Employing and Paying Salary to Your Children

Our kids are expected to perform basic house chores, such as picking up toys, making their bed, helping to take care of the younger siblings, and helping out with other things when asked. But we also pay a small amount every week to our older kids for performing extra help. For now, their extra help involves table cleanup, emptying the dishwasher, and light vacuuming of the dining area. We don’t just hand cash but put the money in their bank accounts, so even though the weekly amounts are small, the money adds up over time. The children love to see their money grow and don’t feel the urge to spend it right away. They plan their savings and spendings. For example, my daughter waits until she can spend some of her money on a few horseback riding lessons.

Later, we plan to hire our kids to help with our businesses. For example, they can help with administrative tasks or even small projects, depending on their skill level. As their skills improve, we might give them more work for higher pay.

At some point, our kids even tried subcontracting each other. My daughter agreed to pay some part of her weekly salary to her brother for helping with her work. It didn’t last long, but when they get older they might come back to the idea. Eventually, we want them to start their own businesses, and I would then encourage them to work with each other as partners or hire each other as employees.

Again, I strongly believe that children should help out not because they expect to be paid, but because they are part of the family. Children should not expect any financial reward for helping out. In fact, before hiring our kids for extra work, we require that they perform their share of basic chores properly and prove that they are responsible enough to be trusted with paid work.

I think that paying kids for some of the work is beneficial because:

  1. If you need to hire someone to help you, it’s better to hire your child than a stranger.
  2. It’s better to have kids work for their pocket money than give away free/unearned pocket money like most parents do. We all want our kids to enjoy some treats that they can by on their own, but giving away unearned money makes them entitled and teaches them bad habits.
  3. You can use it as an opportunity to teach your child financial responsibility. If you give them money every week, they will not appreciate it. They will just spend it on sweets or toys right away. Rather, open a bank account for them and put the money there. Occasionally – but only occasionally – let them spend some part of the money on whatever they want and keep the rest of the money in their account. That will teach them how to save and how to appreciate delayed gratification.
  4. It’s always a good idea to teach children about hard work and money. Children should be taught that money doesn’t grow on trees, that it takes hard work to earn money. Not only will children learn business skills, but they will also appreciate their parents’ hard work of providing for the family.
  5. Placing children under the age of 18 on the payroll is an excellent strategy to minimize tax liability for business owners.

I was about 10 when I earned my first money, and I still vividly remember the sense of pride and accomplishment that I experienced. My father, a civil engineer, hired me to help him draw blueprints for his engineering projects. What did I buy with my first money? A telescope/microscope science kit.