Tell me about kids and money/allowance

[KarenAylwood]

When did you start teaching kids about money? Do you give an allowance and expect they do X, Y, Z as part of the family? Do you take this away if they don't do what they're supposed to? Do you put a monetary value on each chore?

My son is 3, will be 4 in June. He knows that money buys things at Target and Target has toys. That's about it. We've taught him to put his clothes away and his drink/snack cups go in the kitchen when he's done. He asks to get up from the table but isn't really big enough yet to help with cleaning up from dinner. We need to get better about asking him to put away his toys, but if we ask he'll do it. He helps clean up at school even when other kids don't. They have clean up time that everyone has to do, but then some sweeping and stuff like that occurs that he chips in with and doesn't have to.

How early did you start with the money talk? I'd love to get him a piggy bank and start teaching him about spending/saving. I like the idea of saving 1/2 of what he gets. We don't have a bank account for him but have a named account under Capital One 360 where we put his birthday money that he doesn't know about.

Tell me what you do!

 

[Felicis]

We do a dollar per year. From that, she spends some and saves some. At 4 I would have 2 to spend, 1 to save long term, and 1 to save short term (we use the short term saving to give to charity, such as buying a toy at Xmas for underprivileged, or food for a food bank etc).

We don't tie it to chores, because chores have to be done to be part of our family. The research I have read has suggested that pocket money is best used as a teaching about money tool, rather than tying to jobs. Anecdotally, friends with teens have found that once their teen can earn real money, they no longer want to waste time earning chore money unless you bump up the money! And you can't switch easily from money for chores to do it because you are a part of the family.

 

[kymom99]

I was never real strict about doing chores to earn money. I guess I figure everyone has to pitch in around the house and it's not something you get paid for.

My son has never been real motivated by money. He also rarely asks for anything. I'm very lucky that way. He knows things are expensive and we don't have a lot of money. I started putting money in an account when he was an infant. Whenever he got some money for a birthday, etc. I talked to him about how much of it we should deposit in the bank. He had a job last year for about 9 months and saved a good amount of what he earned. He's a senior in high school now. He has a checking account and debit card and buys his own gas and treats. He also bought things like extra team shirts, etc. back when he was working. I don't think I did a perfect job but he does know the value of a dollar. He goes away to school in August. I'm praying he can take care of things

Oh, and one major thing he saved for was a guitar. I told him he had to save for it, I didn't want him to take money out of his savings account. He decided he would use birthday money. We went to look at them and get some prices. This was probably 4-5 years ago. We found what he wanted and I told him we would get it and he could pay me back when he got his birthday money. It was hard taking money from him but I knew I needed to do it.

 

[elcmum]

I do $1 per year of age, up to age 13. At that point they are old enough to earn money by doing jobs and mowing lawns.

I've used a few systems but the biggest and best thing I ever did was just go and get $100 in $1 bills and save them for a weekly allowance check. I'm down to one kid on this system, but basically they were all required to help out with chores as I needed them to be done, they had to do their own laundry, and they had to have a grade minimum. Money was lost for poor behavior but bonuses were given when they went above and beyond.

The biggest mistake I made with my middle child was using an online system in her formative years. She didn't understand (and still doesn't) the power of money in her hand and spends what she earns before she even has it. She, out of the three, really could have benefited from that tangible connection.

I had a rule that they needed something to save for -- your little one may not understand that now. (For my youngest, he wanted to save for Beats headphones. At Christmas he had the money to buy them and ended up deciding they weren't worth the money (!!!) and didn't buy them at all.)

They also had to put more than half into that wish-list bucket, and the other part of the money was for immediate things like snacks.

 

[crispychicky]

We do 'The Bank of Mom & Dad'. Any money DD "invests" and puts in the Bank of Mom & Dad grows at a variable interest rate (which coincidentally is the same as $1 per year of her age per week for now ). She can use that money towards any wants. DD tends to be a natural saver and so far has used her money very sparingly. I think it's important for her to learn that compounding interest really rocks, and eventually, her dollars working in the bank could potentially grow into a significant sum.

We also have her set aside money for donations. Some months we don't donate anything, but then the next she may give double. We need to be better and more consistent with her charitable giving now that I think about it.

I keep our household budget in a spreadsheet and 'The Bank of Mom & Dad' has a tab inside there. DD likes to look back at how her pile o' cash has grown. So far, this has worked for us and seems to mesh well with DD's personality. YMMV.

DD has age-appropriate household chores that she is responsible for since she's part of our family team. So far, we don't tie money toward chores.

