Lemonade Stand Savings
Yesterday Ben and I went to the bank and to open his very own savings account. In went the money he has earned by taking care of our neighbor’s cats while they are on vacation, lemonade stand earnings, and birthday money.
The savings account was his idea. Up until now he has kept his money in a small red lockbox in his room. And every once in a while he’ll buy a toy or a candy bar.
But recently he decided that toys and candy are a waste of his money- he didn’t like seeing the amount in his box dwindle. He’d rather have it in the bank where he wouldn’t be tempted to spend it. Great idea Ben.
In the car ride to the bank, I was bombarded by questions:
Do they keep my money separate from the other money in the bank, in a box with my name on it?
What would happen to my money if a bank robber came and robbed the bank?
Can I have a check book?
Can I have a credit card?
Will they give me $10 for keeping my money in the bank? (Where did that question come from?)
Can I put more money in the bank if I earn more?
Can I have my money back if I need it?
All in all the trip to the bank was so satisfying for me. It felt wonderful to see Ben planning for the future… making goals about how much money he wants to earn and save.
It also spurred a conversation last night of whether or not we should be paying our children an allowance in cash. We have job charts currently. The kids can earn points with the charts… to be turned in for privileges or used to earn something they really want.
But should they have money in hand? Money that can be used to learn to budget- what to spend, save and give.
The hardest part is I would have to be organized enough to have the right amount of money on hand every week– and then how much money? What is fair? What is reasonable? Should some jobs be done because they are members of our family? And just the bonus jobs earn money? What happens if they don’t make their bed one morning? How much do I deduct?
The most important thing I want to teach my children is that budgeting money is important. Saving is important. I also want to teach that spending money doesn’t make you happy…
Does anyone out there have a system of allowance they are happy with? I’d love to hear.
And if any of you are in love with the darling mushroom bank shown above- like me, it’s from one of my favorite toy stores The Magic Cabin.
we pay our youngest minimum wage. no joke. when she’s not doing much: she doesn’t make much. but… when she steps it up: she makes a load. we write a check which she cashes at the bank. she puts 10% in her tithe — and splits the rest between her bank account and her pocket money. so far… great results! and when she says, “i never get any money for chores” — we point to the work-for-pay theory.
A blog I read, Get Rich Slowly, has some helpful articles about allowances for kids. Here’s one.
http://www.getrichslowly.org/blog/2007/03/22/allowances-for-kids-teaching-children-the-value-of-money/
I’ve heard many times that allowances should be just about teaching kids how to be responsible with their money. And that chores are for the good of the family, expected of everyone, and not paid. So the two shouldn’t be tied together.
We don’t have any kids yet to test the theory on though. Good luck!
Thats great, as the last couple of years have shown prudance and saving is beneficial over borrowing and credit! We’ve recently started an allowance (pocket money in UK) for our girls. They have to do certain jobs over the week to get the money, like laying the table, clearing after meals, making bed & doing some school work each day. My girls are 4 & 7 so the school work is very minimal and the jobs are not difficult but I was getting fed up of them expecting everything to happen around them. We wanted them to take some responsibility but mainly to build on that in the future rather than hit them with teen/older kids chores. I made a chart for them and they have to do 6 jobs each day and they get a tick for each job, to get their money they have to get 5 ticks for each job, that way there is some flexibility especially for the youngest. I haven’t had to deny them their money yet but I will and they know I will. The oldest is saving up for a toy she saw about 6 weeks ago and is still going strong whereas the youngest has splurges every few weeks. The oldest did say she was going to save her pocket money for a trip to the Carribbean for all of us but as she gets £1.50/week ($2.30) I think it might take her a while, when she suggested the youngest should also save towards this holiday the youngest said ‘No I’m gonna spend it all on sweeties (candy)!’ The differences in their spending habits are a reflection of their personalities and ages!
I don’t have kids of my own, but growing up my sister and I did get an allowance. I think I bartered myself $.50 a week in first or second grade and my dad was gracious enough to slowly increase the amount over the years. We were responsible for basic house chores (dusting, vaccuuming, after-dinner clean up, taking care of the dog). My sister was good at squirreling her money away, but mine was used for the occasional book and lunch money. We both worked summers at age 15 (the min. age requirement in Pennsylvania) and Dad would “hold” our allowance those three months.
