Monday, July 5, 2010

On Children and Money

Big B is one lucky kid. We are in the process of writing over thirty thank-you cards for the bounty he received upon turning six. Yes, when he's playing with a new birthday toy, we are mindful to pull out the gift list and remember who gave it to him. And sure, he's grateful. But merely two days after the bounty was received, on a routine trip to Target, he was dangerously approaching whiney-town for being denied a new action figure.

I realized that Big B is old enough and smart enough to begin to manage his own money, and to perhaps begin to conceptualize value. I posted the question of allowance to fellow parents in the social media world, and learned so much about the way other families handle this issue. Papa, Big B and I had a meeting, and agreed on a plan.

First, we emptied Big B's piggy bank, which contained, for the most part, all of the money he'd earned since his savings account was opened at birth. Big B helped me sort all of the money, bills and coins alike, by denomination.
When the money was sorted, I helped Big B count each pile, and then use a calculator to total his earnings. Tomorrow he'll make a nice deposit into his savings account. We talked about long-term savings and what he might like to use that money for one day.

And now, each Friday, Big B will get an allowance. This will not be tied to his household chores, as he is expected to pitch in as a family member anyway--and he can always go above and beyond to earn extra money. Like many families, we chose the dollar-per-year-of-age method. Together, we decided on his budget: one-third into his long-term savings, one-third is for spending (or short-term savings), one-sixth to charity, and one-sixth will go toward our family's Redwoods Forest Vacation Fund.
(We'll give little b a little allowance too--he loves to put money in his piggy bank, and I imagine the younger we start, the more savvy he'll be. There are also online games, like this one and this one, to help kids understand what things cost.)


Rose said...

Giving the boy an allowance stopped those "gimmes" for sure. Great lessons to be had with an allowance. My boy has saved for up to 8 weeks to get a coveted toy.

Looks like you guys are having fun with the idea!

toolie said...

I love having younger children so I can follow in the footsteps of you wise and wonderful mamas....thanks for these $$$ lessons!

Mama Bird said...

Can't wait to hear how this goes. We've been thinking about initiating an allowance over here too. So, did you tie any responsibilities to the income?

kollene carlsson said...

awesome lesson!