Reader Question: How Do You Handle Kids and Money?

posted by Andrea | 03/15/2018

I’m often asked if we give our kids an allowance or if we pay them anything for doing specific jobs around the house… and RIGHT NOW, my answer is “no”.

I say “RIGHT NOW” because my kids are really young (in my opinion).

At 6, 4, 2, and 5 months, I don’t think they need an allowance or to be paid for doing jobs — because for the most part, they really don’t even do many jobs yet! 🙂

However, Nora has just started asking about ways she can make more money (not sure what she plans to do with her money yet; she just knows she wants it!) And she’s wiggling her 2 front teeth like crazy in hopes that the tooth fairy will visit her again soon!

Also, we just opened a bank account for Simon last week — we decided to start bank accounts at age 4 because they sort of understand a bit about money by then.

Since kids + money has been a hot topic in the Dekker house these past few weeks, I thought it would be the perfect time to share a recent Reader Question (more like multiple questions) I got from Kara, regarding how we handle kids and money!

Hi Andrea,

I know your children are still fairly young, but I’d love to get your opinion (or the opinions of your readers) regarding so many questions I have about kids and money.

1. What age is a good age to start a bank account?

2. Should we give them a weekly allowance?

3. How much should that allowance be?

4. Should we pay them for doing normal household chores or only extra things we list out ahead of time?

5. Should we require them to save a portion of their money or let them blow it and learn from their own “mistakes” now, when they can only waste a small amount of money?

6. Do you give money for lost teeth?

7. What about money for Birthdays, Christmases, or other holidays?

Sorry for so many questions, we’re just trying to figure this out and you were the first person I thought to ask! I know you and/or your readers will have good, practical, “normal” tips for our family!

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Because our kids are still quite young, I honestly don’t have lots of personal experience to go off from when answering these questions, so my plan is to provide whatever answers and ideas I have below, but I would LOVE it if those of you with older children would chime in with your ideas in the comments!

Q #1: When to start a bank account?

I don’t think there is a “right” age — but as I mentioned above, we decided to open bank accounts for our children at age 4.

We start with $44 in the account and I set up an automatic deposit of $5 into the accounts each month. They get a few checks from grand parents and great grandparents throughout the year, so we also deposit those into the accounts.

Q #2, 3, 4: Allowance? How much? and What for?

We don’t do allowances yet (unless you count my $5 monthly auto deposit) but in general, I’m not “for” or “against” allowances for kids.

This is a question I’m hoping others will weigh in on.

Q #5: Make them save or let them blow their money?

I think it’s super important to teach kids the benefits of saving SOME of their money — not necessarily all of it though. We should be able to enjoy the fruits of our labor and not hoard it all away for the sake of saying we have so much money in the bank.

That said, if you have children who just want to spend, spend, spend, I do think there’s merit in letting them blow their spending money a few times to see if it teaches them a lesson.

Q #6: Money for lost teeth?

Yes, we do — but I definitely don’t think this is necessary either.

Right now, we’ve been giving Nora $1 for each lost tooth, but I think we’ll start mixing it up a little — maybe more for molars or less for teeth that take a really long time to come out!

I honestly thought she knew it was us who put the money under her pillow, but more and more, I’m thinking she actually believes in a tooth fairy — which is sort of sweet 🙂

SIDE NOE: Simon often refers to Angels as “Jesus’ good fairies”. 

Q #7: Money for Birthdays or Christmas?

When they turn 4, we give them 4 one-dollar bills. Then, every birthday after that, we give them the number of bills that corresponds with their age (Nora got 6 this past birthday).

For Christmas, we’ve been putting a $1 bill somewhere in one of the gifts they unwrap — which they think is SO fun. I’m not sure we’ll continue to do this every year, but so far it’s been fun.

Other than that, we don’t give them any other money throughout the year.

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Like I mentioned above, I most definitely do NOT have all the answers for Kara — so for those of you with more experience with this area of parenting, please enlighten us all in the comments.

Feel free to share things that worked really well for your family, as well as things that didn’t work so well.

Thanks so much!

