So, you’re beginning to wonder about if your kids are ready to have the responsibility of an allowance. Â Can they handle having money in those greedy little hands? Â Can they wisely choose what to spend it on? Â So many decisions! Â But one question, why haven’t you been giving them one already? Â In our family Poppet has always received an allowance, from day one. Â This is how we went about it, and the reasons why we chose to give her one before she even knows it exists!
How much to give?
In our home, we decided to give Poppet $1 each month per year of age. Â So, for her first year of life, she received $1 a month. Â This year she is receiving $2 a month. Â When she is $15 she will receive $15 a month (unless inflation is crazy by then, and then we will likely revisit the amount.)
Why not have it be more as a teenager?
It is our intention that she should be holding down a part-time job in her teen-age years. Â The allowance at that point is just a little something extra, not her main source of income.
What does a 1, 2 or 5 year old learn from receiving an allowance?
A 1 year old, probably not much. Â But we handle her finances for her at this point in her life. Â As she grows we will give her allowance directly to her, and teach her how to be responsible with it.
Teach them to give back
In our home we observe the law of tithing. Â Right off the top there is a 10% cut that goes back to God. Â We take this for her and Papa submits it with our own tithe to the Church. Â There is also a portion that is set aside for special offerings above and beyond the tithe. Â This is an optional amount that we contribute for her at this point. Â If you are not religious, you can teach your children to give a bit to charity.
Next, we want her to learn to give to others. Â A certain amount of her allowance may go towards an item that she can share with her cousin – a candy, a game, etc. Â (we chip in the difference since a buck doesn’t go too far these days!)
Teach them to save
The remainder of her allowance is put into the bank for her to have access to later. Â If there is something special she would enjoy having (i.e. a stuffed animal) it comes out of this account. Â As she grows she will have different jars in her room. Â One will be for tithe, one for saving and one for spending. Â She will put at least 50% of the remaining allowance into savings, and the other 50% can be spent.
Let them make their own choices
Within reason, we will let Poppet spend her allowance that is not saved on anything she wants. Â She may choose to save it up for something truly special she would like, or she may decide to blow it all the first day and have to wait an entire week for more. Â We will guide her steps, and have definite input in what she spends it on, but if she chooses to use it all in the same day and we agree on what it is going towards, it is her money and her decision. Â Through this (with our help) she will learn that living “pay cheque to pay cheque” is not nearly as rewarding as budgeting her money across the entire week.
Make sure their education is provided for
We use Poppet’s baby bonus for her future education. Â It is money we didn’t have before she arrived, and so we don’t miss its presence. Â Each month it goes directly into an RESP for her. Â Even if she does not go on to post secondary education, the funds can still be liquidate by simply paying for the tax on it. Â Either way, it is a great way to ensure savings! Â If your child does decide to carry on their education, then there will be some funds available to them.
When I went to University, my parents had a deal with me: Â Â I would pre-pay my education by working and a small student loan, and I would be reimbursed for every grade above 75%. Â (I think I forgot to collect on this though!) Â The only problem with this was, it was extremely difficult to live in a different city, paying my own bills for the first time, as well as trying to receive an education. Â This meant working full-time as well as attending school full-time. Â I was exhausted by the end of my second year, and when I met and married my husband I never did complete my 3rd year. Â It would be great if Poppet could have a bit of a head start when it came to her education so she could focus on the exact purpose of why she was there in the first place! Â This is not to say that we would foot the bill for her education. Â Actually, it is our saving of her baby bonus money that will allow her to perhaps only have to work part-time through her post-secondary education.
The bottom line
Giving your child an allowance isn’t just about what they do with it today. Â It can teach them so many money management skills that they will need in order to have an easier time of it as an adult. Â What we teach them today, can, and likely will affect their family finances and that of their own children in the years ahead.
Image: FreeDigitalPhotos.net
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I love this post! and i agree with many aspects of what you wrote. we also have an internal family discussion about the allowance to our 3 children. though they vary in the age, we decided to give them the same amount but not as much as you. we give very little and it changes from one country to another. for example, in Cambodia, we decided to give only $1 a week. they are happy with it. but the important part of it that we make them run a journal about what money comes in and our of their pockets. this way, we teach them to log the money and manage it correctly. we teach them about smart purchases, saving, donating part of it, etc. this can be a great tool, like said in the post, to teach our kids so many things… cheers for that.
kobi with the TheNomadicFamily.com
kobi klaf recently posted..Seriously, What The Hell Are We Doing?
Great idea! I think we’ll implement the tracking too!
Great lessons Poppet’s momma. I want to figure out something for the school year for my son to pay for his own popcorn Friday’s and stuff like that or save the money. He will ask for the 50cent and then on Sunday night I see the popcorn is still in his bag. I did stop giving him money for that, but it would have been better to have him learn that money wasting lesson on his on.
I love that you have started this with her already! What a great idea. We have started giving our 13 a set amount each week for things like school lunch or breakfast, or his beloved Starbucks. If he wants to buy lunch, or donate to a school event or get a coffee he has to make sure he has it in his budget. We saw a huge difference this year it the way he thought about money. He even has offered, and we have allowed him to, pay for us or his grandfather when they go to dinner. I wish I started this sooner! Kudos to you!
very good points I like the dollar a year per month thing very smart idea.
Alicia H recently posted..Mommy Confession ~~~~~ Sunscreen
Great post. This gave me something to think about for our boys. I love that even at a young age she will learn about saving, the value of a dollar, tithing and sharing. Great parenting!
sadly we didn’t start an allowance with our kids…they do earn cash for good grades on report cards and when they go above and beyond in helping around the house or at Nana’s and Papa’s they get cash. We’ve taught them to tith on any monies they recive and have learned how to tith their time also…church activies or charity work. Some lessons are better to teach when they are young so as they get older it just becomes second nature not a chore!
Pamela R recently posted..Revenge of the Vegetarian ~~BOOK REVIEW/GIVEAWAY~~
Great idea tithing time!
Elizabeth… Great post. We, actually my mother-in-law started giving our 5 1/2 y/o $1 everyday that she helps her at her home.. be it dusting, vacuuming and/or getting the mail. As part of her receiving this I am also teaching her about tithing. Although she doesn’t get $10 in a week, she is giving $1 of tithing each week… everything else goes in her piggy bank. We also give her a sticker each day for good behavior, and when she reached 14 she earns $5 to go shopping. This is teaching her patience (she has none! lol)… thank you again for sharing such a great post with me.
Carla Barilá Karam recently posted..Day 404 ~ July’s Message {better late than never}
Love the sticker idea! Will definitely have to do that one!