Giving Your Child(ren) an Allowance
We started giving the children an allowance for two reasons:
- To help them begin to understand how to handle money.
- To have them be responsible for earning some money by doing chores.
Now I understand that tying allowance to chores has been a disputed topic for a few years, so we decided to tie some of the chores to allowance and some chores were just a family responsibility.
This is not a discussion about chores & allowance, but allowance in and of itself. When I was a child, I got an allowance and once I had accumulated enough money to buy whatever was my greatest desire at the time, I spent all of my accumulated money on said item. So I learned that I could save money to buy what I really wanted. Hmm….I think I am a really good consumer.
When we started giving our children an allowance, we wanted to do something different. We wanted to give the children a vehicle to learn about saving, spending and giving.
How did we do that? First, we bought a set of 3 drawer plastic boxes for each child and labeled the drawers: save, spend & give. We felt that due to their young ages, a physical vehicle was needed to represent each category. Next, we gave them money that was easily divided among these categories.
When we started with the $5.00 per week allowance, we gave each child $2.00 to save, $2.00 to spend and $1.00 to give. Now that we have increased to $10.00, we give the children $4.00 to save, $3.00 to spend & $1.00 to give and they can earn an additional $2.00 to spend every week by doing a few ‘pay-as-you-go’ chores.
Our intention on the amounts per category are to focus on saving, earn additional money, if desired, and instead of determining whether to give money to charity or not, the only question becomes who to give the money to, not whether to give it.
Are the children wildly excited about the save & give drawers? Absolutely not. They do not even look at them – they go immediately to the spend drawer to see how much money they have to buy that must-have item.
However, at the end of the year, when we donate their accumulated money to a favorite charity – they are SO happy. They love it and say it feels really good. They even talk about it periodically throughout the year.
Regarding saving, occasionally, they ask how much money is in their bank accounts. They are really happy when they see the balance and they are grateful that we are saving money for college as well. We talk about that once in a while too.
Our next step: Grow Money. We want the kids to know how money grows. We have started the conversations and we are earmarking money for them to select investments. Our son is really into it and has started researching companies and wants to know about stocks, bonds & futures. Our daughter, not so much. She wants to invest in toy & clothing companies. We figure two things – 1. It will be really interesting to see how these investment schemes play out, and 2. By the time they start working, they will have at least had a foundation of money with regard to saving, spending, giving & growing.