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38 comments

  1. Rachrl

    04/07/2018

    For my 7 & 8 year old, we give 2 dollars a week. This number is somewhat arbitrary, but seemed to meet the requirements of being enough to blow on candy or gum but not so much that they wouldn’t have to work at saving it for a big ticket item (I was dreading the thought of an 8 dollar toy every week).
    They’re also required to give back. We call it a tithe, but the kids were allowed to pick where it goes and they picked an animal shelter.
    The allowance isn’t linked to any chores in particular, but they do have a set of expectations (clear the table, clean their room, etc). I didn’t create an itemized list because I didn’t want them to have an expectation of a bonus if they were given an unexpected task (i.e., taking out the trash is so-and-so’s job, so what will you give me for it?). I’m trying to instill the attitude of “family helps family and that’s how it all gets done”. It’s not quite working yet, but we’ll see.
    They also both have savings accounts and half of any birthday/christmas money gets deposited for a rainy day. The other half they can spend.

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  2. Sarah Elizabeth Parsons

    03/18/2018

    Our boys are almost 5 and 6. We started allowances last year. Our policy is that you everyone does chores as part of the family, and that kids get allowances as their paycheck for being in the family. We occasionally have extra for-pay chores.

    Currently, we do $1/week for each year of age (so the 4 year old gets $4/week and the 6 year old gets $6/week). The amount is somewhat arbitrary, but we had a friend that tied it to ages, so seemed to make sense. It also added up to about what we spent on fun stuff for them pre-allowance, and I think has actually saved us money. If our income ever changed so this amount was a burden, we’d revisit the amount we had to spend on allowance.

    I am continually amazed at how well it has cut down on the “I want” factor. Parents pay for needs, and boys can choose to spend allowance on whatever they want. The “mom, can I have…” has shifted from me saying “No” to me saying “If you want to spend your allowance, sure.” Or “Yes, but you’d need to save for X weeks to buy that.”

    My 6 year old has shown both a remarkable math ability and goal-focus, and has happily saved for 3-4 months for a lego set he wanted (and he could tell you each week exactly how much he had saved and how many weeks were left).

    The 4 year old bought a lot of Dollar Tree toys at first, and is slowly learning to save his money. Just last week he made a choice to not buy two things he wanted so he could save or a bigger toy later on. I was so proud!

    The one challenge we’ve run into is that they are close enough in age that the different amount adds up quickly when they are saving. We’re considering changing to an equal amount.

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  3. Kimberley

    03/16/2018

    For the amount, we give them what their age is. For example, my son is 7 so he gets $7 a week. However, if they are acting up or not doing what they are told, they get a dollar taken away. This has worked very well for us. My daughter who is 3 even understands that if she is not acting right, she gets a dollar taken away. They also do chores for this money. To keep it as simple as possible, we have told them that as long as they do what we tell them (like pick up their dirty clothes/dishes, clean up toys, etc) and they don’t complain about it, they will get their allowance.

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  4. Emily

    03/15/2018

    So many wonderful ideas shared already! Like many, we do not give allowance as my children are expected to help with chores (age appropriate) as part of being in our family. We have a running list of chores above their ability that they may earn money for. I have each chore listed with the expectation of what is to be done plus the dollar amount they can earn. My older ones (11, 9 and 5) are definitely more into doing the paid chores than my 3, 2 and 1 year old 😉 When they’re a little older we plan to teach them how to budget larger things like clothing, food, etc. For now it’s teaching wise spending and saving in general.

    PS we don’t do the tooth fairy or give money for teeth

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  5. Annaleah

    03/15/2018

    My husband and I had different views on how to handle this, based on how we were raised. So we’ve compromised by doing this: our kids, starting around age three, have chores (difficulty based on age) that they do because they are part of our family, and we want our family to learn to work together. Then, when they are interested in getting money, we allow them to earn money by doing extra jobs. Our oldest is nine, and they are now starting to get money for other things (tooth fairy, birthdays, etc), so I am realizing that we need to start intentionally teaching them about saving, tithing, etc. We so far haven’t really regulated their spending (though we do discourage some things), just because they really haven’t had much money.

    We do give things for the tooth fairy, but I’ve intentionally switched it up between money (50 cents to $1.00), candy, or very small gift. I did that because I didn’t want to set up any kind of specific expectation, and because sometimes I don’t have cash on hand, and this way I can give them something else, and I’m not stuck! Ha!

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    Andrea Reply:

    sounds like you have a good mix between your 2 ideas — and that’s probably the most important thing (that you are on the same page)!

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    Andrea Reply:

    I love this Annaleah! I actually told Dave that the next time Nora loses a tooth, i want to do something different so she doesn’t expect the same thing each time (because I also rarely have cash!)

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    Nancy Reply:

    We took a friend’s idea for this, and bought $20 worth of $1 coins at our bank. They’re gold and seemed kind of special when the kids got them in exchange for a tooth. Dollar coins aren’t convenient to spend, so they were easy to keep on hand.

