Suzanne Cramer suggests an easy to implement money management system when it comes to allowances for kids – especially the younger ones. Please consider her article: Money Management 101: For Kids
Suzanne recommends the following steps when implementing an allowance system:
Keep it fair. I have talked before about being fair, and it applies to allowance as well. In my blended family, my two kids are not always home at the same time or even the same amount of time. So how can I make allowance fair? I chose to create a chart that is housed on the fridge; we all know everyone will see it there as the fridge door is always opening. There is a list of 6 weekly chores that can be selected. Each chore is worth $1. Each child can choose to pick 3 or have their brother do the other 3 for them, hence forfeiting the $1 for that chore.
Learning to say NO. This was the hardest for me as I have a hard time saying no to their angelic faces as they ask, "Please may I have this Mommy?" My response is now a firm, "How much allowance do you have saved?" By remaining firm and consistent your kids will learn that if they want something they have to earn it, and sometimes it might take awhile for that to happen. This is also a good rule of thumb for adults trying to save. Consider giving yourself a weekly allowance for non-essentials. Say, $20/week use it as you see fit. Daily coffee, new lipstick, or maybe save up for the month and buy that pair of $80 boots you saw on clearance.
Set the rules. Allowance can be confusing for kids as they may not understand what they are expected to pay for from their allowance. You can't tell them what do with their money, remember they are learning a valuable lesson here, but you can point them in the right direction. Explain how their allowance can be used for Sharing (donations, gifts), Spending (toys, candy), and Saving (lets face it some things they want are going to cost more than $3, so it may take a few weeks or months of saving).
Help them keep track. Get them a piggy bank. This can be a jar, coffee can, or pot; it doesn't need to actually be a piggy. Explain the money is kept here until it is ready to be spent. Then if they are old enough, teach them the value of each coin/bill and make this a learning experience as well. If your kids are older consider a local bank to house your child's savings. There are several banks who offer "kids accounts" where as little as a dollar can be deposited without monthly fees and the child receives a bank book where they can keep track of their savings. How powerful is that! My local bank actually offers this; and in addition, they have a free change counter in their lobby the kids love to use. Make visiting the bank a "family" affair and teach your kids the value of money and the power of saving.
As always, welcoming your comments and additional suggestions to get our kids to understand all things related to money 101.
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