Penny Pinching

ONE CENT:

Dear Penny,

Glad you asked. It's something that gets constantly re-evaluated in  
our family. A few years ago, we recommitted to giving allowances to  
our kids, from the youngest who at 5 really had no "needs," to the  
oldest, a teenage girl, who had many needs--real and socially  
perceived. One of the first things I can say is, ignore what the  
"going rate" is. This has to work for your family in your particular  
circumstances. Also, consider a graded approach. Our five year old  
started with a dollar a week, while the teenager got significantly  
more--but she had to buy her own incidentals out of it. Even for the  
youngest one, having an allowance gives him a chance to see the  
benefits of saving. If he blows  his savings on a silly impulsive  
purchase, he'll regret it when some other opportunity comes up.  And  
we do require them to give a proportion of their money away. Within  
the guidelines of savings and generosity, you should be able to make  
system that works-- even if doesn't look like your neighbors'.

-One Cent

TWO CENT:

Dear Penny,

Great question!  We don’t give allowances at all, but allow the kids to earn money by doing work. It’s more than just different terminology, it makes sure the kids realize that money comes after they work.  (A good principal for all of us to know!)  We also make sure they realize that some work is due to the privilege of living in the family. The wage they earn isn’t because we as parents “owe” them for taking the trash out.  However, the wage-earning system gives us amazing opportunity to talk to them about money, work, and responsibility.  Every Saturday night, we sit down with them and have a chat.  Yes, this is our “payday.”  (After the age or six or seven, we stop paying them immediately, preparing them for their eventual necessary patience as they wait for pay day in their real jobs.) The kids get their three jars – labeled Spend, Save, and God --  and their work chart to determine how much they have worked.  If they work more, they get more.  If they work less, they get less.  I know it sounds simple, but doing this week in and out really allows the kids to “get” the way that money works. Every Saturday night, we drop 10% into the God Jar, 10% into Save, and the kids get to spend the rest.  And let me tell you, this will permanently solve the “I wannas” when you go to the store.  When the kids ask me if they can buy something, I always say yes…  as long as they pay for it.  This has resulted in both heartbreak (poorly built toys that break too soon) and immense joy (an American Girl that took months and months of work).  Far better for them to learn these lessons under our roof than when they’re struggling with a new job later in life.

This book series, by the way, is a great resource for parents to teach their kids the right way to think about money.

Two Cent