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    Nancy Reply:

    Just to clarify—one coin per tooth at our house. We bought $20 so we would be prepared. 🙂

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    Andrea Reply:

    oh my word — that’s a great idea! Nora would love getting a gold coin!

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  6. Erin M

    03/15/2018

    My kids (15, 12, 10 and 6) get a weekly allowance that is their age minus $4. We expect them to pay for most wants out of this. I cannot remember a time when our older kids asked us for money to go out with friends. They have bank accounts they can put money in to- we are definitely on the frugal side so the kids are decent savers as they grow up.

    Recently I heard and would recommend this podcast: https://www.momminainteasypodcast.com/podcast/2018/1/13/ep-18-money-money-money where they highly recommended Smart Money Smart Kids by Dave Ramsey and daughter. I have it from the library but haven’t yet read it.

    We’re on the brink of needed to decide how to handle the costs that come with a driving child. Not sure what to do about it all.

    Thanks!

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    Andrea Reply:

    Thanks for the link Erin — I’ll put that on my list of things to listen too!

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  7. Ann

    03/15/2018

    I do not think that there is one answer that will fit every family. For those of us with super strong-willed kids who need to get their power buckets filled on a regular basis, money is one way to do that. We require our 6 year old to help with things around the house just because he is part of our family and we “need” everyone to chip in. That said, there are sometimes extra work that is up for grabs and we could offer extra money for those jobs. We haven’t needed to do that yet.
    How much a child is given depends on what they need to spend it on. We give our 6 year old $2/week. He must save some, give some, and can spend some and he chooses how much goes into each category. We are willing to purchase 4 hot lunches a month from school. If he wants more, he pays for them himself. He usually chooses to buy birthday gifts for parents and siblings and that comes from his own money. When Scholastic book order forms come home, I usually circle any I am willing to buy and let him choose 1. If he wants more than that, he buys it with his own money. If he is invited to a friend’s birthday party, he buys the gift himself with matching money from us. If there is a specific toy that he wants, he needs to have enough in his spend section of his bank to buy it. I do not need to listen to him beg for candy from vending machines at stores and restaurants or for toys at the store. I just ask him if he has enough money and if he is choosing to spend his money on that item. No more arguments, no more blaming, no more mean mom!
    He has his own saving account and often chooses to put money in there because “the bank gives me extra pennies if I let them hold it for me.” When he was younger we put in any money given for gifts from Grandparents, etc. but now we let him choose.

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    Andrea Reply:

    AMEN! Yes, you are exactly right — and sounds like you are doing a great job with your little guy 🙂
    And I had to laugh about your comment regarding the bank “giving him pennies”. Simon said the EXACT same thing when we opened his account… “so the bank is going to give me more monies? Cool!”

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  8. Mikki

    03/15/2018

    My son (14) has chores that are required year round and in the summer additional chores that are required. If he does something that I would pay someone else to do (groom dogs, cut grass etc) he gets Paid that money. He also gets an allowance each month that is to teach him how to handle money. Half of it in cash and half in his savings. I transfer a set amount into his school lunch account each month and if he runs out ( I transfer enough to cover his lunches but he likes to get extra things), he pays for the rest of the month or packs his lunch. We also have a “fun fund” that is used for things like camp, guest passes at the pool, high school football games etc. Any clothes or things that he “wants” he pays for. If he needs something, cleats, sports gear or legit needs clothes, I have a set amount that I will spend and if he wants something more expensive, he makes up the difference. This has worked very well for the last few years. When he asks why he has to do chores, my answer is because you live here. I think if kids never have money to manage, they never learn to manage money. I also believe that everyone should be able to do the following before reaching adulthood: balance a check book/manage money, wash laundry, sew on a button, change a tire and cook at least one decent meal.

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  9. Allie

    03/15/2018

    My daughter is 11 and we give her a weekly allowance of $5. We started at age 5 with $2 and increased as we saw fit. At the beginning, I allowed her to spend it, which she did at the Dollar Tree. However, those toys always break and I set them aside for the first five weeks. At that time, I showed her all the broken toys and told her that if she saved for those five weeks she would have $10 or a small, sturdy Lego set instead of a pile of garbage, which I had her then throw away. She quickly learned that saving and buying quality was a better option. Now, she saves all her money and only spends infrequently or saves for vacation souvenirs.

