Should you pay your children to do chores?

This is such a great topic, and one in which I have spent a lot of time discussing with my wife over the years.  Last week, I was interviewed by the Globe and Mail on this very topic and the article can be found here:

http://www.theglobeandmail.com/life/parenting/should-you-pay-your-kids-to-do-chores/article23076370/

I have included the article below, so please have a read of the pro-side and the con-side and let me know your thoughts.  I’m curious as to what other families do regarding money, specifically teaching children about the value of money.

The article:

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The phrase “the value of a dollar” is misleading. The truth is, there are so many values contained in a buck it’s hard to count them all. It’s these values we are trying to impart when we give kids an allowance – that money has to be earned, that not every desire can be instantly gratified, that it’s important to give to those in need. Perhaps the biggest point of contention is whether to pay kids to do chores. Dan Lieber argues against it in his new book, The Opposite of Spoiled. Parents don’t get paid for housework, so neither should children, according to Lieber. But a strong case can be made for the other side of the debate as well. We asked parents on each end of the debate to explain their allowance philosophy.

NOT TIED TO CHORES

Kids should do chores to help the household and learn to take care of themselves, not to pocket cash. “Let’s fast-forward to when your child goes to college. Is he going to want to be paid to take out the trash and keep his room neat?” says Kristan Leatherman, co-author of Millionaire Babies or Bankrupt Brats.

Lori McGrath, Vancouver-based blogger of The Write Mama

Kid’s age 6

Allowance $3 per week: $2 goes into his wallet, $1 goes into a piggy bank.

The lesson “I want him to learn how to be independent with money. I want him to feel empowered about it, and to learn how to make good decisions about money.”

Why it’s not tied to chores “He does have chores, but [the allowance] is just to teach him financial responsibility. We don’t want it to be an emotional thing – ‘You’re being a good boy, here’s money.’ We want it to teach him about making his own decisions and saving for things.”

Warren Orlans, Toronto-based tax consultant @ inTAXicating and blogger @UrbanDaddyBlog

Kids’ ages 10, 8, 5

Allowance $5, $4, $2 per week, respectively.

The lesson “The value of money. Money is not something you throw away, but it’s not the be-all, end-all. You can do without money. You don’t have to buy everything you see. But if you see something you want, you can save up and purchase it.”

Why it’s not tied to chores “The kids have to do chores as part of being members of the household. … I’m a big sports fan, and there’s nothing worse than having a player on your team who’s only in it for the contract.” But if Orlans has to clean up after the kids after two warnings, he makes them buy back the items, whether socks or comic books, from their allowance.

Denise Schipani Huntington, NewYork-based author

Kids’ ages 12 and 10

Allowance $12 and $10 per month, respectively.

The lesson “That money has worth. And it has consequences.”

Why it’s not tied to chores “The very idea of that turns me off completely. None of us [in the family] pay each other for doing what needs doing. But they get an allowance so that they can decide what they want to do with money. We presented it more as a way to help them understand how money works.”

TIED TO CHORES

Paying kids to do chores teaches them about working for what they want. “Having the feeling that the money comes from your effort appears to be related to the notion that money doesn’t grow on trees, and that you’re not entitled to any money,” says Lewis Mandell, an economist and financial literacy educator.

Tibetha Kemble, Edmonton-based consultant in First Nations relations

Kid’s age 6

Allowance $10 after a full slate of chores is completed, usually every two weeks.

The lesson “That there is a direct connection between doing work and getting something for it … and that things are expensive and if you save up your allowance you can afford to buy it – that it’s not just about immediate gratification.”

Why it’s tied to chores “It was really the only way that we could tie money to something without it seeming arbitrary or punitive or behaviour-related.”

Jen Kern, Toronto-based events and business development director

Kids’ ages 6, 3

Allowance No allowance for the three-year-old. Older son has a chore chart with various amounts (25 cents for making his bed, for example) with a weekly maximum of $7. His parents match whatever he saves.

The lesson “That money isn’t free … linking savings to that was really important. Neither my husband nor I were ever taught that, and as result we were really crappy with money for a lot of our late-teens, early 20s. We’re trying to explain to him that if he puts his money away, it will be there when he needs it. He’s saved $85 already.”

Why it’s tied to chores “There was going to be no free ride.”