 

[MomToOne]

I'm in the camp that believes that household chores are part of being in a family so there is no money associated with doing them. I don't get paid to cook and DD16 doesn't get paid to take out the garbage. Not performing a chore results in a punishment of some sort, usually loss of the use of her car these days but in the past may have been no dessert for x days, no going to so-and-so's birthday party, etc.

That said, she does get an allowance. I see it as her pay for doing her job - being a kid I give her a certain amount of free cash per month and a certain amount of money for gas. (If she spends more than the amount I give her for gas, she has to pay the rest from her allowance; if she doesn't spend it all, the excess gas money comes back to me - it doesn't go to her for random spending)

I've given her an allowance off and on since she was 4 or 5. At times during mid-adolescence I stopped giving her one because an over-indulgent aunt was keeping her flush with money and she was getting a bit unappreciative as a result. I've always bought the necessities and things she had no true control over - a reasonable amount of clothing, essential toiletry items, school supplies, school trip fees, etc. - but she was expected to buy anything else she wanted with her allowance and/or the money from said aunt. So she at least learned to save pretty early - if I remember right, there was a $20-$25 toy that she wanted that was the very saving first goal, and when she hit it she was thrilled. From there she got the idea. She even managed to save enough over the last few years to pay for half of her car. Most of the other half came from that same problem aunt the minute DD got her license LOL

Amounts have varied over the years, sometimes around the $1/year mark, sometimes a bit more, sometimes a bit less. As a teenager, the total amount of cash I give her is a bit over 1.5 times her age per week. And I'm thinking she needs to be given a bit more, honestly. That's not a crazy amount if you are a teenager. She'd be thrilled to get a job and not need to be given an allowance, but I want her to focus on school and think a job would be a mistake for her personally at this point. (I am not against other 16 year old's having jobs, this is due to specific concerns with her and schoolwork.)

Generally, I suggest giving them an amount that allows them to meet their goal in an age-appropriate time frame. For example, when they are younger, you want to give them enough so they can save for a small toy they want within a few weeks or so; otherwise, the goal becomes unattainable and they give up and often just blow the money on stupid things. Teenagers on the other hand, should be capable of saving much longer to reach a much larger goal.

ETA: I agree with a previous poster that giving them cash is the best way to do things at least until they demonstrate an appreciation for and understanding of money. I just recently switched to transferring DDs allowance to her bank account (that she has debit card access to) instead of giving her the cash. It seems a bit silly, but in the past I would get cash out give to her, then at the end of the month if she had anything left that she wanted to put into savings she'd give it back to me. I'd then deposit it into her account. Needing to buy gas was the straw that broke the camel's back though - she really needed a debit card on her own account to make that convenient.

 

[DISbot]

Another for the "typical chores/tasks are expected" camp, as well as "save half".

At probably about 4-5 my parents bought poker chips and mapped them to various values (probably so they didn't have to worry about me losing money, but I could have the tangible connection/responsibility of keeping track of "money"). I could earn these chips by going above and beyond on chores and doing extra work around the house. For example, I could earn them for cleaning up someone else's mess, or helping make dinner (wasn't expected), or doing laundry - basically anything mom and dad didn't make a chore that made their life easier. We moved, and it was 5 cents per furniture moving sticker I removed, or 5 cents per dandelion pulled from the yard - tedious tasks that would entertain a child for hours for low cost.

Once I was probably 10 or so, we transitioned to actual money rather than chips - prior to this point I would pay my parents in chips and they would buy the item. If I knew there was something I wanted to save for, my parents would adjust tasks/payments to help me get there (assuming it was reasonable) - so if in general I made like $5/week, if they knew I was saving up for a stereo either more odd jobs would pop up or jobs would pay a bit more. They would also occasionally meet in the middle, tasking me to save half the funds for more expensive wants (such as an mp3 player).

Any gifts from relatives that were cash had a requirement that half goes into savings - which as a child wasn't tracked online; so the balance was a pleasant surprise for high school graduation.

As a teen the tasks kind of went away because babysitting became an option along with other entrepreneurial opportunities, and any supplemental funds were based on need and their decision that school and scholarship applications were to be my full-time job (their stance was that these would pay out more than minimum wage over the 4 years).

In general I think this worked as my brother and I are both definite savers, we understand that interest on money is "free" money so we don't keep it all under the mattress, and we understand that certain things in life are expected and we shouldn't be paid to be a contributing member, but there are rewards to going above and beyond.

 

[tvguy]

No allowance for our kids.
If they needed it, we bought it.
If they wanted it, they found the way to save the money and bought it.
Fortunately, most of their K-12 years they had uniforms for school. If they want Ecko clothing, or some expensive shoe, that had to come from their birthday, Christmas or odd job money.

