Do you "Tax" your kids allowance?

[In2why]

Please lets not say anything political.

 

I am figuring out a new allowance system. We are discussing paying the kids one dollar per age. So the 12 year old will get $12 per week, and the 8 year old will get $8 per week. They have chores but allowance has nothing to do with chores in our house, other than if they don't do them I take allowance to pay the other child to do them.

 

So anyway we require our kids save a minimum of 10% for "retirement/college" fund. I am also thinking about having them pay a 10% tax to the family that is held in "trust" quarterly and then if they have spent their money on charity or educational items then they get that as a deduction. Just a thought. It is my goal that they have a realistic idea of what things cost, and the hidden costs of life.

 

They have to use their allowance for any extras they want like for example they love Minecraft, a computer game that can be free or has 3 different levels as subscriptions. I want them to decide whether it is worth all the bells and whistles, and how much they are willing to pay for it.

 

Any thoughts, or how do you guys handle allowance?

[JenniferB]

We don't do allowances yet, but we do tax French fries when we eat fast food, and we tax candy at Halloween. Gets them used to it early.

[Stacia]

No. I had never even thought of that type of idea w/ allowances (prior to reading your post)....

[nukeswife]

I don't take taxes out of their allowance, but they are required to pay sales tax on things they buy, so they learned that just because something says it's $9.99 doesn't mean it's $9.99, unless we're shopping at the Navy Exchange (it's the Navy's version of the Post Exchange for those of you that are non-military)

[Meriwether]

We don't do allowances yet, but we do tax French fries when we eat fast food, and we tax candy at Halloween. Gets them used to it early.

 

This is us.:D I will occasionally tax a grilled cheese sandwich, too, by cutting out 1/4.

[Alice]

We don't do allowances yet, but we do tax French fries when we eat fast food, and we tax candy at Halloween. Gets them used to it early.

 

I do this too. They are quite used to paying a "Mommy tax" with most treats. :)

 

We don't tax the allowance but we do have them tithe to the church from the beginning. They give 10% to church and then are required to save a certain amount also.

[chiguirre]

And I though I had invented the "mom tax" on yummy foods that I don't want a whole portion of! Well trained minds think alike!

[Jennifer3141]

I tax desserts but not the kids' money. :D

 

If they think their taxes are too high, will they occupy your house??? :lol::lol:

[In2why]

I am going to bring up "Mommy Tax" the next time I dip into the kids Halloween candy. :D

[Joker]

If they think their taxes are too high, will they occupy your house??? :lol::lol:

 

:lol: I actually laughed out loud and now my dh and dds are looking at me funny! :D

[regentrude]

No, I do not tax my kids' allowance.

They know about sales tax, and we discuss family finances. I see no need to impose an artificial tax so that they "get" it - they do understand about taxation.

[KidsHappen]

My kids don't get allowance but I do tax Halloween candy.

[J-rap]

My kids didn't have a standard "allowance," but they got paid for jobs done over and beyond regular chores. It probably amounted to the same thing as allowance. And we did require them to give 10% to the "10% jar" -- ha ha. :) We didn't call it taxes, but once it was full, we would have a family meeting and decide what to do with it. It would always go to a worthwhile service project or charity.

[mrs.m]

No, we don't tax allowance. I was never given an allowance and I wasn't surprised when I got my first paycheck with taxes removed. ;) I like your model for the charity purposes though. We do savings a similar way except we pay interest for any money they save. We also charge interest if they borrow money. None of them ever borrowed money more than once because of that experience.

[Farrar]

Um, I do the opposite. I give interest on savings every week.

 

I pay my children under the table anyway. Shhh... don't tell in case we decide to run for office one day!

[pqr]

No, I let them keep the fruits of their labor. Of course if they do not perform their duties or are lazy they do not get paid. That is the lesson that I am trying to teach them.

[Serenade]

We don't tax our kids. Sounds like too much work, and I know I wouldn't follow through on it.

[Ellyndria]

No, but on the occasion that he has a bag of chips, which he claims he cannot open, there is a Chip Opening Tax when I open it for him. He doesn't like me eating a chip...so I tell him to open his own bag, then.

[TheApprentice]

Never even crossed my mind. But I don't think I would.

[bcnlvr]

We don't. It is not considered "income" for them (ie it is separate from chores) and the money they receive has already been taxed (I received it as income and it was taxed then). Maybe if they were getting an allowance as income for doing chores, maybe, but still, each dollar would be taxed twice.

[justamouse]

We don't do allowances yet, but we do tax French fries when we eat fast food, and we tax candy at Halloween. Gets them used to it early.

