Dear Dave,
I’m trying to wrap my head around your commission method of giving money to kids. We have an 11-year-old and a 16-year-old. Should they have individual lists of tasks, or should there be one big list they both work from on a first-come, first-served basis? Also, should giving, spending and saving be a mandatory part of the commission structure? Is there a time when children should age out of the commission structure?
— Camilla
How to make a commission system work for kids
Dear Camilla,
I really like the “age out” part of your question. So, let’s look at the entire scenario as an evolution. For starters, you should teach kids to work and manage money early, but at an age-appropriate level. We don’t send 3-year-olds to the salt mines. We might send a 16-year-old there … I’m kidding, of course. But it’s not unfair to expect more of a 16-year-old and teach them with more sophistication and detail than you would a preschooler.
If you tell a 3-year-old to clean up their room, those of us who have had kids that age know the child will put away two or three toys — and you’ll do 90% of the actual work. Then, the kid gets lots of high-fives and praise for being the best room cleaner on the planet. Oh, and here’s a dollar for doing one of your chores.
The point at that age is to teach them to make an emotional connection between work and money. Work creates money. It’s a simple concept, but I still talk to folks in their 40s and 50s every day who can’t seem to grasp the idea. After that, you can move on to things that are a little more complicated. You have to clean the room yourself. It’s your turn to feed the dog. And tasks get a little bigger, and little more complicated. This is a great time to introduce them to the uses for money — I’m talking about giving, saving and spending — and how to do all three.
By the time they’re 16 or so, they should know enough about money and how to handle it properly that you can help them open their own checking and savings accounts. Cosign on the accounts for them, and as they begin making more money through things like after-school and summer jobs, they can practice managing their finances on a different level with parental oversight.
But the real point behind the commission structure is this: If you do the work, you get paid. If you don’t do the work, you don’t get paid. When they’re younger, and maybe don’t want to do a job here and there, that’s okay. They’re kids. What you’re doing is new to them, and it’s a learning process. But if it goes on for a couple of weeks, or they decide they’re just not going to do anything — that’s not an option. They’re going to learn to work.
Camilla, my goal as a parent wasn’t to raise great kids. It was to raise kids who became great adults. In my mind, parents do their kids an awful disservice if they don’t teach them how to be mature, functioning adults in the real world. And handling their finances wisely, along with learning the value of work, is a huge part of that.
— Dave
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