Mike and I feel very strongly about teaching our kids to be responsible with their money early in life. This is essential if you want your family values instilled, otherwise the media and their peer's opinions will have a greater influence over a child's spending decisions.
There are a few schools of thought on allowance:
1. If the child does their daily/weekly chores, they receive an allowance.
2. The child gets paid per chore completed each day/week.
3. The child does chores as a contributing member of the household and is given a weekly allowance separately.
4. The child doesn't get an allowance, but is given money for specific items (movies, trip to the mall, etc) on an as-needed basis. Chores are usually completely separate issue in this case...or not at all.
There are a few schools of thought on allowance:
1. If the child does their daily/weekly chores, they receive an allowance.
2. The child gets paid per chore completed each day/week.
3. The child does chores as a contributing member of the household and is given a weekly allowance separately.
4. The child doesn't get an allowance, but is given money for specific items (movies, trip to the mall, etc) on an as-needed basis. Chores are usually completely separate issue in this case...or not at all.
We began paying Ryan an allowance of $1 per week on his 6th birthday. After going back and forth, we decided that he will not get paid based on chores completed since he's expected to do what he's told, whether or not there is a privilege associated with the request. It works for us so far.
I was also just introduced to a website called Allowance Manager. It tracks each child's weekly allowance and is basically a virtual piggy bank. Older kids can access their account and look at the balance of what they've earned, adding entries as money goes in and out of the "account." Check it out...it's completely free!
We haven't yet figured out what to let the kids spend out of their piggy bank, but I'm sure that will come later. The idea of "tithe 10%, save 10% and spend 10%" doesn't seem appropriate for kids!
When I was eight years old, my mom had a unique way of teaching me to save: I got $25 for my birthday (from someone) and our bank had a minimum requirement of $50 to open a savings account. She explained that I could spend the $25 on anything I wanted, but if I chose to open a savings account, she would double my money on the spot AND continue to match anything I put into savings from that point forward.
Even at eight, I was smart enough to understand the concept of 100% interest! She matched my deposits for several years, until I started babysitting a bunch and I began breaking her bank account...but by then I had saved hundreds of dollars in my account. I hope to do something similar with my own kids in a few years!
I was also just introduced to a website called Allowance Manager. It tracks each child's weekly allowance and is basically a virtual piggy bank. Older kids can access their account and look at the balance of what they've earned, adding entries as money goes in and out of the "account." Check it out...it's completely free!
We haven't yet figured out what to let the kids spend out of their piggy bank, but I'm sure that will come later. The idea of "tithe 10%, save 10% and spend 10%" doesn't seem appropriate for kids!
When I was eight years old, my mom had a unique way of teaching me to save: I got $25 for my birthday (from someone) and our bank had a minimum requirement of $50 to open a savings account. She explained that I could spend the $25 on anything I wanted, but if I chose to open a savings account, she would double my money on the spot AND continue to match anything I put into savings from that point forward.
Even at eight, I was smart enough to understand the concept of 100% interest! She matched my deposits for several years, until I started babysitting a bunch and I began breaking her bank account...but by then I had saved hundreds of dollars in my account. I hope to do something similar with my own kids in a few years!
What about you: any thoughts about how to encourage saving vs. spending at an early age?
Posts
2 comments:
We have Mr T on an allowance, and it IS tied (partially) to chores. We explained that since we all live together in this house, we all share the responsibilities AND benefits...including having money to spend on fun things. This helps iron out the 'But I don't want to unload the dishwasher!' arguments with a 'Hey, you helped make them dirty, you help make them clean' response.
But what really gets him motivated for his allowance is that we tie it to behavior as well. He knows that if he doesn't behave throughout the week, we will decide a certain amount to deduct from his allowance. We don't tell him when or how much has been deducted, simply give a warning of 'This is the kind of behavior that will lose you some allowance. You need to decide right now if you really want to keep acting this way.' There's no screaming, no threatening, no time outs. Simply informing him what a continuance of the behavior will get him, and then at the end of the week (even if the offence occurred on a Monday) he received the consequence. I think this helps with long-range thinking with in-the-moment behavior.
As for spending it, every MOnday his classroom as a donation can for one of the international Christian children's charities his schools sponsor. When we remember (which is most weeks, but not all), he is expected to take out as many coins from his piggy bank as he chooses to donate (we give him 5x 50cent coins a week....easiest to deduct 1, 2, 3 etc as his behavior warrants). Whatever he chooses to donate, we match.
as for the rest, we don't buy him any 'just because' toys/gifts (even from 'dollar stores') but let him go wild in the toy store and choose of his own free will. Other than things that we consider dangerous or inappropriate, he is allowed to have free reign. He earned this money, he earned the right to do with it (almost) whatever he wants.
And already he's talking about what he wants to buy his sister for Christmas with some of his own money. Awwwwww!
We don't force the issue with sticker charts, a direct 'this behavior will take away X number coins' correlation, or rules about how he spends it....for now. We can be stricter about it in the coming years. For now, a general introduction to the idea/concept is working beautifully.
Good luck to everyone else out there navigating their way through the Allowance Mine Field! ;-)
xoxooxoxoxo
Wonderful to see your dedication to proactively teaching your kids to be wise with their money in a way that lines up with your family values!
Once the kids get a bit older, I like the idea of setting the allowance based on what you think is reasonable for your child to purchase given your family's financial context - i.e., an allowance based on a simple concrete budget. Such an approach is less arbitrary, sensible to explain, and has the added bonus of introducing your child to the important concept of budgeting. For a young kid buying occasional trinkets, the budget might be expressed in simple terms like "1 pack of gum a month and 3 packs of Yu-Gi-Oh cards a year". For teens, I'd recommend having them budget and pay for clothing items, entertainment, and maybe a few other spend areas - base the allowance on the budget (factor in the charitable & saving targets too), not some arbitrary amount. It's educational for the child, and you'll actually end up saving money. Bottom line: give you kid a "budget" (fiscal discipline), not an "allowance" (handout).
Regards,
Bill
Post a Comment