I have two boys, 11 and 14. I give them a small (probably too small) allowance, and they will earn extra money sometimes doing stuff for my parents after school. Usually I make them do it for free to help out, because we all have to look after each other. Regardless, they have a bit of pocket money. I speak pretty openly (not totally transparently) about what I take home, and what things cost, how bills are paid, and how I save. It’s a fine line though, becuase I have a worrier, and he gets concerned that if I say we can’t do/get something, he thinks we are broke and will starve or something. I’ve started saying that I choose not to spend money on that, instead of saying that we can’t afford that. I’m responsible with my money and we have more than enough to pay the bills and have a little left for fun things. They have a bank account each that they can’t touch yet, and I have forever been depositing $10 to each from each paycheck. They save up for small things they want, I help them out with some things if I can.
So there’s the background. Any suggestions for things I am missing? Obviously my oldest will be getting a job next summer, but for now, I can’t manage any kind of transportation during the day because I am working. I want them to contribute to their savings accounts, but they get such a small amount of money for allowance, that I dont ask them to do that, I just ask them to save for things they want. (Just this week, one kid bought a magic kit, and the other bought reeds for his saxophone.)
I think you’ve got a good system in place. It will teach them not to spend beyond their means and to work for what they want. If you want them to save, explain why you want them to save. And discuss what they think would be a reasonable amount. Some of the things you hope they learn from you is to be wise with their money. They may have to learn by trial and error once they are on their own, but you have given them a framework to build on. Not many kids have that.
I began being transparent when my daughter was 16. I let her see the budget, the income and how it all worked. She is now 27 and I have heard a few times over the years that ‘adulting is hard’… However, she created a budget based on the regular income and is working hard to pay off student loans. She has no credit card debt and I couldn’t be prouder of her!
Ah Kelly. I taught our boys in a similar way, and once they were one their own they went through their cash for a time, then learned they had to pull back and set aside for emergencies, (and boring stuff like underwear and socks). Since we’ve been (age appropriate) honest about our finances all along with them, they know we can talk about it, we love them, and are there for them for counsel, even if we don’t bail them out financially. // I wasn’t taught any life skills growing up so may be more sensitive to that area more than most, and wanted them to have basics-- cooking, cleaning, grocery shopping, minor repairs, and budgeting under their belts before they left home.
Thanks for the input @shannon.h and Olivia. I do need to move more towards teaching more life skills. Some comes pretty naturally at home (single parent so they have to help me out), but I think I need to step it up, particularly for the older kid. I’d like to have him plan for, budget, shop, and cook a meal every couple of weeks. Cooking is not my favorite!
How old are your boys now @olivia?
When my son (now 32) was 2 he was constantly asking me to buy things at the checkout (candy and junk at kids eye level.) I solved it and helped him learn about money in one swoop. We gave him an allowance - $0.50 a week. To earn that he had to do one age appropriate chore (which he picked and agreed to do.) Other chores around the house were also done, “because he was part of the family.” Each week he received his allowance and had 2 piggy banks, he had to deposit a quarter into each of them. One was his “spending” and one was for college. The rule on his “spending” bank was that he could use it immediately, or save up for something he really wanted later. I told him I didn’t care what he used the funds for, it just had to be something legal. When he received cash for anything (job, birthday) he was required to place a portion into the college fund - it didn’t have to be half, but we encouraged that. He was told if he worked hard and graduated with a degree, any funds left over in the college fund would be his to spend as he saw fit. He got a degree, without debt and had @ $2,000 left over. As he grew up, he chose to do a new chore each year for his allowance. One year it was do the laundry (at 4!) I had him help sort the clothes, then he would wash, dry and fold the towels and his clothes and help fold the other clothes. One year he vacuumed and dusted the house. We always had him help set or clear the table and assist (or make) a meal or part of it. He helped me shop (we compared ingredients and costs.) He followed his dad and learned how to change the oil, check the filter and tire pressure, change a tire and battery. We had him sit down and balance the checkbook when he was in junior high school. In fourth grade we showed him how his college fund was growing with the interest. At 3 he wanted Lego, saved up and discovered the town next to us charged less tax, so he would ask us to drive over there so he could save money. When he was five he wanted something that was being discontinued, but didn’t have the funds, so he learned about lay-away (mom bought and put it up on a high shelf. Every time he made a payment, he did the math to subtract the cost from his payment.) We started a “mom taxi.” If he forgot something at school (4th grade) and we had to go back and get it, he had to pay a “taxi fee” of $0.50 for the return trip. It stopped a lot of forgetfulness. When we got him a credit card, we told him it was for emergencies, or purchases that he already had the funds for, but didn’t want to use right away and we discussed interest rates and credit scores. We donated items, money and time at holidays so he was aware of those who were in different circumstances than ourselves. Make money (and life) management a part of your daily ritual in a fun or pertinent way.
I am very transparent with my kids. They are 12 and 13. We started telling them what things cost when they were 9 and 10. They sit down with me sometimes when I am paying the bills and I have gone over with them the importance of appreciating what they have and how much things cost. My son, the 13 year old, is grasping on a little faster than my daughter, the 12 year old. Now when he wants something, he looks at the cost and decides if he really wants it or if he thinks he will be bored with it right after getting it. And he tells us, never mind that is really expensive and I don’t think I will use it long. When we do chores, they don’t get paid by allowance. They get points. Once they reach 1000 points, it usually takes them a month if they do everything I have on the board for the month, they get a day of fun. If they both get the points, they get to go to each other’s day of fun. And their day of fun is wherever they want to go.
Observing my parents’ financial management taught me a lot about money management. Demonstrate exemplary behavior if you want your children to learn about money. Allow them to observe you negotiating with your spouse while putting together a budget. Allow them to watch you paying your payments. Tell them that the amount of money you have set aside for entertainment expenses is limited, and that spending it on item A or event B means it won’t be available for item C or event D. Let them know that when it comes to budgeting, the necessities (shelter, groceries, water, and energy) take precedence over desires such as trips, cable packages with hundreds of channels, pricey cell phone plans, and eating out.