Creating a Family Economy System That Works

father paying son for chores

A family economy system is one option for parents who find that chore charts don't work and hate giving an allowance. You can create a simple family economic system at home by mimicking the real world economy. Follow a few simple steps to create a custom family economy that teaches your kids important life lessons and lightens your household chore load.

What Is a Family Economy System?

Richard and Linda Eyre are the duo behind Values Parenting and helped pioneer the idea of a family economy system. Their idea of a family economy is an inclusive system that distributes some parental income directly to kids if the kids choose to help with household upkeep and management.

  • You take the money you would normally spend on your kids' want and give it directly to them to spend when they earn it.
  • It gives kids the chance to earn money at home, then spend or save it in the ways they choose.
  • It empowers kids to make good financial and family decisions and learn life skills.
  • It gives parents a way to manage children's infinite "want" lists.
  • Think of it like your kids having a good, age appropriate job and access to a personal bank.

What Age Kids Can Participate in a Family Economy?

The Eyres recommend starting a family economy with kids when they turn 8, but other parents choose to start as young as 5. For this type of system to work, kids need to be able to read, write, and do simple addition and subtraction. It's up to you to decide when your kids are ready. Kids typically participate until they turn 15 and can open a real bank account at an actual bank.

Importance of a Family Economy

Instituting a family economy system can create more work for parents in some ways, but once your system is up and running, it can have great benefits. Some of the skills and values kids learn through the household economy system are:

  • Gratitude
  • Motivation to pitch in
  • Self-motivation
  • Using a check register
  • Earning interest on savings
  • A sense of ownership
  • Making smart financial decisions
Little girl paying for purchases

Steps to Create a Family Economy System

The most important thing to remember when creating your own family economy is to be flexible. There is no magic formula or precise way to make one of these. You need to consider your family's budget and each child's developmental level to create a system that fits your family.

Make a List of Chores and Tasks

While this is not a behavior system, tasks can include some things that may be considered behaviors, such as getting dressed in the morning. Kids won't earn money per task, but rather one point per task or task cluster, then money for point ranges.

  1. Make a household chore list that includes all tasks that keep the home clean, safe, and organized. Print one copy.
  2. Make a list of kid's chores and household tasks you know your kids can do on their own. This can include educational activities like 30 minutes of reading time. Print one copy.
  3. List the self-care tasks and activities your child is expected to do each day without an option to skip it. These can be grouped in clusters and worth one point, like eating breakfast, brushing teeth, and getting dressed in the morning.
  4. Not all chores and tasks will be a part of the optional paid system.

Decide on the Financial Details

The amount of money your kids can earn each week is totally up to you. There should be a set amount they have the potential to earn at the end of each week. Some families choose to pay based on age, so an 8-year-old could make $8. You also need to decide on point ranges and what the child earns for each, even if they only get 2 points, you want them to earn some portion of their money.

Choose a Workweek and Pay Day

Decide what day your kid's workweek starts and ends on and what day they will get paid. The standard schedule is a Monday to Friday work week with Saturday as pay day. This keeps kids accountable for doing the work in a timely manner and keeps parents accountable for recognizing those efforts.

Make a Weekly or Monthly Schedule

You can modify a printable family chore chart or create a schedule from scratch that takes all your information and organizes it. Schedule four blocks for each day, each block can include more than one activity, but each block is worth 1 point. The schedule should include:

  • The child's name
  • The days of the week with the pay day noted
  • Some type of check boxes where your child can mark they have done a task
  • The expected tasks for each day and room for optional tasks
  • The details of the system including how many points are possible each day and each week and how much money the child can earn for the week.

Gather Your Banking Supplies

To start, you can just operate a simple bank that works like a real checking account. Later, when your system is working well, you can introduce a savings option. The standard supplies needed are listed, but you could also opt to use things like spreadsheets or journals if that works better for your family. What you need to get started are:

  • A locked box with a hole to drop things in
  • A check register for each child
  • Fake checks for each child
  • Small cards, each with a number 1-4 written on it or counters such as poker chips
  • Cash
Grandfather and grandson playing with till

Host a Family Meeting to Introduce the System

After you have ironed out all the details for your system will work, it's time to show the kids. A family meeting is a great time to do this because you'll have their undivided attention and time to answer questions throughout the conversation.

  1. Explain to the kids that you think they are old enough to start earning money and deciding how to spend it. Introduce the idea of a family economy system and how it's just like you going to work and using a bank account.
  2. Show your kids the household chore list so they can see all the work it takes to manage a household. Explain that if everyone pitches in to complete the list, the whole family has more free time.
  3. Show your kids how much money you spend on their wants and needs. Explain that you are now going to let them earn this money and spend it however they choose. If you have rules about what they can't spend money on, explain that now.
  4. Show kids the schedule you created and explain each part of it. Make sure you emphasize that this is optional. If kids don't want to earn money, they don't have to participate, but you'll get to decide how to spend money on their "wants."
  5. Hang the charts, lists, and schedule in one shared area. This is where they'll stay. Explain that kids will be responsible for remembering to do these things, parents won't be offering a lot of reminders.
  6. Set a time in the evening, like before the bedtime routines start to settle up for each day. Tell kids you will get out the bank (the lockbox) at this time each night. They will show you what they've done for the day and you will give them a number card or counters that equal the number of points the child earned that day to put in the bank.
  7. On your pay day, when you open the bank, kids count and total their points for the week. This number goes in their check register.
  8. If your child wants cash, they write you a check and you give them cash.
  9. If they don't want cash, they are responsible for bringing their check register to stores and writing a check to you for any purchases they choose to make. You will make the actual purchase and they will subtract it in their check register.
  10. Give each child their check register. It's helpful to start them off with some money in the account.

Give the System Time to Work

Starting a family economy system takes time and patience. Once you explain the system, offer some reminders in the first few weeks, but not too many reminders. It could take as long as six months for the system to become part of your family routine.

What a Family Economy System Is Not

While a household economy can resemble a chore system or behavior management system, it is actually more of a rewards system. For this economy to work properly, it must be used for the right reason. A family economy system is not:

  • A way to get kids to do all the housework
  • A trick for getting kids to do their chores
  • A behavior management system
  • A pay based chore system
  • A way to avoid buying your kids things
  • An allowance system
  • A free for all for kids to earn unlimited money

Cooperation As Family Currency

Every child and every family is different, so tailoring a household economy to a currency that speaks to your kids is vital. Family economy systems help kids learn valuable life skills about money and cooperation, but they also help parents teach these lessons.

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Creating a Family Economy System That Works