Kids and Money

Allowance?  Earned for chores? Yes/No?

What Age?

How Much?????

Lately, I've read several articles ranging from teaching your children basic money skills to whether or not an allowance is appropriate.  Of course EVERYONE is an expert and every expert has their own opinion of  what consists of the perfect formula.

I tend to do a lot of research (by that I mean I read a lot of blogs and articles) on whatever subject I am currently fixated on and then, in the end, I still do what I want.

So from what I have gathered up til now, here is what the experts say:

* Allowance is Good.
     It teaches money-management skills.
* Start Early
     Young children are more likely to listen and take parent's advice. 
* Don't pay your children to do chores.
     Children should do chores because they are a contributing part of the family, not for money.  Also, when  they get older and have part time jobs, then they may balk at doing chores.
* Don't pay them too little.
     If you don't pay them enough, then they really can't experiment and make mistakes.  And I don't know about you but in my case mistakes are where most of my learning came from.
* Determine what you expect the money to be used for and stick to it.
     Ex:  If the allowance is meant to cover all entertainment, and they spend it all on Monday, then they won't have money left on Friday for the movies.

OK, so maybe I'm not doing everything wrong according to my research, but I'm sure I'm still screwing up somehow. ;-)

Ty & I are taking our own approach to his money.  I'm teaching him to handle his money the same way I do my own.  I have Long Term Savings, Short Term Savings and a Checking Account. Therefore, Ty also has three stashes of money.


My long-term savings is exactly that. It is never to be touched unless it is a dire emergency, and so far nothing so important has occurred that I haven't figured a way around withdrawing from there. 
 My short-term savings is for things that I would like to do (like vacations), or buy (like a new TV) and also for unexpected problems (like having to replace one of my brand new tires already, because I busted it somehow).
 My checking account is for everything else, but unfortunately that is mainly bills. Yuck.


Since Ty doesn't have any bills, this is how his money stashes are broken down:

*Long-Term Savings (I have currently have control of. It goes in, but it doesn't come out.)
*Short-Term Savings (He chooses something he wants to save-up for. Right now its a trip to Harry Potters Wizarding World in FL)
*Pocket Money  (This is exactly like it sounds.  Its my solution to the "I want that!" problem that plagues all children.)


Birthday, holiday or other monetary gifts are split in half. One half of the money MUST be put into his long term savings. The other half is his choice.  He can either put it into his short-term savings or use it as pocket money. 


He earns money every evening (approx. $2.00) for doing his chores.  This money goes directly into his short -term savings. He is responsible for making sure all of his toys are picked up and put away before bed.  He also makes sure that the living room is picked up and back in order.

Ty is also extremely helpful anytime I need him.  He helps with laundry, my flower beds, helps cook, clean-up and anything in between.  That is why he only has a small list for daily chores (Besides he's only 5 for heaven's sake! Just how much more do you people expect?)

Any other money he receives is his pocket money.  He has his own wallet, which I actually keep in my purse, but the money is his. 

When we are in a store and he wants something, we get out his wallet and count his money.  Then I tell him whether he has enough or not.  I also tell him how much money he will have left. 

The kicker is that I let him decide whether he still wants it or not. Having to go without something tomorrow because he spent all of his money today is part of the learning process. 

We have been doing this long enough that he has grasped the idea, to some degree anyway,  that it takes a while to earn the money.  He is beginning to see that some things are worth spending his money on and some are not. 

I also make him use his own money in gas stations when he wants candy, or at department stores if he wants to ride those ridiculous rides. You know those $0.50 abominations sitting right outside every store, that children think they are entitled to ride JUST because they happen to be walking within 10 feet of one.   (By the way, that smile that is plastered all over your child's face while they slowly circle around or go up and down for 30 seconds IS NOT because those rides are that much fun.  Its there because they know they broke you down just a little bit more this time.  To them it's just another battle won in the struggle for power.  Damn that carousel horse!)

Anyway, back on topic. I haven't started giving him an actual weekly allowance yet, and I'm not sure that I will.

I feel as though it is my job to teach him the ways of the real world. One of those lessons is: Nothing in life is free.  I believe that you have to work for things, and I'm pretty sure that no one is going to be giving him an allowance when I'm dead and gone.  Unless, of course, my lotto numbers hit before then, and I can set up that trust fund. (I'm holding my breath.)

The one thing I am sure plenty of  'experts' would agree that I am screwing up on is that I happily use money as a form of bribery. I use it all of the time, for lots of things (mostly to get my way, without an argument).  The other evening, I even paid Ty 25 cents JUST to try a piece of celery dipped in ranch. He didn't like it, but at least he tried it.

I will even use it as an incentive for grades. (GASP!!) Yes, I know, that's horrible.  But is it really? My way of thinking, as deranged as it may seem, says that NO young kid really understands the importance of getting good grades and establishing the basic foundation for their future.  So, I figure the important part is to make sure it happens.

These are the things that Ty and I are doing right now.  I would really love, love, love to hear any other ideas you may have. 

Leave me a comment or shoot me a message on some of the things that you do.  I'm always looking for more creative ways to teach Ty about money.