Insider’s experts choose the best products and services to help make smart decisions with your money (here’s how). In some cases, we receive a commission from our partners, however, our opinions are our own. Terms apply to offers listed on this page.
- When their kids were young, Jeff and Leslie Fuller set up an allowance system that involved taxes.
- The girls “paid” 25% in taxes, which went into a family fund. Later, the group decided how to spend the money.
- Today, say the daughters, those lessons in 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 children make mistakes that don’t matter when they’re young,” Jeff imagined a system for his girls that would serve as a training ground for the real world. This system would center around one of the most challenging aspects of adulthood: financial management.
When Jeff shared his unconventional plan with his wife, Leslie Fuller, she loved the idea, and together they implemented the system. They would pay their daughters, Danielle and Sami, $1 a week for each year of their age, and in return, the girls were responsible for the same number of chores.
So, when Danielle was 3, she was in charge of three age-appropriate chores that her parents paid her $3 a week to accomplish. With each passing year, the girls earned another dollar and became responsible for another task.
The girls paid 25% in ‘tax’
In and of itself, this seems like a clever but a fairly ordinary allowance structure. But Jeff and Leslie added a catch — their daughters had to pay taxes on their earnings, just like they would when they grew up. The family tax rate was 25%, and the girls were expected to put an additional 25% into savings and were encouraged to donate 10% to charity, but that was optional. And while they could spend the remaining 40-50% of their allowance as they saw fit, it was the long and short of their spending money.
Unlike many of their peers, Danielle and Sami didn’t beg and harass their parents to satisfy their every whim. Instead, they knew they were in charge of saving their money and choosing whether or not that whim was how they wanted to spend it.
The tax went into a family pot
While taxing a 3-year-old’s allowance at 25% may seem coldblooded, the taxes weren’t returning to mom and dad’s wallet. Instead, Jeff and Leslie continued their small-scale economic system, and the taxes went into a family pot.
When the pot began building up, the family of four would democratically decide what to do with the money. First, they would nominate items they wanted, then put them to a vote. Over the years, the items purchased with the family tax ranged from trampolines to microwaves.
And while you may think, “Two little girls getting out-voted by their parents to finance a microwave sounds like corruption can infiltrate even the smallest of governments,” Danielle and Sami still crow over their mother for that victory. Leslie thought the old microwave functioned decently enough to struggle through a few more years, but the rest of the family, tired of fighting the dying machine for snacks, disagreed.
The system set the girls up for success later in life
As the mother of three children myself, I’ve found that the best parenting advice comes from people enjoying the long-term results of their wisdom. And that’s the thing about the Fuller family. As I chatted with the four of them over Zoom, I watched Sami tease her dad and Danielle stand up for her mom if she felt a story might cast her in a negative light. They laughed and reminisced, and I recognized that they share the delight, loyalty, and mutual respect we all hope to have with our kids someday.
Not only have Danielle and Sami grown into the kind of adults I think most parents hope their kids will become, but they attribute much of their success to their parents’ unconventional system. For instance, they both agree that the family tax-allocation meetings gave them their negotiation and pitching skills.
Sami recalls pivotal moments over the years when she baffled friends with her insistence on delaying major purchases to retain a savings buffer. But when she was young, the Fullers visited Disney World, where Sami blew all her savings on a magic-trick kit that she regretted the moment she realized it meant she wouldn’t be able to afford anything else for the rest of the trip.
So, while many of us had to learn that 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 figured it out as a little girl. These kinds 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 grew up
Over the years, Jeff and Leslie evolved the system to reflect their daughters’ ages. When the girls entered their teen years, Jeff and Leslie found that coming up with enough chores for them to complete each week felt nearly impossible, and they moved over to a point system.
Difficult chores earned more points, and instead of assigning tasks to each girl, they put a list of chores on the fridge, complete with their point value. These chores were then given on a first-come-first-serve basis, and soon waking up on a Saturday to select the most valuable assignment before her sister could get to it became a weekend ritual for Danielle and Sami.
That’s the genius of the Fullers’ system: It incentivized Danielle and Sami not only with rewards but through consequential realities that we all hope our kids will turn into personal values. Things like “work is an opportunity” and “investing in your family is an investment in yourself.”
Despite how heavy the system may sound for a couple of kids, the sisters agree that it never felt like their parents had chucked them into the deep end 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 they would never let them drown. When Danielle used this analogy, I was reminded of the advice that inspired Jeff to build the system in the first place — let kids make mistakes when they are young, and it doesn’t matter.
Leslie echoed this sentiment: “If you want your children to know how to make decisions, let them. Let them experiment within the parameters you give them.”