Family Bank

First: Announce to the child that you believe he is now old enough to become part of the family economy and to become a member of the Family Bank. This will mean that he will be able to have more money than he has previously had, but he will be expected to earn it, and he will then be responsible for buying the things he wants rather than asking you for them. He will have an account in the Family Bank, and will have his own checkbook so that he can take money out of the bank by writing a check and put money in with a deposit slip. Show him how the checkbook has a check register so he can always keep track of how much money he has. (Have $50 in the account—as a new member bonus, and already written at the top of the check register.) Tell him you are very proud of him and excited for him to have a checkbook and a bank account just like you. (Let the child know that a debit card is the same as a checkbook, but that a checkbook is better training….and that a register that keeps track of the balance should be used even with a debit card.)

Second: Explain that there is a certain amount of money that comes into the household, and there are certain things that need to be done to keep the household going and in good shape. Make a list of all the jobs, tasks, and maintenance that are required. Include specific things like cleaning each room, fixing each meal, mowing the lawn, doing the wash, keeping the front hall clean, etc. (Take your time and make the list as long as you can.) Also include things like getting kids ready for school, making sure the homework and music practice gets done, getting everyone ready for bed. Ask if it makes sense that those who participate in the work in the home should get part of the money that comes into the household.

Third: Ask how the child thinks he can get more money into his bank account and into his checkbook. Explain that you have decided that he is old enough to have responsibility for some of the things that have to be done in the household, and that if he can remember to do them, he will get paid on “payday” which will be each Saturday. Be sure he understands that this replaces allowance, that it is a more “grown-up” system, and that he will be able to earn a lot more money than he used to get from allowance, because he will be doing some of the work and because he will need more to buy more of his own things.

Fourth, introduce the pegboard (which should have his name on it) and explain that there are four pegs he can get each weekday, and that each of them will go toward the amount he earns for the week. The first peg is the “morning peg” and can be put in when he gets up on time, gets ready for school, has breakfast and has everything together to leave for school on time. He can put the second “homework peg” in after school when he has finished his homework (and his music practice or whatever else you want him to do after school). The third “zone peg” can go in when he has checked on and cleaned up his zone. (Each child should have one small “common area” or “zone” of the house—a hallway or closet or front porch—that everyone uses. This should be an area that you don’t clean—that is left for the child.) And the fourth “bedtime peg” goes in if he is in bed by bedtime; teeth brushed, prayer said, school stuff laid out for the next day.

By the way, the word “zone” came about when we were trying to initiate our youngest son into the family economy. He was a pretty headstrong and independent kid, and he had a deep aversion to terms like “job” or “task” and we were trying to make it all more palatable to him. He did love basketball so we tried a different term. “Do you know what a zone defense is son?” “Sure,” he said, “it’s when instead of guarding one guy you have a certain part of the court, and you don’t let anything bad happen there.”
“Exactly right,” I said, knowing I had him now, “so now your zone is the front hall and stairway, and all you do is just be sure nothing bad happens there.”

Fifth: Explain that before bed each weeknight, the child can get a “slip” (3x5 cards or post-it notes work fine) and write a “1”, “2”, “3” or “4” on it, depending on how many of the pegs he got in that day. The child must then get the slip initialed by a parent (or by the babysitter or tender if the parents are out) and he can then put it through the slot in the top of the family bank. On Saturday it is payday, and the bank is opened by the banker (we usually suggest dad) and each child gets his slips and adds up his total. Five weekdays with four pegs a day yields a maximum of 20. How much “pay” the child gets is according to how many pegs he got in during the week.

The best way to determine how much a child can earn each week is to calculate how much you have been spending on him in an average week—on toys and clothes and entertainment and personal effects. Make it so that, if he gets all or most of his pegs, he can approach that amount (we sometimes say two thirds of that amount for a good, consistent 19 or 20 peg week.

And remember, there are some things your child will probably never buy for himself (underwear seems to not be on the “must have” radar of most kids) so you will still need that other third of what you’ve been spending on him.