We did try the "if you do this chore we will give you this much money" thing a few times, without much more success than just guilting them into doing their chores.

 

[KarenAylwood]

I like all the responses so far! The poker chip thing is actually a really cool idea for a young child. I am leaning towards the allowance and you're required to do certain chores as part of the family. We are usually in the punishment rather than bribe group of parents. DS is allowed flexibility until he starts misbehaving then we start taking things away. If he won't do something we don't bribe him into it, we usually punish him for not doing it and he does it next time. It's worked really well and he's relatively well behaved because of it I think. However, I do randomly reward him if he hits a certain milestone or does really well for a straight week or two, or something. So he knows that above and beyond behavior and working towards say something like no accidents can result in a reward. I'm not sure he will really grasp the money idea at this age but I think we're going to try introducing it and maybe see how specific chores work for him and introducing an allowance soon.

 

[DLgal]

In our house, no allowance until age 10. Prior to that, we would just buy our kids things they wanted at Birthdays and Christmas and an occasional toy for a reward of some sort.

At age 10, allowance started. They get HALF their age per week because what does a 10 year old need with $40/month??? So, it's $5 per week to start. We also open them a youth savings account with an ATM card. Prior to age 10, any birthday or Christmas money went 50% to their 529 plan, and they could use the rest to buy something fun. If they didn't want anything, 100% to the 529. Once they turn 10, they deposit the gift money into their account. I let them decide fully how they want to spend it. I no longer buy them things they want but don't need. This includes things like Mickey Ice cream when we go to Disneyland. They need to use their own money for that as well as candy, chips, etc.

My oldest is a saver and has close to $1000 in his account already. My youngest... gets it, spends it.

 

[cdndisneymum]

They ask...I give.

 

[aprilgail]

I always gave 1.00 per year of age per week- never forced her to save any- she was always a saver so she used to put it all away until she found something big she wanted then she would spend it. Plus she used to do extra work on tv shows and commercials as a little kid and made spending money that way

 

[tcufrog]

I just started allowance again with the kids. $1/year. My younger son is greedy lil bastard who thinks I should buy him something everywhere he goes even though I don't do that at all. Now that he has an allowance he's become better at realizing the value of money. Some chores are allowance related (my younger son gets paid for dog poop patrol in the backyard and my older son walks the dog) and some they do because they're part of the family.

 

[Elliesmommy]

I also do not pay for chores, they are just expected.

As far as teaching about money, I started just explaining to my daughter what I was purchasing and why at the grocery store (coupons, sales, etc...). She was about three when I started this. She really only started grasping the idea of money and how to stretch a dollar, save, etc. at the age of six.

Now that she is eight, she is a bargain hunter. She thinks through her purchasing decisions. She is fully involved with our financials (just her and I). It sounds weird but it helps her understand our budgeting. She understands how many hours I have to work to purchase something.

As far as an allowance, she doesn't get one. She watches for sales and bargains for things she wants, then presents them to me. I usually purchase what she is looking at (within reason). For example, she had been eyeing up a game for $9.99. It is 50% off this week. She told me about the sale, told me why she wanted the game, and I purchased it for her.

 

[mommajo143]

We do not give allowance - my boys have chores that we expect them to do as part of the responsibilities of being in a family... that being said I have a chart with a bunch of extra stuff & $1 is in the chart behind each "extra" - they know that after finishing the days typical stuff they are welcome to do as many "extras" & once completed can take the dollar associated with the extra task. These are things like cleaning the blinds, wiping baseboards, weeding a flower bed, etc... truly exceptional things that we don't expect of them on a routine basis. Each child has a space in our safe to save money but we do not pay interest. Besides the fact real banks give such low interest rates we are more interested in teaching them to save & buy with cash as opposed to borrow & owe...

 

[Bianca and Bernard]

When did you start teaching kids about money? Do you give an allowance and expect they do X, Y, Z as part of the family? Do you take this away if they don't do what they're supposed to? Do you put a monetary value on each chore?

My son is 3, will be 4 in June. He knows that money buys things at Target and Target has toys. That's about it. We've taught him to put his clothes away and his drink/snack cups go in the kitchen when he's done. He asks to get up from the table but isn't really big enough yet to help with cleaning up from dinner. We need to get better about asking him to put away his toys, but if we ask he'll do it. He helps clean up at school even when other kids don't. They have clean up time that everyone has to do, but then some sweeping and stuff like that occurs that he chips in with and doesn't have to.

How early did you start with the money talk? I'd love to get him a piggy bank and start teaching him about spending/saving. I like the idea of saving 1/2 of what he gets. We don't have a bank account for him but have a named account under Capital One 360 where we put his birthday money that he doesn't know about.

