I struggle with the concept of allowances. I want my children to learn to handle money, and I know in my heart that the only way to do that is to have money. But I don't like the idea of getting paid for things that you do as part of the family (ie, chores) and I definitely am turned off to the idea of handing over cash simply for breathing. Trust me, I have family members who live with the "on the dole" entitlement mind set and it is not anything I want to see my children indulging in.
Since we could never come up with an actual system of remuneration, Mr. Blandings and I adopted by default the "above and beyond" concept of earning money for our brood. Finished with your daily chores a little early and want to fold an extra load of clothes for me? Sure, I've got a quarter in my pocket for that. I need a quick pick up for the living room and you volunteer cheerfully? That might earn you a dime. The rules for this extra pay are this: you may be offered money for a service, or you may not. If you are, you are perfectly within your rights to turn the job down and let it pass to someone else. But if it's not a cash job, then it's a request and compliance is fairly well mandatory. Oh--and if you ASK for money up front, then no, you're not getting any. Sorry.
The kids then have the option of taking their spare change and keeping it aside or having me credit their "account." An account in our house is simply an index card with a running total of deposits and withdrawals from birthday money, etc., and purchases made.
And that's been it. Not a lot to it, but hey, I said it was a default system.
Aware that Jo is creeping up into the age where more instruction is probably in order, I was happy to be able to review Kid's Wealth, a complete kit that helps kids learn to manage their money in a systematic way. Systematic is key here: teaching children to budget is one of the most important parts of raising an adult who knows how to live within their means. You know all those folks who call in to Dave Ramsey? Well, they never got the systematic budgeting thing down.
Kid's Wealth comes with instructions and caveats for the adults and I feel that it's important to say up front that I don't agree with all of them. First and foremost, as a Christian, I take the mantra "Pay Yourself First" to be an affront to my Christian sensibilities. Whether you are a tither or not, you probably agree that God wouldn't ascribe to this particular theory. You pay God first--period. Second, Kid's Wealth states quite plainly that unless you are giving your children what they call "real amounts" of money, you're wasting your time. Their idea of "real amounts" soars into the unreasonable, in my opinion. Many of their examples revolve around $80+, a sum that I am in no way able or interested in giving to any one of my children in the course of a month.
Does this mean that the program is a wash? No, it doesn't. A little pick-and-choose magic made Kid's Wealth a valuable learning experience for my whole clan.
The first step was deciding on how much money to issue each child. Since Mr. Blandings gets paid twice a month, we decided that we would base our pay schedule on his paycheck. We noted this in the calendars that each child received and then handed down the judgment:
Jo, age 11, $20 month
Atticus, age 8, $15 month
Logan, age 6, $10 month
The children were delighted beyond words.
Each child kit comes with a set of five wallets to divide and store their cash. Linked to a set of characters that signify the area of budgeting, these are color coded and divided into five categories: Wealth, Plan, Learn, Fun, and Angel. In my house, we mixed things up and took this approach: Angel (giving back to God), Savings, Learn and Fun. Tying the wallets in to more closely match our values was not difficult at all.
Each wallet receives an agreed-upon portion of the overall pie with each Kid's Pay Day. We used the formulas provided as they seemed reasonable; we simply turned them a bit and put aside the 10% for God first rather than last.
Accompanying each Kid Kit is the most valuable piece of this program as far as I'm concerned: a child's activity book. The activity books are customized by age and have age-appropriate exercises included. These are the heart of the program, with real math exercises, example and outlines of what kinds of things fall into each category of spending. Using one of this books is a real-life math workbook and not for the faint of heart. Jo spent an entire afternoon playing with percentages, not something she would have been motivated to do on her own.
This program has been a habit-forming, fun way to teach my children about income, debt and managing money. They are looking forward to saving up for big ticket items and love being able to see the funds they've set aside for fun stuff--in case they want to use it. I would have never taken the plunge into such an in-depth financial education without Kid's Wealth. It' nice to know that my children are learning about money now, before they're in the real world!