Monday, January 12, 2009

Kids, allowances and money...

Money is a funny thing.

It is essential, it is limited, and for most of us, the more we have, the more we spend.

Daughter teaching a craft class to little girls

For kids, it is almost magical. Most kids, especially younger children, don't have any idea of the time and effort it takes to actually get money, or the capacity to understand how to use it wisely.

I am a firm believer in regular allowances for young children and salaries for older children/teens. I hear some of you gasp, but
honestly, I don't know how kids can learn to budget, save and spend if they don't have a regular amount of money coming in. I don't think it has to be a lot of money, but it needs to be enough that they can learn to manage it. I have seen the articles saying that a child should get $1 for every year of age, per week, to spend. Honestly, we NEVER gave anywhere near that amount for 2 weeks.

If a 7 year old gets $2.00 every payday--let's say twice a month--and he has to buy any snacks and toys for himself out of it, plus put 10% aside for savings and perhaps a percentage aside to give away, he is learning valuable lessons for less than $50 a year. Not only that, but if he really wants something that costs more than a few bucks, he either has to save for quite a while, wait for his birthday or find a way to generate income on his own. We found our kids could be quite resourceful in finding ways to earn income.

Our daughter babysat starting at about nine years old [she was at a neighbor's and I was home], a few of our children started mowing lawns at age ten and as a family we had a bread baking business for a few years and the children earned money this way. You have heard of the lemon aid stand--some of our kids did that too, or different variations of it. They would ask if I had any extra chores they could do to earn extra money, and so on. I want to talk about chores, but I think that will have to wait for a later blog.

As children age, they should be given more responsibility, as well as more money to manage. It is part of learning to be a responsible citizen. I have seen well meaning parents rant and rave about why kids should not get allowances "They don't need to get paid for doing their chores!" and then hand the

Youngest son selling and enjoying Coke

child a $10 bill whenever the child or young teen asked for it. That kind of money management leaves me shaking my head. I mean, what does that teach? I think it teaches kids to be dependent on someone else to find mercy and give them something for nothing. It does not teach them to save, or plan or have a sense of responsibility about money. It teaches them that dad or mom is a money tree.

Our kids didn't get paid for chores. They had to do their chores. Period. They couldnt' say, "I don't want to wash the
dishes, so don't pay me as much." They had to do their chores, and we gave them an allowance because they were part of our family, and family members get an allowance.

As the kids aged, when they got to about twelve, the allowance stopped, and a "salary' was instituted. I got this idea from my parents, who did this with my younger sister. I thought it was a great idea.

We sat down with each twelve year old and talked about how they are getting older and so forth. At this time, if we hadn't done it earlier, they opened a checking account and we went to the county clerk's office and got them a state ID. It looks like a driver's license, but they couldn't drive.

Then we wrote down their expenses...things like clothes, youth group expenses, entertainment, gifts, giving, lunch money and so on. We estimated that cost for a month. Then every month we paid them that amount. If a youth trip came up, they had to pay for it themselves. They did not ask us for money, they did not expect us to take them shopping for new shoes or clothes. That became their responsibility. Obviously we still took them shopping, but they could decide where and what they needed to buy and they payed for it themselves.

What usually happened is that if they wanted the latest-greatest tennis shoes they needed to save and probably needed to make some outside income. If they needed/wanted something big, and they talked to us about it, sometimes we would go half with them. My dad called this "writing a grant" and it is something he did with my older kids and with me as an adult from time to time. If we wrote down what we wanted, the price and why we wanted it, he would evaluate and might go half on it. We did not have our kids write the grant, but they did have to come to us with the request and have good ideas for wanting us to go half. Usually it was something big, like a bike or lawnmower or perhaps a big trip.

You don't have to give the kids a lot of money. Our income has always been limited. My husband was the sole bread winner and we had five we did not hand over lots and lots of money. Actually with a salary, a parent probably spends less because you are not financing every activity, birthday party present and so forth. The kids learn to save and be creative--kind of like "real life." And, you should see how happy they are when you buy them new socks or some sheets for their beds! They do not take these things for granted.

The goal is to help them understand how to manage their money responsibly. I would be naive to think that all my kids applied everything we taught them and never had any money issues after they left home. I am sure my kids have struggled with money, just like most of us--but I think they know the principles that will work, they know how to get on track, how to manage money and not be held a slave to it.

Take care,

Daughter Kari on far right. She is weaving bookmarks on a homemade loom. She and two friends were vendors at craft fair. This was great business experience. I think she was about 12 at the time.

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