Money. Where does it come from? How do we get it? Why CAN'T we just go get more whenever we run out? These are questions my kids started asking a while ago.
And while we are happy to have the freedom to buy the things we need, we wanted to be sure to convey the right message to the kids regarding money, working, saving, and spending. In a way that they could understand. So we started searching for a good teaching tool that communicated our beliefs simply.
And so we ended up with Commissions. If you are familiar with Dave Ramsey, then you know this is his word of choice. If you don't know Dave Ramsey but are interested in taking charge of your family's financial well being, I highly recommend listening to his show. He has been to the rock bottom and back financially, so he speaks practically from experience. But enough of that.
Being Ramsey fans, we looked into his take on paying children. And it made sense to us, so we adopted the plan as our own. With a few minor tweaks. It works like this: the children earn money for jobs they do. Simple as that. If they want to earn more money, they do more work. They are expected to give a portion to God, save a portion for larger purchases, and then they can choose to either save or spend the rest.
They do not, however, get paid for every little thing they do. The system that works best for us is this:
We keep a list of family jobs, commission jobs, and fine-able jobs.
Family jobs are jobs that they are expected to do as members of this family, and they are not paid in money for this work.
Commission jobs are jobs above and beyond family jobs. I keep a tally every week of how many commission jobs they do, and at the end of the week they are paid for their work.
Fine-able jobs are jobs that they are expected to do daily, and if they are not done, the are fined. The fine is the same price as the commission payment, so I just subtract a mark for every fine they receive.
As soon as they are paid, the first portion goes into a Give envelope. This money is taken to church each week, although giving could be to any charitable donation, if you so choose. The next portion is put into a Save envelope. This money is used for larger purchases. If a child decides he wants to buy a toy, for instance, we find a picture of it and the price, and we tape it up near the tally of earnings so he can see it every time he gets paid. Saved money cannot be taken out for something else like an impulse buy. That's what the Spend envelope is for. Spending money is for little items like gumballs, video games, and other small kid items.
This works for us because it gives the children complete control of how much money they earn every week. They can easily see that when they work hard, they earn more money. It is their choice to earn commission, and some weeks they hardly earn any at all. But I guarantee you that when that happens, the very next week they are asking for extra work. It is also easily adjustable to the child's age and understanding of money concepts. We started a simplified version when our younger son was 3, and he easily caught on to the idea.
But more important than the actual earning of money is the lesson they are learning regarding a strong work ethic. I know they understand that money is earned, and it is something I hope they carry with them for their whole lives.