:iagree::iagree: lol, that's what we do. :001_smile:

[angela in ohio]

To make it truly realistic, you would also need to charge them rent and for their meals, instead of just allowing them to spend it all on fun extras.

 

Of course, many adults don't get that concept. ;)

[kolamum]

Yes. I keep a checkbook register for each child in my planner. When they do an "extra" job I pay them for it. When i find a chore half done or poorly done or or or.. I "tax" them. :)

 

This allows us, as parents, to enforce the rules without having to demand money on the spot and allows me to reward them even if my change purse is empty. :D

[Tap]

I would not label it a tax nor would I treat it as one. I wouldn't want the act of saving, to have a negative connotation. I don't see the practical application of calling it a tax. I would say you are asking them to create a savings account for certain items. Why not just call it that.

 

If you want them to save for a goal, then designate that $1 a week must go into a savings for charity, etc. I wouldn't want to get involved in collecting percentages of dollars as in having to have specific coins around every payday. We used to use envelopes so the kids could see the cash growing week after week, instead of a number on paper. Once the kids were older, we moved to a paper tracking system to keep track of larger amounts of money.

 

I do reward my kids for saving money and spending wisely. There are times when they will go to buy something (having already saved the money and chose the item) and I will pay for it for them as a reward for xyz. I don't do it very often, so they never expect it when it happens.

[Tigger]

We don't tax DS's allowance ($7 a week)...nor do I have to supplement his savings since our local bank actually has a great incentive for savings accounts held by children - they pay 10% interest up to $500!

 

When DS gets money for his birthday or other holidays, he usually puts it into his savings account (usually - but sometimes half) and when he gets his allowance, he holds onto it and each month usually puts in another $15 to his savings account. In the last year, he's seen his savings account grow to $220 and loves seeing that his money makes money in interest. He has his eye on a couple of pricey things, so he'll likely take some money out in the near future.

 

I don't have the heart to tell him that it isn't really like that in real life with bank accounts for adults, but for now it does help him understand the concept of interest bearing accounts and the potential of compounding interest!

[SailorMom]

I think your idea is a good one, but the implementation might be a bit too abstract for them.

We used to have a 30% / 30% / 30% allowance rule.

The first 30% was theirs to keep for whatever they wanted.

The second 30% was to be saved for them to buy Christmas presents for their immediate family.

The last 30% was saved for whatever they were saving for at the time - they would have a picture printed out and taped to the fridge with the total cost and the running tab of their savings on it.

[twoforjoy]

No, I let them keep the fruits of their labor. Of course if they do not perform their duties or are lazy they do not get paid. That is the lesson that I am trying to teach them.

 

I can't help it. This reminds me so much of this:

 

Our Daughter Isn't a Selfish Brat; Your Son Just Hasn't Read Atlas Shrugged

 

I usually don't like McSweeney's but this one was awesome.

[Ginevra]

Please lets not say anything political.

 

I am figuring out a new allowance system. We are discussing paying the kids one dollar per age. So the 12 year old will get $12 per week, and the 8 year old will get $8 per week. They have chores but allowance has nothing to do with chores in our house, other than if they don't do them I take allowance to pay the other child to do them.

 

So anyway we require our kids save a minimum of 10% for "retirement/college" fund. I am also thinking about having them pay a 10% tax to the family that is held in "trust" quarterly and then if they have spent their money on charity or educational items then they get that as a deduction. Just a thought. It is my goal that they have a realistic idea of what things cost, and the hidden costs of life.

 

They have to use their allowance for any extras they want like for example they love Minecraft, a computer game that can be free or has 3 different levels as subscriptions. I want them to decide whether it is worth all the bells and whistles, and how much they are willing to pay for it.

 

Any thoughts, or how do you guys handle allowance?

 

I have not read other replies.

 

First, I have heard of $1 per year, but I disagree with this as an allowance amount. I think it is too much. I have observed other parents starting with this at age 6 or 7 and then realizing a few months into it that this is too much to really help the kids learn to value money. (It also becomes a lot for the parents to dish out.)

 

Secondly, I don't do "required" savings, because then I think it is illogical to tell them, "Here's your money," only to turn around and say, "...but I'm keeping this part so you spend it properly." They easily learn the point of saving when their allowance is not that big; when they want a Wii game or something similar, they have to save for several weeks or even a month or two. I find this much more clear and concrete than having them save for retirement or college, which is too nebulous a concept for children.

 

For similar reasons, I would see no point in "taxing" kids.