 

Danielle Riddel, Calgary-based real estate assistant

Kid’s age 14

Allowance $70 per month ($10 has to go into savings)

The lesson “Nowadays I feel like kids get money all the time for everything. I want her to learn that you can’t have everything as soon as you want it. You have to work for it. You have to save for it.”

Why it’s tied to chores “She doesn’t get allowance for cleaning her room or taking care of the dog. She gets it for doing all the floors in the house and cleaning three bathrooms. I wanted her to have money because I want her to learn to spend and how to save money, but I didn’t want to just give it to her.”

Thoughts?

Comments?

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IRS Releases 2011 Tax Rates

Below is the IRS press release identifying the 2011 Adjusted tax rates, effective January 1, 2011.

SECTION 1. PURPOSE
This revenue procedure sets forth inflation adjusted items for 2011. Other inflation adjusted items for 2011 are in Rev. Proc. 2010-40, 2010-46 I.R.B. 663 (dated November 15, 2010).

SECTION 2. 2011 ADJUSTED ITEMS
Tax Rate Tables.

For taxable years beginning in 2011, the tax rate tables under § 1 are as follows:
TABLE 1 – Section 1(a) – Married Individuals Filing Joint Returns and Surviving Spouses
If Taxable Income Is: The Tax Is:
Not over $17,000 10% of the taxable income
Over $17,000 but $1,700 plus 15% of
not over $69,000 the excess over $17,000
Over $69,000 but $9,500 plus 25% of
not over $139,350 the excess over $69,000
Over $139,350 but $27,087.50 plus 28% of
not over $212,300 the excess over $139,350
Over $212,300 but $47,513.50 plus 33% of
not over $379,150 the excess over $212,300
Over $379,150 $102,574 plus 35% of
the excess over $379,150

TABLE 2 – Section 1(b) – Heads of Households
If Taxable Income Is: The Tax Is:
Not over $12,150 10% of the taxable income
Over $12,150 but $1,215 plus 15% of
not over $46,250 the excess over $12,150
Over $46,250 but $6,330 plus 25% of
not over $119,400 the excess over $46,250
Over $119,400 but $24,617.50 plus 28% of
not over $193,350 the excess over $119,400
Over $193,350 but $45,323.50 plus 33% of
not over $379,150 the excess over $193,350
Over $379,150 $106,637.50 plus 35% of
the excess over $379,150

TABLE 3 – Section 1(c) – Unmarried Individuals (other than Surviving Spouses and Heads of Households)

If Taxable Income Is: The Tax Is:
Not over $8,500 10% of the taxable income
Over $8,500 but $850 plus 15% of
not over $34,500 the excess over $8,500
Over $34,500 but $4,750 plus 25% of
not over $83,600 the excess over $34,500
Over $83,600 but $17,025 plus 28% of
not over $174,400 the excess over $83,600
Over $174,400 but $42,449 plus 33% of
not over $379,150 the excess over $174,400
Over $379,150 $110,016.50 plus 35% of
the excess over $379,150

TABLE 4 – Section 1(d) – Married Individuals Filing Separate Returns
If Taxable Income Is: The Tax Is:
Not over $8,500 10% of the taxable income
Over $8,500 but $850 plus 15% of
not over $34,500 the excess over $8,500
Over $34,500 but $4,750 plus 25% of
not over $69,675 the excess over $34,500
Over $69,675 but $13,543.75 plus 28% of
not over $106,150 the excess over $69,675
Over $106,150 but $23,756.75 plus 33% of
not over $189,575 the excess over $106,150
Over $189,575 $51,287 plus 35% of
the excess over $189,575

TABLE 5 – Section 1(e) – Estates and Trusts
If Taxable Income Is: The Tax Is:
Not over $2,300 15% of the taxable income
Over $2,300 but $345 plus 25% of
not over $5,450 the excess over $2,300
Over $5,450 but $1,132.50 plus 28% of
not over $8,300 the excess over $5,450
Over $8,300 but $1,930.50 plus 33% of
not over $11,350 the excess over $8,300
Over $11,350 $2,937 plus 35% of
the excess over $11,350

Child Tax Credit.

For taxable years beginning in 2011, the value used in § 24(d)(1)(B)(i) to determine the amount of credit under § 24 that may be refundable is $3,000.

