given an allowance, at least they can learn some budgeting and money management skills (provided the parents don’t rush in to save them whenever they run out of money at an inopportune time).

The trouble with the chore/allowance scheme is that there are often chores left undone and nagging ensues (unless you are a far better parent at commanding obedience than I am, which many are).  (Read with a whiny voice) “Johnny, when are you going to take out the trash?  This trash needs to go out, Johnny.  Johnny, I need you to take out this trash!”  It also teaches the paycheck mentality, where a fixed amount fo money is expected each week for a specified amount of work.  Doing more wouldn’t result in more money, so no additional effort is put forth.  At times, a little less can also be done and the same reward is still gained.

I would rather have my children learn that greater rewards can be gained through greater effort.  For this reason, our children are on the job/commission system.  In this system, certain household tasks (Things that are for the general household)  are placed on a job list on the refrigerator.  (They are expected to take care of things like their rooms, picking up their things, etc… just as a matter of course.)  Each job has a corresponding commission, which is a fair rate – what I would pay an adult to do a similar job.  For example, putting away the dishes might pay $2, $3 with the silverware.  Mopping the floor might pay $5.  Helping weed one of the beds might pay $3 for fifteen minutes worth of work (where I set the amount of progress that should be made in 15 minutes).

The idea is that:

1) They learn that money comes through work, it is not bequeathed to you each week or month because you breathe air.

2) It provides an incentive for them to want to do these needed tasks.

3) It provides a way for us to provide money to them for their needs and wants, and

4) It causes them to place value on the money they get.

In general the system works fairly well.  The needed tasks normally get done – at times we are even asked if there is anything they can do to earn some money.  At times our children will become very ambitious, looking for every job available, usually to buy some expensive thing. Our children have saved up for and bought a 3DS and an iPod.  There have been some issues that have come up:

1) Tasks may not always get done when they need to be done.   Obviously the trash needs to be taken out when the can is full and the table needs to be set before dinner.  At times our son would say he didn’t feel like doing these jobs when they needed to be done.  I explained to him that we don’t always feel like doing our jobs, but if you are not reliable and do them when your boss needs you to, you will not keep your job.  After explaining that he would lose the job and not be able to make money anymore, he generally improved at following the needed schedule.

2)  They sometimes fell that they should not help unless they are paid.  This has happened a few times, where they feel they should get paid for doing tasks that we did not want to put on the job list.  In this case we calmly explained that there are some things you just do because you are part of the family.  In general this has worked well.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

Picture Credits: Christa Richert, Website .. , downloaded from stock.xchng

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