Monday, January 4, 2010

Allowance Formula for Kids

My wife and I don't have any kids yet, but we are planning to in the next few years. With that being said, I came up with an idea that I wanted to run by all you parents out there.

After reading the article "Should You Pay Your Kids for Good Grades" on fivecentnickel, I developed a formula to calculate a weekly allowance for kids based on their grades.

[GPA-Unacceptable] x Rate = Allowance

Using this formula, each report card could set the tone for allowance payments. This enables an allowance to increase or decrease with the grades on each passing report card. I have no idea what the average allowance is for children these days, but changing the rate provides flexibility.



Example 1:
Your son Michael brings home a report card with a 3.29 GPA. He is not allowed to get less than a 2.5 GPA (C average). His pay rate is $10. And his allowance is paid weekly.

[3.29 - 2.5] x $10 = $7.90 per week

Example 2:
Your daughter Rachel brings home a report card with a 3.50 GPA. she is not allowed to get less than a 2.5 GPA (C average). Her Pay rate is $10. And her allowance is paid weekly.

[3.5 - 2.5] x $10 = $10 per week

Example 3:
Your other son Paul brings home a report card with a 4.0 GPA. He is not allowed to get less than a 2.5 GPA (C average). His Pay rate is $10. And his allowance is paid weekly.

[4.0 - 2.5] x $10 = $15 per week

Example 4:
Your oldest daughter Megan is starting high school, and brings home a report card with a 3.50 GPA. she is not allowed to get less than a 2.5 GPA (C average). Her Pay rate is $15 because she is older. And her allowance is paid weekly.

[3.5 - 2.5] x $15 = $15 per week

Example 5:
If you want to be really mean, you could even charge or fine your kids if they get less than an acceptable GPA.

[2.36 - 2.5] x $15 = -$2.10 fee per week

This formula rewards kids for working hard, and teaches them that there are consequences for their actions. It could also provide a platform for teaching personal finance and money management.

Please comment on whether this formula could work for your kids.

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