Sisters in their 30s whose parents taxed their allowance at 25% say the unusual system set them up for lifelong financial success

Sisters in their 30s whose parents taxed their allowance at 25% say the unusual system set them up for lifelong financial success

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  • When their children were young, Jeff and Leslie Fuller set up an allowance system that involved taxes.
  • The girls “paid” 25% in taxes, which went to a family fund. Later, the group decided how to spend the money.
  • Today, the girls say, those lessons about taxes and budgeting continue to serve them well.

When his daughters were 3 and 1, Jeff Fuller had an idea. Inspired by a colleague’s advice to “let your kids make mistakes that don’t matter when they’re young,” Jeff envisioned a system for his daughters that would serve as a training ground for the real world. This system would focus on one of the most difficult aspects of adulthood: money management.

When Jeff shared his unconventional plan with his wife, Leslie Fuller, she loved the idea, and together they implemented the system. They paid their daughters, Danielle and Sami, $1 a week for each year of their age, and in return the girls were responsible for the same amount of chores.

So when Danielle was 3, she was responsible for three age-appropriate chores for which her parents paid her $3 a week. With each passing year, the girls earned another dollar and became responsible for another task.

The girls paid 25% in ‘tax’

On its own, this seems like a smart but fairly ordinary allocation structure. But Jeff and Leslie added a catch: their daughters had to pay taxes on their earnings, as they would when they grew up. The family tax rate was 25% and girls had to put an additional 25% into savings and were encouraged to give 10% to charity, but this was optional. And while they could spend the remaining 40-50% of their allowance however they pleased, that was the long and short of their pocket money.

Unlike many of their peers, Danielle and Sami did not beg or nag their parents to accommodate their every whim. Instead, they knew they were tasked with saving their money and choosing whether or not that whim was how they wanted to spend it.

The tax went into a family pot

Although taxing a 3-year-old child’s allowance at 25% might seem cold-blooded, the taxes weren’t coming back into mum and dad’s wallet. Instead, Jeff and Leslie continued their small-scale economic system and the taxes went into a family pot.

When the prize pool started piling up, the family of four democratically decided what to do with the money. First, they named the items they wanted, then put them to a vote. Over the years, items purchased with the family tax ranged from trampolines to microwaves.

And while you might think “Two little girls get voted out by their parents to fund a microwave, it sounds like corruption can infiltrate even the smallest of governments”, Danielle and Sami still sing about their mother for this victory. Leslie thought the old microwave worked decently enough to last a few more years, but the rest of the family, tired of battling the dying machine for snacks, disagreed.

The system prepared the girls for success later in life

As a mother of three myself, I’ve found that the best parenting advice comes from people who value the long-term results of their wisdom. And that’s the thing with the Fuller family. As I chatted with the four of them on Zoom, I watched Sami tease her dad and Danielle defend her mom if she felt a story might cast her in a negative light. They laughed and reminisced, and I recognized that they shared the fun, loyalty and mutual respect that we all hope to have with our children one day.

Not only have Danielle and Sami become the kind of adults most parents hope their children will become, but they attribute much of their success to their parents’ unconventional system. For example, they both agree that family tax allowance meetings have given them their negotiation and presentation skills.

Sami recalls pivotal moments over the years when she baffled her friends with her insistence on delaying major purchases to maintain a reserve of savings. But when she was young, the Fullers visited Disney World, where Sami spent all her life savings on a magic trick kit that she regretted the moment she realized it meant she couldn’t afford what. whatever else for the rest of the trip.

So while many of us had to learn this lesson the hard way when we bought a house at the top of our budget and then realized we couldn’t afford to furnish it, Sami understood it as what a little girl. These types of stories illustrate Danielle’s description of her parents’ system as “cradle-to-grave financial literacy.”

The system evolved over the years as the girls got older

Over the years, Jeff and Leslie have evolved the system to reflect the ages of their daughters. When the girls entered their teens, Jeff and Leslie found it was nearly impossible to give them enough tasks to complete each week, and they switched to a point system.

Difficult chores earned more points, and instead of assigning chores to each girl, they put a list of chores on the fridge, along with their point value. These chores were then given on a first-come, first-served basis, and waking up soon on a Saturday to select the most valuable mission before her sister could get there became a weekend ritual for Danielle and Sami.

That’s the genius of the Fullers’ system: it enticed Danielle and Sami not just with rewards, but through back-to-back realities that we all hope our children will transform into personal values. Things like “work is an opportunity” and “investing in your family is an investment in yourself.”

Despite how cumbersome the system was for a few kids, the sisters agree they never felt like their parents had thrown them to the bottom of the pool. Instead, it felt like they were in the pool with them.

And yes, they let their daughters struggle, but they all understood that they would never let them drown. When Danielle used this analogy, it reminded me of the advice that inspired Jeff to build the system in the first place – let the kids make mistakes when they’re young, and it doesn’t matter.

Leslie echoed that sentiment, “If you want your kids to know how to make decisions, let them. Let them experiment within the parameters you give them.”

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