Money certainly can, and often does, have a negative impact on the responsibility our children feel, and it stems from the way we handle money and the way we hand it out to our kids.

We had just finished a parenting presentation to a very affluent group of parents where we had focused on teaching responsibility. An excited father came up afterward and said he had been so moved by our message that he had decided, right there on the spot, to sell his big home in the city and move his family to a rural farm where "everything's harder and there are cows and chickens and eggs and crops so that my kids can have some real responsibility."

Well, there is certainly a lot of responsibility to be learned on farms all right, but why do we assume that urban or suburban lifestyles and a reasonable amount of comfort have to work against our parenting and against our children's chances of learning responsibility? We told this dedicated dad that we thought he should think about it for a while, and that he might consider some specific ways that he might teach initiative and responsibility just as well in an urban or suburban environment, using money and a "family economy" as his vehicles, rather than farm chores. Money, we suggested, is actually as good a "raw material" for discipline and delayed gratification as are chickens or cows. After all, money can be earned, budgeted, saved, given and managed — and together, those abilities make up a pretty good definition of responsibility.

Having said that, money certainly can, and often does, have a negative impact on the responsibility our children feel, and it stems from the way we handle money and the way we hand it out to our kids.

I remember well the first day that I realized as a father that "allowances" were working against us and that money was helping me spoil my kids much more than it was helping me teach them anything. It was a Saturday morning, and I was trying to catch up a little on sleep. I was awakened by loud knocking on the locked bedroom door. Groggily, I got up and opened it to find three little kids with their hands out, saying, "Gimme my money, gimme my money, it's allowance day." It occurred to me in my sleepy state that the whole scene looked a little like the welfare office. These kids were lined up for the dole, and I had just opened the window. (Now, we should certainly be grateful for welfare and unemployment benefits and safety nets, particularly in tough times, but the question is whether we want to pattern our family after them.)

We had created an economy in our house all right, but it was an entitlement economy. Our kids, I suddenly realized, saw no connection between performance and reward, they perceived no real ownership in the money we gave them or the things they bought with it, and they were learning the antithesis of initiative and responsibility rather than the essence of it.

Over the next several months, we worked with some other parents who had some of the same concerns and developed what we started to call "the home-based family economy." We had the goal of creating a microcosm of a real workplace in each of our homes — one where kids would have household and personal responsibilities through which they would earn their own money — and thus be better prepared to handle the real economic world some day.

Since then, the "family economy" has been tried and perfected by thousands of other parents and has proved to be a surprisingly fun way to give young children the sense of "ownership" that is always a prerequisite for even the most basic forms of responsibility.

When you stop to think about it, all institutions that last (from a club to a school to a whole country) have some kind of an economy that allows responsibility to be shared so that individuals feel ownership as well as both membership and motivation based on the fact that they do part of the work and share in the earned rewards.

If you would be interested in setting up a family economy in your home that includes a pegboard for kids to keep track of well-defined household responsibilities, a weekly "payday" instead of allowances, and a family bank where they can keep and earn interest on their money, simply go to and click on "family economy."

Take the guidelines there and adapt the system to your family's needs and circumstances. It's the best way we know to use the raw material of money to teach the principles of responsibility, delayed gratification and performance-related rewards.

Richard and Linda Eyre are New York Times No. 1 best-selling authors who lecture throughout the world on family-related topics. Read Linda's blog at and visit the Eyres anytime at