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Teaching Kids to Manage Money
By JLP | February 19, 2006
This is a topic near and dear to my heart as my wife and I have two boys (ages 10 and 9) and a baby girl to raise. Any time I see an article with the title like Teaching Kids to Manage Money, I take notice. I have talked before about what my wife and I do:
1. We pay the boys $1 per week for each year of their age (the 10-year old gets $10 per week). We cap it at $10 per week no matter what their age is.
2. They are required to tithe, which is 10%. This 10% goes to our local church. We don’t call it giving because I don’t look at tithing as giving. Rather, I look at it as merely giving God what is His in the first place. Now, if you don’t believe in tithing, then it is perfectly fine to call this charity or giving.
3. They are required to put 25% into long-term savings which is invested for them. As they get older I plan on teaching them about the world of investing and why it is important.
4. They are required to save and additional 25% for short-term spending (like a bicycle, Play Station, or whatever else they want).
5. The remainder is theirs to spend pretty much as they wish. I have veto power.
For more on allowances and budgeting, check out AllowanceMagic, which has a pretty cool workbook that you can order.
As of right now, their allowance is not tied to chores. However, we are looking into ways to teach them household responsibility. Right now I feel like we are raising two SLOBS and it is getting on my nerves. Any suggestions for combatting slobbiness?
Topics: Kids and Money | 2 Comments »
February 19th, 2006 at 11:00 pm
The main difference between our system and yours is that we lump the spending and short term together. That way the kids have to have the discipline to save up for bigger items — we’re not making them do it. This has actually worked pretty well, and has put the kids in the position of having to make choices between immediate and delayed gratification. And they’re actually capable of pulling it off! Our oldest (eight years old) saved up for a Gameboy DS. He went MONTHS without spending any money to make it happen, and he did so willingly. I was totally amazed.
As far as the slob thing goes, let me know when you get it figured out.
February 22nd, 2006 at 12:25 am
It reminds my father who cultivated me a habit of saving when i was as young as 5 years. he gave me ten rupees (indian currency) every month on 1st, that i took to nearest post office to deposit in my kids saavings account. occasinally during birthdays and when i topped in the class, i got bonuses. by the time i turned 15 years, i had a savings of 1800 rupees. it immediately alerted me the power of compounding as well.