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Money, Money, Money...

How do you teach a child about money management choices.

So, my husband and I have decided that with our daughter enteringkindergarten in the fall will come more responsibility (cleaning her room, doing homework in a timely manner, putting away her laundry). And with more responsibility will come, dare I say it, an allowance. I'm not talking much here, just a small monetry amount that will be hers to do with as she wishes.

Well, of course with me it's not that simple. I try to create a lesson in every experience. I feel that a milestone as big as starting to get an allowance needs much consideration and discussion, as it will potentially mold how she views money and deals with her finances for years to come. I know, poor kid, right?

Anyway, I heard (or read) somewhere that money received, be it an allowance, a gift or a salary, should be split into thirds–1/3 for savings, 1/3 for spending and 1/3 for charity.

I like this idea. I don't follow that rule myself, but think it could be a good starting point for my daughter to learn some financial responsibility. She also just happens to have three money banks in her room. We were going to make the amount simple like $3 a week and have her get in the habit of breaking that, and the money she makes recycling our cans, into 3's.

Robert Jochim June 21, 2011 at 10:38 AM
Teach your children not to rely on government to take care of them. Have them save and protect their new assets.
Doreen Currie June 21, 2011 at 12:32 PM
This is a topic we have not been consistent with in our family. Over the years we have given our kids an allowance and we did enforce a rule about saving some of it. One thing we started doing once our girls were old enough to take babysitting jobs was to make them pay for things they wanted to do with their friends; trips to the movie theater, bowling etc. Our youngest became very frugal and would sometimes opt to stay home rather than blow the money on a movie! I think this is a great age to teach your daughter financial responsiblity, as well as a sense of accomplishment when she sees the money in her savings can grow, you are helping her with math skills.
Doreen Currie June 21, 2011 at 12:36 PM
Oh and I once read that you should not tie their allowance with chores...but the way I see it, it's like being paid to work. If basic chores are not done, you don't get your allowance, kinda like if I don't turn up for work, I don't get paid!
Michelle Petroccio June 21, 2011 at 01:33 PM
My children don't get an allowance for chores. They are rewarded on merit when it suits our budget, and never really "need" very much, because we make sure they are provided what they need. If there is something special they want, they have to earn it by helping out around the house and the yard. My oldest son, who will soon be turning 16 wants driving lessons, and we have told him he needs to get his working papers and find a summer job that is flexible around his Marching Band schedule. He needs to make and save $5,000 before we'll even consider hiom getting a driver's license to defray the cost of the insurance rising when we put a new driver on our policy, and he must pay for his own car and gas.
Anna-Maria Lee June 21, 2011 at 03:14 PM
I know, I go back and forth on the whole allowance for chores thing. I like that it is a way to introduce a work ethic, but want her to do the chores because she is part of a team (our family), they need to be done, and to take pride in accomplishing them. I think that we are going to make sure she understands that if she shows us that she is responsible, by doing her chores, as well as being polite, respectful etc, then we feel she is responsible enough to handle some money.
Jenn McCulloch June 21, 2011 at 03:55 PM
We haven't given our kids an official allowance, but they do have some of their own money. When it comes to birthday gifts or other holidays that they may get cash for, I put most of it in their savings accounts, but I let them have a couple dollars to keep (the younger ones are 6 and 4)...My 10-year-old stepdaughter also has her own stash of money and it worked out well when we went to Disney World bc I told them how much money they had and that they could use it for whatever they wanted, but once it was gone, that was it. It definitely helped with the 'I wants' and they thought about things before they bought it bc they money was theirs and there was an end in sight. And the best part was they all picked gifts for other people among their spending, too.
Jenn McCulloch June 21, 2011 at 03:56 PM
I remember using my own money to do things once I started babysitting and working...it definitely makes you think before you buy something or do something.
Jenn McCulloch June 21, 2011 at 03:58 PM
We have things we expect them to help with and they don't get an allowance for it--it's just expected and most of the times it's done quite willingly.
Doreen Currie June 21, 2011 at 09:08 PM
Our oldest daughter went on a student ambassador trip for three weeks, we got her a prepaid Visa card and loaded it with the money she had saved. We had her figure out how much money she could spend each day so her money would last. We kept track of the account when she was gone and only had to add to it in the last couple of days. It does make them think twice about the difference between "wants and needs" when it's their money!
Heather Brooke June 21, 2011 at 11:44 PM
We never gave either of the boys allowance. And chores were difficult because they weren't with us all the time. However, they have always both been very willing to do anything that we asked them to do. The younger one (now nearly 21) moved in with us at age 18, that is he lives here when he's not away at college. So it was a little difficult trying to decide what was reasonable to ask him to do around the house, but we finally settled on when we clean he cleans. So if I do the dishes after supper he dries and puts them away. If we're cleaning the whole house he will be given a specific duty, like cleaning the bathroom. It's just part of living in the house, we all have things we have to do. As to allowance, I didn't get any as a kid and I did fine. If I wanted money my parents gave me a job like cleaning their car or reorganizing the linen closet. Not usual chores like dishes or laundry that we all did, but something special and negotiated the amount of money I would be paid per job. I certainly learned the value of a dollar, but also didn't associate earning money with normal chores. And until I was 18, half of any money that I earned or was given was put into savings. I think 1/3 is kind of high for charity, isn't tithing usually 10%?
Bizzyasab June 22, 2011 at 09:43 AM
We never gave allowances either.If we needed some help with something, they would help.And when they wanted to drive, they had to work , so they could pay the insurance and gas.But if we wanted to go out , we would pay our oldest to watch her younger brother ,if we couldn't afford to pay her, then we didn't go out.But I am tired of hearing,how come my friends get allowances,and I say, do I get paid to clean,do laundry,childcare,no, so that's that,lol.
Liz Wood June 22, 2011 at 02:20 PM
I think starting an allowance is a great idea, assuming your child is ready. I think the idea of starting off with completing chores first, is a good way of knowing if he/she is ready for the responsibility of an allowance. My son is also entering kindergarten this year, and he is nowhere near ready for that. We are still working on him getting himself dressed! I do, however, have him make choices at the store. Does he want a cookie or a car. If he wants the car, then he can't get anything next time we are at that store. When I do start an allowance, it will be his decision if he is going to save it for something large or spend it on little things. I think by making the decision himself, he will learn more. As far as charity, I'd rather have him do a service than give money. But that's just my opinion :)
Michelle Petroccio June 23, 2011 at 02:15 PM
My little guy is quite comical with money. He scrounges cahnge from around the house and from our cars. When he wants something, he always has a little stashed cash of his own, but most of the time he likes to buy something for mom, dad or his siblings with it. My middle two depend on gifts they get from birthdays and other holidays and use it to buy things they want.
Abbie Walston July 08, 2011 at 04:48 PM
I never got an allowance growing up, but I did get paid for working in our family's farm market. My parents taught me how to manage money, I had my own savings account and I gained an appreciation of how long I'd have to work to pay for something frivolous. I don't believe in giving kids money "just because" on a weekly basis, but I do think getting paid for doing chores or work is a good thing!
Bill at FamZoo July 11, 2011 at 07:47 PM
Anna-Marie, a couple of quick tips for getting started with teaching youngsters about money here: http://blog.famzoo.com/2011/03/teaching-kids-good-money-habits-3-tips.html
Audra Wilder July 12, 2011 at 01:52 AM
This is a great resource - I love it - my daughter too will be entering kindergarten in the fall. she saves the can money, money she finds :-) and gift money - once a month we go to the credit union to deposit it into her own account - she loves it! Anyway - this is a neat site http://www.moneytrail.net/

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