I didn't have my first job until last September. I was 20 years old, recently back from my mission. I had somewhat half-heartedly tried to get a part-time job while I was still in high school, but I never landed any interviews. My income throughout childhood was thus limited to family related things such as doing extra chores for money. I wanted to get a job in high school because I wanted to help pay a little bit for my mission, and I simply thought it would be the nonlazy thing to do. In hindsight, it's probably best I never got a job.
It took just about all my time to keep up with school. That's because I was a Running Start student. Running Start is a program in Washington state that allows high school juniors and seniors to enroll in a community college instead of (or in conjunction with) regular high school and have the state pay for tuition. I did Running Start full-time for those two years, so by the time I finished high school, I had completed two full years of college. In light of that, I wasn't even financially that far behind of a hypothetical student who got a job instead of doing Running Start. Tuition at Edmonds Community College (the college I went to) is currently $1,282 per quarter, assuming you're taking a full load of 15 credits. Working 15 hours per week for the length of a college quarter at Washington state's minimum wage gets you about $1,563. The hypothetical student comes out a little ahead, except he'll have to start out college from square one whereas I've already finished two years.
This got me thinking about how I would want to handle teaching my future kids to work when I'm a parent. I want my kids to work for all their money. I'll provide them with everything they need, of course, but I'm not going to give them an allowance. The reason is less because I want to teach them not be lazy but rather because I want them to learn how to manage money. The way I think about money is different now that I have a job and real income. I'd like my kids to learn early on to value the money they spend and thus become thrifty people.
The problem is how. When they get into high school, they can try to get part-time jobs. But 1) we've already seen this isn't necessarily very efficient (at least if you live in Washington), and 2) I'd like them to learn about money management at an earlier age. So what work can a 10 year old (or younger) do? Extra chores around the house come to mind, and maybe that'll work for some. But I think there's a better way.
In the same way that I came out ahead by going to a community college instead of getting a job, I think the most productive thing a younger child can do is school work. When they get to the point where they can land a job doing something related to their career instead of menial labor, then is a good time to get a normal job. It's worked out well for me. I have a job working with software, and I'm a computer science major. Not only does my job give me some money, it's also valuable educationally. It's helping to prepare me for my career.
But until my kids reach that point, what's best for them? Learning is something they can do at any age, and it has the best value in the long-term. As a base, they would have to, without pay, do all of the normally required schoolwork (obviously) in addition to chores that we divide up among family members. But past that, I might be willing to pay them to, say, work ahead in math. Or read a book and write an essay about it. Or learn about something completely new (like computer programming!).
This would have several benefits. The greatest benefit is that they would hopefully develop a love of learning. I think it's somewhat typical for kids to think of school as "not fun." I myself remember thinking that I didn't like math. I don't know why since it was so easy. Ideally, my kids would learn to break out of this tradition. They would discover and pursue the things that they enjoy. I'm fortunate to have been introduced to programming at an early age by my dad. Whatever it is my kids love to do, I want them to figure out what it is and then do it.
This love of learning would help them to accomplish as much as they can, not just the bare minimum. It would have been easy for me to get ahead in math at an early age. I didn't have difficulty with it until I took precalculus. In fact in 9th grade, I did do extra math. I finished geometry quickly and decided to move on to algebra 2. But by that time, I had gained a deeper appreciation of education. As a younger child, why would I care about learning multiplication and division when all I was "supposed" to do that year was addition and subtraction? If I had the personal desire to, I think I could have progressed much more quickly during my earlier years. If I can help them have the motivation, perhaps my kids will all be child prodigies (I used to regret not being one myself).
I should mention briefly that I'm writing this from the perspective of a homeschooler. I fully intend to homeschool my children, possibly supplementing their education with classes from local public schools on a case-by-case basis to best meet their needs. The inflexibility of a full public school education would make this whole earn-while-you-learn scheme more difficult.
In light of all that, learning to manage money is practically a side effect. I think it would be significant, though. I would need to carefully devise a compensation system. If it's too easy for them to make money, they'll find a comfortable routine, make a decent amount of cash and miss out on the long-term educational benefits. If it's too hard, they just won't do it. I think I'll avoid paying by the hour. That would be asking for trouble ("I just spent 100 hours reading this book, where's my money?"). Compensation will be based on completion of various projects. The key I believe is to get them to do it for more than just the money (a mindset that will be important as they pursue their careers). I don't want them to be sitting with their stop watches thinking about all the money they're getting. I want them to get lost in what they're doing.
Compensation would probably be negotiated per project. I'll be able to continually evaluate the compensation system to make sure it's effective. I'll probably offer compensation mainly for doing extra in core subjects that they are already required to do (math, writing, science, etc) and for "starter" projects in extracurricular subjects (music, computers, art, etc). If they find an extracurricular subject that they really enjoy after doing a few projects in it, they shouldn't need further monetary compensation to pursue it I don't think. Paying them to do starter projects will motivate them to explore a lot of different fields. When the project is completed, I would evaluate it with both my wife and the child to assign it a grade. The pre-project negotiations would include a grade-based pay scale. The child could be allowed to continue working on the project before cashing in to get a higher grade.
One of my missionary companions told me about a couple he had heard of who gave each of their kids $30 every week to teach them "the value of money." That's obviously quite ridiculous. When you don't have to do very much to get money, you think of it in terms of how long you have to wait for it ("If I wait for three weeks, I'll have enough allowance to buy X"). Even if you're trying to be responsible, spending money just isn't the same if you didn't work to earn it. Only then do you know how much effort went in to getting that money, and that's what the real value of money is.
If the compensation system is working, my kids should feel like they really are working for their money. Even young children will have an opportunity to do meaningful work and get paid. They'll learn right from the start to be stingy and responsible with their earnings. And because they'll be so educated, they'll eventually have careers which give them lots of earnings with which to be stingy and responsible.