Monday, July 5, 2010
Thoughts on Kids' Allowance
Sassy's room is decorated in Butterflies, and pink and white gingham. Very little girl. And she is growing up. Some of her butterfly deco is falling apart (it is about 5 years old). And she has expressed an interest in changing a few things. Fair enough.
One thing she said she needs is a new piggy bank. When we asked why, she said "this one is too full." (Ah, to have such problems!) We said she could just give us all her money, and then her bank will be empty. She said OK. (hee hee)
The conversation continued after I left the room between G-man and Sassy, and apparently Sassy would like an allowance. G-man said that an allowance would be linked to responsibility and that she would have to earn it.
(hmmm.....not sure if he and I are on the same page. I agree that she should do chores, but that is part of being a family...not just for cold hard cash.)
Anyway, as their 8th birthday approaches, it really is time that they have some rudimentary money lessons. Right now, any money they get just goes into their piggy bank. We buy all of their stuff. They don't know how to spend money!
Now, neither child is the type that wants all sorts of things. We have never been in the habit of buying them tons of stuff, and they don't ask. But they need to learn how to save, how to spend. And that is our job as their parents....to teach them. Plus, I don't want them blogging 30 years from now about all their debt.....
So, I think we are going to start giving them an allowance at their birthday. (Not that we really have it in our budget, but I will figure that one out). I am not sure of the amount. The only thing I am sure about is that part will go into long term savings (no touching that!!), part is for spending (and we will teach them about budget and saving for a goal), and part will be for charity (because they need to understand that not all people are as fortunate as they are.) So, the amount will need to be easily divided, and we will give it to them in appropriate denominations so they can quickly put it where it needs to go.
I am thinking something along the lines of a weekly allotment such as:
$2 - long term savings
$2 - spending
$1 - charity
That is $5 a week. They are only 8, so I don't think they really need more than that. And if they would like to earn extra, maybe a "job jar" they can pick from?
I am a crafty gal...so I will probably take some boxes and cover them in paper and make a slit for the money. Instant bank.
As for the piggy bank....I am not sure how much is in there. I counted it a long long time ago, and it was more than I thought (I was watching Suze Orman, and she said in a dire emergency, borrow from your kids if you have to! So I was curious how much there was). The grandparents usually feed the piggy when they visit, but I never asked how much they put in there....apparently, it was mostly $20's. If I had to take a wild stab at it....they each probably have $500 in there.
Maybe for their birthday we open a savings account for them, and get some CDs. I am not savvy on this, so I have to look into it.
What are your thoughts?? What do you do? What am I missing?