Teaching kids about money: it has to be done.
Recently Teresa and I sat down with our kids to do a reset on the way we teach them how to manage their money. Our goal is to start early, and to make sure that they are aware of what real life costs, the importance of saving, the importance of giving, and the importance of making hard decisions.
Here’s the new plan we rolled out to everyone over the age of five.
Your Allowance
- You will receive a weekly allowance in the amount equal to your age.
- In order to receive your allowance, you must complete a weekly chore that goes above and beyond the normal household chores that we all do to participate in family life. It must be completed to our satisfaction, without complaining.
- In order to receive your allowance, you must request it, after you have completed your chore.
- You will receive your allowance, in cash, on the weekend following the completion (Cash is tangible. We want them to see their reward and put it in the bank themselves.)
- You will be responsible for keeping track of your cash.
- You will be expected to tithe at least 10% of your allowance and prayerfully consider more.
- You will be expected to find opportunities to generously share your tithe with the church or those in need on a regular basis.
- You will be expected to save a portion of your allowance for future expenses.
- This is your money. You may choose what to spend it on so long as it meets the basic moral requirements of our home.
Managing your Money
- You will be expected to deposit your savings into your bank account whenever it becomes a substantial amount.
- You will be able to keep the interest you earn on any savings in your bank account.
- Whenever your monthly balance is greater than the annualized amount of your allowance, you will receive a bonus allowance equal to a week’s allowance.
- In order to be paid your monthly savings bonus, you must submit your previous month’s bank balance to Mom and Dad by the 15th of the month.
- Once you have reached 12 years of age, you will be given an extra checking account and will have access to a debit card which will provide you the opportunity to take money out of your account.
Your Responsibilities
- You will be responsible for paying for activity fees for activities that you participate in.
- You will be responsible for purchasing equipment associated with any activities that you participate in.
- If you don’t have enough money for an activity, you will be able to take a loan out from Mom and Dad.
- You will be charged one week’s allowance as interest for your loan.
- You will only be allowed to take out one loan at a time.
So far this approach has been a success. The plan is adapted from a book that I really enjoyed reading, The First National Bank of Dad.
What do you do to teach your kids about money and finances? How have you helped them learn stewardship?