 

My children's allowances are for themselves to use as they like. I do not buy computer games or other frivolous things in most cases; if they want it, they can save/spend their allowance. I do require them to get gifts for their friends' parties and also to pay for pet food or pet needs (but not veterinary care). At Christmas, I also ask them if they would like to participate in buying something for a shoebox gift or other similar charity. It is voluntary, but so far, they have always been willing to do this.

[ZooRho]

We did when we were giving allowances. We used it to buy books for school.

 

we never had lots.

 

We got the idea on the amount from Money doesn't Grow on Trees book.

[Catwoman]

I have never heard of the concept of taxing an allowance.

 

My ds gets a healthy-sized allowance, and he can buy whatever he likes with it, or can save it up for a "big" purchase. (He has never asked for anything inappropriate, and knows what DVDs and video games are allowed/not allowed, etc.) I would never force him to save any part of it, nor would I tax any of it.

 

I would never ask my ds to contribute toward a family purchase or a vacation, nor would I force him to save part of his allowance for college or his "future," whatever that may be. I don't understand the concept of giving a child money and then taking part of it back. It's not teaching them how to save; it's just taking part of their money away from them.

 

I'm not suggesting that it's not useful for kids to have bank accounts or even a piggy bank, so they can learn the benefits of saving their money; I just don't think it's particularly helpful to force them to save. I would think that, in at least some cases, those same kids would go a little hog-wild when they start working and earning paychecks, because all of the money would finally be theirs to spend on whatever they wanted, and there would be no one to snatch away some of the money from them.

 

If you want to put money away for your children's future and want them to understand things like saving, banking, and investment, why not give them their regular allowance for fun things, and then have a certain amount of money that you put away for them each week? I remember my dad used to put an amount equal to my allowance each week, into an envelope, and as it built up, we'd decide whether to put it in the bank, or put it into a different type of investment. It taught me a lot about how quickly savings can add up, but I still had the fun of spending my regular allowance on toys (or whatever.)

Edited November 3, 2011 by Catwoman

[In2why]

We don't. It is not considered "income" for them (ie it is separate from chores) and the money they receive has already been taxed (I received it as income and it was taxed then). Maybe if they were getting an allowance as income for doing chores, maybe, but still, each dollar would be taxed twice.

 

 

That makes a lot of sense. We don't tie allowance to work, so it shouldn't be taxed. My thoughts were similar to someone who wrote above that the "tax" would be used to pay for a service project of some type. But I think I am going to scrap the idea. We also pay interest on money saved.

[In2why]

We did when we were giving allowances. We used it to buy books for school.

 

we never had lots.

 

We got the idea on the amount from Money doesn't Grow on Trees book.

 

 

I haven't read that book as of yet, I will have to check it out.

[In2why]

I have never heard of the concept of taxing an allowance.

 

My ds gets a healthy-sized allowance, and he can buy whatever he likes with it, or can save it up for a "big" purchase. (He has never asked for anything inappropriate, and knows what DVDs and video games are allowed/not allowed, etc.) I would never force him to save any part of it, nor would I tax any of it.

 

I would never ask my ds to contribute toward a family purchase or a vacation, nor would I force him to save part of his allowance for college or his "future," whatever that may be. I don't understand the concept of giving a child money and then taking part of it back. It's not teaching them how to save; it's just taking part of their money away from them.

 

I'm not suggesting that it's not useful for kids to have bank accounts or even a piggy bank, so they can learn the benefits of saving their money; I just don't think it's particularly helpful to force them to save. I would think that, in at least some cases, those same kids would go a little hog-wild when they start working and earning paychecks, because all of the money would finally be theirs to spend on whatever they wanted, and there would be no one to snatch away some of the money from them.

 

If you want to put money away for your children's future and want them to understand things like saving, banking, and investment, why not give them their regular allowance for fun things, and then have a certain amount of money that you put away for them each week? I remember my dad used to put an amount equal to my allowance each week, into an envelope, and as it built up, we'd decide whether to put it in the bank, or put it into a different type of investment. It taught me a lot about how quickly savings can add up, but I still had the fun of spending my regular allowance on toys (or whatever.)

 

 

I don't agree about not forcing a 10% savings. We have always put a minimum of 10% into a retirement account since we began working and it paid off by allowing DH to retire at age 53. (Company matches funds and contributed with profit sharing, but we have much more saved than the average person) And our adult children, because of it being expected, have done the same thing once they started working. We all pay ourselves first before we pay anyone else and if you do it automatically then you never even think about it being money that can be used for something else.

 

I do like the investment strategies as being part of the learning experience. We usually steer the kids to CD's or bonds once they get enough in their accounts. We also follow stocks once they are in high school, and even give shares as gifts, so they can understand dividends, growth and loss.