A family economy system functions on the premise that parents pay their family members for the chores and duties performed. You can create and implement 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 simultaneously lightens your household chore load.
What Is a Family Economy System?
Richard and Linda Eyre are the duo behind Values Parenting who 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 they choose to help with household upkeep and management.
- You take the money you would typically spend on your kids' wants 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 sound 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 Can Kids Participate in a Family Economy?
The Eyres recommend starting a family economy with kids when they turn eight, but other parents choose to start using the system with children as young as five. 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.
Importance of a Family Economy
Initially, instituting a family economy system might feel like more work for parents, but once your system is up and running, it can have significant benefits, while taking daily demands off your personal plate. Some of the skills and values kids learn through the household economic system are:
- Motivation to pitch in
- Using a check register
- Better time management skills
- Earning interest on savings
- A sense of ownership
- Delayed gratification
- Making smart financial decisions
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. It is completely normal to map out a family economy system only to realize later that you need to make modifications to it for the system to function optimally.
Make a List of Chores and Tasks
While this is not a behavior system, tasks can include items considered as 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.
- Make a household chore list that includes all tasks that keep the home clean, safe, and organized. Print one copy.
- 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 or practicing handwriting. Print one copy.
- List the self-care tasks and activities your child is expected to do each day without an option to skip them. These can be grouped in clusters, with each cluster being worth one point. Items might include self-care tasks like eating breakfast, brushing teeth, and getting dressed in the morning.
- 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 eight-year-old could make eight dollars. You also need to decide on point ranges, and what the child earns for each, even if they only get two points, you want them to earn some portion of their money.
Choose a Start to the Work Week and a Payday
Decide what day your kid's work week starts and ends on and what day they will get paid. The standard schedule is a Monday to Friday work week, with Saturday serving as the payday. A work week schedule aims to keep kids accountable for performing chores and tasks 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 pertinent information and organizes it. Schedule out four blocks of time for each day. Each block can include more than one activity, but each block is worth one point if completed. The schedule should include:
- The child's name
- The days of the week with the payday noted
- Some type of check boxes where your child can mark that 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 operate a simple bank that works as 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 items in
- A check register for each child
- Fake checks for each child
- Small cards, each with a number one-four written on it, or counters such as poker chips
Host a Family Meeting to Introduce the System
After you have ironed out all the details for your system, it's time to reveal the plan to the kids. A family meeting is a great time to introduce the economic system because you'll likely have kids' undivided attention and time to answer questions throughout the conversation.
- 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.
- 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 and more spending money.
- 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.
- Show kids the schedule you created and explain each part of it. Make sure you emphasize that this system is optional. If kids don't want to earn money, they don't have to participate, but in the event they do not participate, you'll get to decide how to spend money on their "wants."
- Hang the charts, lists, and the schedule in a common area of the home. This is where the family economy information will stay. Explain that once the system gets going, kids will be responsible for remembering to do these things, parents won't be offering a lot of reminders. The first week or two of using the system might include more explicit direction and reminders from parents as kids become used to this new routine.
- 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.
- On your payday, when you open the bank, kids count and total their points for the week. This number goes in their check register.
- If your child wants cash, they write you a check, and you give them cash.
- 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 from their check register.
- Give each child their check register. It's helpful to start them off with some money in the account. It doesn't have to be much, but having even a few dollars in the bank to begin with can serve as a motivating factor.
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 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.