These were our 6yr. old’s money envelopes totally made on her own, without anyone telling her! She read some Kids’ Dave Ramsey books and decided to take action 🙂 So Cute!!
Kids and money is always a hot topic. Every family is different as to how they decide to include their kids in the money process. We include our kids in many aspects of the finances and money in our household, but we wanted to talk specifically about what we teach our kids about their allowances.
First, what do we give our kids for an allowance? This is always an interesting topic. Many people base it on completing chores, many base it on age, many just give a flat allowance, etc.
I don’t think that there is a wrong or a right way to decide on when to start allowances and how much to give, how often to give, etc. It needs to fit your families budget and needs!
So we have what we call a “graduated” allowance. That is what we give our kids a weekly is based on their age. It is a “weekly” allowance, but we pay them once a month.
We actually pay .50 per year per kid!
- $58 total monthly
- 9 year old – $18
- 8 year old – $16
- 6 year old – $12 (he will be getting a “raise” soon after his birthday which will go to $14)
- 4 year old – $8
- 2-year old – $4
We have found that this is a very reasonable pay scale for us, our budget and our kids. The real little ones are not really doing anything with it, which just means more money saved.
This also isn’t the only form of money that they get. They actually do quite a lot to earn extra money here, at grandpa and grandma’s, other friends and neighbors, etc. But kids and earning money is a different topic for another day.
But whatever money they bring in, whether allowances or extra jobs, this is what we “encourage” them to do with it:
- Have a savings goal in mind – what are they wanting to save for? Right now, it is primarily Legos, horse riding, American Girl Doll stuff, souvenirs on vacation, etc. All goals that are fine in our book 🙂
- Giving 10% of their money to the work of the church – we are trying to teach and train them that all they have is given by God and always will be. We learned hard lessons from lack of tithing early in our marriage (part of our story coming soon!) and so we want our kids to automatically know and understand the importance of giving.
- The remaining 90% is divided in half – half needs to stay in savings. The other half is for them to save for whatever they are saving for at the time and they can spend it when they want, or even save that too!
Our kids also have bank accounts. We have decided to let them keep it all in the bank… even the spending money (except for the giving money). Then when they are ready to “spend” from the spending portion, we take them to the bank and get it! This also seems to help eliminate wasteful spending. I know our kids would spend money at dollar stores, the candy at the check stands, etc. But this process forces them to be more intentional!
We are not saying that this is the only way or the right way. It is just the way we have decided to do it!
Btw- we talk about allowances and more of our budget in our breakdown of our 2013 $20k Living Expenses Budget HERE.