This past week I implemented something I learned from a recent Global Gals Gathering. I paid my 6-year old daughter her first official $6 bi-weekly allowance. Six bucks? For a six year old? Read on, and it will all make sense.
Financial responsibility is not taught in most schools. Its up to us parents to teach accountability and responsibility when it comes to money. As with everything we teach our children, remember that each child has his/her own personality and way of doing things. So what works for my child may not work for yours. Take what you can from this blog and apply it or modify it as necessary.
Natalie Stillman from New York Life presented to us “It’s Common Cents” by Neale S. Godfrey. (Godfrey also wrote the book Money Doesn’t Grow on Trees.) When following the basic concepts in this program, you teach your child that the only way to get money is to earn it. You can begin teaching this concept at a young age, 2-3 years old, as soon as your child takes interest in money.
Start kids on an allowance system that pays for completing chores. Two basic types of chores exist: (1) Citizen of the Household and (2) Work for Pay. My child is responsible for keeping her bedroom and playroom picked up and brushing her teeth as part of being a household citizen. Just recently, we decided together on her Work for Pay Chores: feeding our pet cat, emptying small trashcans once a week, clearing and setting the table. I am quite lenient at this stage but expect to get more structured as she gets older. Just tonight I reminded her to empty the trashcans, and she did it all on her own, no questions asked. She gets paid $6 every other week ($1 for each year of her age).
Here’s the kicker. She has four bins to keep her money, which we labeled and discussed together. In the first, “Charity,” she puts 10% of her allowance. She can use this money to donate to any organization that interests her. We talked about the women’s shelter, her elementary school, or the junior theater. The second, “Long-term savings,” gets 30% and will eventually go into her bank account. The third, “Medium-term savings,” gets another 30% and is for her to buy something “big” with her own money. At this point, she is saving for a dollhouse. Finally, number 4, “Fast cash,” gets the last 30%. This is her spending money for things such as that pack of gum or shiny lipgloss she always asks for when we are at Target.
Teenagers will need a more formal budget and may be able to get paid once a month. Of course, the teen can complete other chores for additional money. Also, if a child is saving for an expensive purchase, you can help to achieve the goal by rewarding their savings efforts. For each dollar saved, you can match it in order to reach the savings goal a little bit quicker.
By following these guidelines, you can start teaching our child the difference between “want” and “need.” The child will begin to make different buying decisions because its his/her own money. Don’t fret if you have an older child, its never too late to start teaching financial responsibility.
Thanks to Natalie Stillman for her time and for being so open about her own experiences.
Until next time,
Jules