My parents paid me for chores. together we made a list decided on pay and I had to keep track and submit my work for payment. I was 13 and had to buy my own clothing with the money etc. I got 10 cents for emptying the dishwasher. Not much but over a weeks time it added up. If I mowed the lawn before noon on Saturday I got a little more than if I let the job take all day. And if mom had to nag about some jobs before I got it done. I couldn’t mark it on my chart. The idea was that mom doesn’t have to stress about chores getting done and that I get rewarded for being timely. I think I also got paid for things that should be habit not chores but only for a few weeks until I got better at it. And some jobs I couldn’t do everyday.. jobs I hated I got paid more for. etc.. good luck let us know what you do.
I use a sticker chart. There are things each child is responsible for daily according to their age and abilities. Each day that they complete all their responsibilities (homework, making bed, housework, being helpful etc) they get a sticker for that day. At the end of the week, I add up the stickers and pay the children according to what each sticker is worth. We pay $. 10 for each year old their are, per child. So my 6 year old gets $.60 each day while the 9 year old gets $.90 per day. I do not pay them for Sunday. My children each have their own bank account and it surprises me that they would rather put it ALL in their account rather than spending any of it. This has worked well for us and all I really need to have on hand to be ready to pay them are some one dollar bills and a pile of dimes
We have 6 kids, they receive pocket money just because! They each get their age in dollars once a fortnight the 11 yr old gets $11, 9 yr old $9 etc. We feel that things like keeping the house clean and tidy are a family responsibility (after all it helps all of us),
but there are also chances to earn money doing yard work etc….
As kids my sister and I got an allowance, nothing earth shattering, and most of it went into our savings accounts (we’re big savers). We had to pick up and clean our own room and usually clean one other room in the house (dust or vac, etc.). At some point they also introduced a bonus system where we got poker chips for doing extra stuff. Each chip was a different value (not necessarily monetary) and we got to turn them in for things when they added up. I got my first CD this way. :)
I found this site to be very helpful in making a decision that would work good for my family. It gave a lot of good tips so that I could make a choice. Here it is. Check it out. http://www.themint.org/parents/allowances-the-issues.html
I hope you find it helpful. There is a section for kids too, to help them learn about money.
I don’t have children of my own yet (one on the way), but I don’t believe in paying kids to do chores and thats just my 2 cents from the way we were raised. There’s probably not a right or wrong way to do it – just different for everybody. But for us, chores at home were just done because everyone pitched in to help with the family. When we complained about how some friends got money for chores, my mom (she was a SAHM) would always tell us that she never got paid coz she cooked meals for all of us or made our lunches, she just did it coz she loved us all. So I sort of have that same philosophy. As for allowances – we never had those either. My dad didn’t make much and we were always aware that what he made was for the family and was strictly budgeted. There was always enough for occasional treats or trips and my parents set a good example of being frugal with their money and I think that made the biggest impact on the way my siblings and I spend/save our money now. If we wanted stuff during high school we always thought 10 times about whether it was a “need” or a “want” and then discussed it with my parents and we were never unhappy with the outcome. Either we got it eventually or they made us realize that we were just fine without it. I hope I can pass on the same philosophy to my kids!
I’ve read and wondered myself. The conclusion I have come to is that there are jobs they do because they are part of the family and we are a team, but the point of allowance is to teach kids about money and make mistakes while the price tag is still low. I like the “Love and Logic” approach about collateral and a repo. man. If you do allowance in the end it won’t really matter what your kids do/or don’t or how much you give, but it will give them an opportunity to learn while you are still there to guide and help instead of having their car in hock when they are 25. So, unfortunately, it’s probably a good idea to give more than they could ever “earn” and give them a few lessons.
We’ve just jumped into these waters with our oldest who is seven. We decided, fairly randomly, to just give allowance. She gets three dollars (inflation!) which can easily be divided into savings/spending/charity.
I like how it’s worked. There’s no issue with the chores and she will have our help while it’s still inconsequential.