Tell me what you do!

We do a dollar per week, per year, capped out at $50 a month. We started when the kids were 3 or 4.
It is not tied into chores or grades. We expect them to do the best they can in school; and cleaning the house is expected from everyone.

We pay for food, fun stuff that we do as a family. If they wanted something else, like a movie trip with their friends or a video game, they had to have the money to pay for it.

 

[Branflakes]

We pretty much covered everything of need and want, clothes, shoes, gifts, entertainment, until they were old enough to earn money on their own for some of those wants. Cutting grass, raking leaves, washing cars typical not old enough for a real job yet kind of things.
We never considered any kind of clothing or shoes, hygiene etc as wants. I covered everything always in that Dept. When they were little, and wanted something for example at Target, the answer was either yes or no. Not negotiable. No deal making. No debates. No tantrums. Yes Or No. I was consistent and firm from the beginning.
Household chores were "free". You'll do what I ask of you in the timeframe you're given. Not up for debate. You'll do well in school, because that's your job. You'll stay of trouble.
Break the rules, lose a privilege.
When they needed cash for anything I gave it to them.
When they received money as a gift, they saved half up front, not as a requirement but as a strong suggestion and they were good about saving.
When they were old enough to get a job at 15, I allowed it, as long as it didn't impact school, and they were then required to save half. And this is when they started to buy some of the wants themselves.
When it came time for a car, we bought them cars, they paid for gas and insurance. Learned how to do an oil change, and decided if they wanted to pay someone to do it, or do it themselves. One, 23, always does their own, the other 20, pays for it to be done.
I guess all in all, we set a solid example in how we lived to save money and be responsible. Pay bills on time etc. Both my kids have real money in the bank, CD's and other investments. They save before they spend, want for nothing and are doing pretty well on their own. They never ask for anything.
A week ago, my youngest, 20, in the USAF called and was telling me his car needed an oil pan gasket, a rear main seal, and discovered he also needed a valve cover gasket. Total bill was $994. And he paid it. And he tells me it's a good thing I always saved first mom, because I can easily handle life. It's a lot of money, but I have it. And it's not a big deal at all.

I was proud to hear that level of maturity. But the mom in me wanted to swoop in and just cover it for him, because he is doing so well. BUT I didn't. I felt like that might make him think I was unsure of his ability to handle it.

Whatever your methods, consistency is key. And negotiating bad behavior for good behavior with a toy or candy bar at the checkout is a big fat NO in my book.

 

[leebee]

Never gave DD an allowance; we just paid for her clothes, toiletries, dance stuff, and the things we thought were reasonable. She was fine with it. She also learned that things could be earned, but mostly through good behavior, keeping up with her responsibilities (household things, grades, commitments before social life), and being agreeable. We never had many relatives ever send money- our family doesn't work that way- but if a check came in at holidays/birthdays, it went into a bank account (hers or mine, depending on how much OOP we'd already spent on gifts). Once she was in her teens, we'd cash the checks if they were for a minor amount ($10-ish) so she could have pocket money, but she really didn't have anything to spend it on. She always knew about the checks (and honestly... I bet she received maybe 15 across all the years) and always wrote a thank-you note. It seemed to work well. She is now an independent adult who budgets well and spends her money wisely.

OH, I forgot. My mom never sent checks or gifts. Instead, she sent a card for every holiday with $1 in it. Those were Nana-dollars, and DD always got to keep it (and write a thank-you card). Turns out she saved them in her drawer for about 5 years!

 

[My3Princez]

For us, allowance isn't connected to chores. Starting at about age 7ish, we stopped buying toys/games for our kids other than occasional surprise presents. We increased the amount of allowance money they were given (still a really low amount) and they have to save some, donate some, and the rest is theirs to spend as they like. We reserve veto power if they want to spend it inappropriately, like on a toy we do not approve of, but basically they have learned if they want something, they have to save for it. If they spend a dollar or two every week on something frivolous, they won't get the xbox game they want ....

 

[abcboys]

I've changed throughout the years. I used to do their age in dollars per MONTH (seems like others here do per week). They had a few chores they were expected to do without pay like rotate helping cleanup after supper/put away dishes and take out trash. It's really not much. Oldest son is now 18 and hasn't gotten an allowance since he started working at age 16. About a year ago I stopped the monthly allowance and put extra jobs on the refrigerator they could do to earn money. Some months they get nothing because they do nothing extra. That's on them. Like vacuuming is either 75 cents or $1, cleaning the bathroom is a couple bucks, sweeping the floor, cleaning cat litter etc is each worth a certain amount. I'm actually saving money this way. lol