When Raising An Entrepreneur (Or Not), Skip The Allowance

Published by Mike Michalowicz (Google+)

Are your children going to be entrepreneurs? I don’t know if mine are. In fact, of the three of them, I think it may only be right for one. But I do know, no matter what they choose in life, they will need to have a strong foundation in money management.

They need to know financial management 101… make more then you spend, and you can survive. Perhaps even thrive. Make substantially more then you spend and you achieve financial freedom.

I want to raise children who are financially literate and I am doing it by not giving them an allowance. Instead, I give them at home (and at the office) work opportunities.

At the Michalowicz house, you will see a chart in the kitchen with different work opportunities. Empty the dishwasher and you can make a quick 50 cents. Clear the garbage from every room in the house and you get a full dollar. Take out the recycling, and another 50 cents found its way into your pocket.

The system is setup that you can make over $14 a week if you put in some good effort. I know fourteen bucks doesn’t sound like tons of cash, but when your food, shelter, clothing, health care, and vacations are covered… $14 can go a long way.

But here is the amazing part; now that my children make their own money they spend it much more conservatively. They don’t just buy stuff… they comparison shop. Do you hear me? They comparison shop… and two of them haven’t even hit puberty yet.

I’m not teaching them financial literacy, they are teaching themselves.

Try it with your kids, you will love the results. Entrepreneurs or not, they will be thanking you in their adult years.

To make it easy on you, just click here to download the spreadsheet we use at our home.

By Mike Michalowicz, Author of The Toilet Paper Entrepreneur

Category: Skill Toolbox, The Right Actions
Tags: , , , , , .

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  • Gwen McIntyre

    I have just started this same system with my kids. Each job around the house has a specific pay associated with it. Do the job, get the pay. The kids are excited about it since they have not had any type of allowance before.

  • http://www.alittleindulgence.us/blog Tracy Young

    I can also vouch for the system. The only thing that my husband and I talked about was differentiating between chores that are part of the family and chores that are sources of income.

    In our family, setting the table and feeding the pets are part of the family responsibilities and are not paid. Cleaning the cat litter box and raking the leaves are sources of income. If my girls perform theses tasks then we pay them based upon an agreed to fee structure. I’ve never seen anyone so willing to clean the litter box.

  • http://www.tellurboss.com Kim

    Thanks Tracy, I was wondering about differentiating between those types of chores. I like your system. I’m going to try this!

  • http://joeyfratantoni.com Joey

    I agree with you Mike. This approach was very similar to the one taken by my parents. My brother and I always had responsibilities that we had to adhere to and there usually was no allowance. This gradually molded me into a person who smartly handled his finances. I earned more than I spent and I always saved.

  • http://www.alphaomegasweeping.com Deborah

    Mike,

    Great article! My parents raised me with the same kind of system. Perhaps that is why I am now an entrepreneur. My husband and I are doing the same thing in our home as we want our child to see the value of income from effort.

    Thanks for sharing.

    Deborah

    • http://www.ToiletPaperEntrepreneur.com Mike Michalowicz

      @Deborah – you have good parents!!!

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  • http://www.thegoldandoilguy.com/ Christina

    I don’t disagree with the system and I love to try it and hopefully would raise my kid as an entrepreneur one day. I just have a question, I mean will this make my kids motivated by money alone. I mean they would only perform if with corresponding pay, what if you don’t have any budget for that and would need their assistance. Anyway, it’s not a bad idea but maybe I can try it in a later time and with caution, perhaps it will greatly depend on the country’s’ culture…like a reward system when a child get a higher grades.thanks for sharing.

    • http://www.ToiletPaperEntrepreneur.com Mike Michalowicz

      @Christina – we have been doing it here for many years now, and the kids sometimes say I need money, so I am taking out the garbage. But that said, they will do things for each other and the family, without financial reward. Needless to say, this system is just one small part of parenting.