Hope Scholarship, American Opportunity, and Lifetime Learning Credits.
(1) For taxable years beginning in 2011, the Hope Scholarship Credit under
§ 25A(b)(1), as increased under § 25A(i) (the American Opportunity Tax Credit), is an amount equal to 100 percent of qualified tuition and related expenses not in excess of $2,000 plus 25 percent of those expenses in excess of $2,000, but not in excess of $4,000. Accordingly, the maximum Hope Scholarship Credit allowable under § 25A(b)(1) for taxable years beginning in 2011 is $2,500.
(2) For taxable years beginning in 2011, a taxpayer’s modified adjusted gross income in excess of $80,000 ($160,000 for a joint return) is used to determine the reduction under § 25A(d)(2) in the amount of the Hope Scholarship Credit otherwise allowable under § 25A(a)(1). For taxable years beginning in 2011, a taxpayer’s modified adjusted gross income in excess of $51,000 ($102,000 for a joint return) is used to determine the reduction under § 25A(d)(2) in the amount of the Lifetime Learning Credit otherwise allowable under § 25A(a)(2).

Earned Income Credit.
(1) In general. For taxable years beginning in 2011, the following amounts are used to determine the earned income credit under § 32(b). The “earned income amount” is the amount of earned income at or above which the maximum amount of the earned income credit is allowed. The “threshold phaseout amount” is the amount of adjustedgross income (or, if greater, earned income) above which the maximum amount of the credit begins to phase out. The “completed phaseout amount” is the amount of adjusted gross income (or, if greater, earned income) at or above which no credit is allowed. The threshold phaseout amounts and the completed phaseout amounts shown in the table below for married taxpayers filing a joint return include the increase provided in § 32(b)(3)(B)(i), as adjusted for inflation for taxable years beginning in 2011.

Number of Qualifying Children
Item One Two Three or More None
Earned Income $9,100 $12,780 $12,780 $6,070
Amount
Maximum Amount of Credit $3,094 $5,112 $5,751 $464
Threshold Phaseout $16,690 $16,690 $16,690 $7,590
Amount (Single, Surviving Spouse, or Head of Household) Completed Phaseout $36,052 $40,964 $43,998 $13,660
Amount (Single, Surviving Spouse, or Head of Household) Threshold Phaseout $21,770 $21,770 $21,770 $12,670
Amount (Married Filing Jointly)Completed Phaseout $41,132 $46,044 $49,078 $18,740
Amount (Married Filing Jointly)
The instructions for the Form 1040 series provide tables showing the amount of the earned income credit for each type of taxpayer.
(2) Excessive investment income. For taxable years beginning in 2011, the earned income tax credit is not allowed under § 32(i) if the aggregate amount of certain investment income exceeds $3,150.

Standard Deduction.
(1) In general. For taxable years beginning in 2011, the standard deduction amounts under § 63(c)(2) are as follows:
Filing Status Standard Deduction
Married Individuals Filing Joint Returns $11,600
and Surviving Spouses (§ 1(a))
Heads of Households (§ 1(b)) $8,500
Unmarried Individuals (other than Surviving Spouses $5,800
and Heads of Households) (§ 1(c))
Married Individuals Filing Separate $5,800
Returns (§ 1(d))
(2) Dependent. For taxable years beginning in 2011, the standard deduction amount under § 63(c)(5) for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of (1) $950, or (2) the sum of $300 and the individual’s earned income.
(3) Aged or blind. For taxable years beginning in 2011, the additional standard deduction amount under § 63(f) for the aged or the blind is $1,150. These amounts are increased to $1,450 if the individual is also unmarried and not a surviving spouse.

Qualified Transportation Fringe. For taxable years beginning in 2011, the monthly limitation under § 132(f)(2)(A), regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass, and under
§ 132(f)(2)(B), regarding the fringe benefit exclusion amount for qualified parking, is $230.

Personal Exemption.
(1) Exemption amount. For taxable years beginning in 2011, the personal exemption amount under § 151(d) is $3,700.

Interest on Education Loans. For taxable years beginning in 2011, the $2,500 maximum deduction for interest paid on qualified education loans under § 221 begins to phase out under § 221(b)(2)(B) for taxpayers with modified adjusted gross income in excess of $60,000 ($120,000 for joint returns), and is completely phased out for taxpayers with modified adjusted gross income of $75,000 or more ($150,000 or more for joint returns).

SECTION 3. EFFECTIVE DATE
This revenue procedure applies to taxable years beginning in 2011.