    We do give $2 from the tooth fairy because they are so difficult to remove for her. She’s had 7 removed by the dentist because they wouldn’t fall out and the permanent teeth were growing behind! When she gets birthday money, she generally asks me to put it in her bank account for college. She is learning German and wants to study abroad, which she knows will cost her extra money.

    As far as chores, she has 5 pets (2 cats, 3 rabbits) and cleans litter boxes and rabbit cages everyday. She is also expected to clean the toilets, help vacuum, help in the yard, and fold and put away her own laundry. However, the allowance is more to teach money management and the chores are expected as part of the family.

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    Emily Reply:

    I love your strategy with the broken dollar tree toys! I may have to borrow that one. Thanks! 🙂

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    Andrea Reply:

    I know — I was thinking the same thing! We usually take our kids to the thrift store, so we have found some really great quality toys (like a massive bin of Mega Blocks for only $2). However, I’m totally tucking this idea away for later! Thanks Allie!

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  10. Ruth

    03/15/2018

    Our kids are older (22,19,17,and 15) but I wanted to add my observation about allowing kids to “blow” their money and learning from it. One thing I am seeing is that kids don’t learn from it! We’re not living in a time where they really have to “suffer” from poor financial decisions. And with adolescence stretching way into the twenties, kids can be blowing large sums of money. Perhaps it was my husbands and my upbringing, but we never really allowed our kids to blow their money as young children. We talked about what they wanted to purchase and were pretty “helpful” in guiding them into wise decisions even as young kids. Now as teens and young adults, they are all pretty good money-handlers. They like to save and can see the benefits of delaying gratification.

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    Andrea Reply:

    Thanks Ruth — this is all such good information (especially from someone who’s “been there” already)!

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    Michelle Reply:

    I agree! Our kids are 17, 15, 10 and 8. In the beginning (about 12 yrs ago) we gave each of them 3 small mason jars with the white plastic lids. One each for Save 60%, Spend 30% and Share 10%. Any time they received ANY money, it was divided in the jars. Every six months the Save money was deposited into their bank account (opened at birth) and they made a donation of their choice with the Share jar. When it came to the Spend jar, there was never really a lot of money in there but we talked about what they might like to spend it on. Then they got older and after much discussion we okayed them spending their money on (almost) whatever they wanted (Spend Jar only). I am very grateful to say that my children have never been hungry, cold or unloved BUT it sure makes it hard to impress upon them to spend their money wisely! Especially since the teenagers have had good paying jobs and it seems like they just have a lot more dispensable income than I ever had at that age. AND they can buy so many things so cheaply. But I will say that as they get older they do seem to be making fairly good financial decisions – it does make for lots of interesting discussions. (And we never did allowances but would pay them for specific odd jobs as they got older).

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    Andrea Reply:

    These are great ideas — thanks so much Michelle!

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  11. Nancy

    03/15/2018

    We opened savings accounts when our kids were babies. If they needed something or there was a toy we wanted them to have, we might use their birthday money to buy it, but generally gift money was saved in those accounts. A one-year old doesn’t have an opinion about cash, which made it easier to save! But as they got older, they started to understand what that check or $10 bill in their birthday card represented, and we started to let them spend most of their gift money. We also save for them in 529 accounts, which are exempt from taxes in our state.

    Now our oldest is 17 and has a part-time job. We require her to save 30% of her earnings for college, and she can spend the remainder or save up for a larger purchase. It has been a process for her; in fact just last night I told her I wouldn’t advance her money for some pretty expensive makeup she wants. She had asked if she could buy it and have me withhold from her future paychecks to cover the cost. We do sometimes give her money to go out with friends etc and so I was pretty firm in telling her that makeup qualifies as a “want” rather than a “need” and she would need to save up before she buys it.

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  12. Ruth

    03/15/2018

    Money is a serious topic therefore kids and money is super serious!

    My kids are 21, 19, 19. I homeschooled them.

    I tried all different things while they were growing up.

    In the end, I did not give them allowances. I gave them generous amounts of money for standardized test scores and if I was pleased with their work ethic, I bought them extravagant things (hard work=reward).

    Money is money and I was after scholarship money. No amount of babysitting or lawn cutting can make a dent in college costs.

    All three of my kids earned full tuition, four year scholarships with an additional $4K stipend for any unpaid internship or study abroad they may do.

    My daughter didn’t take it because she also got into an Ivy League school, so we sent her there. Ivies do NOT give merit aid. Only financial need, which they said we didn’t have.

    My sons both went to the school on full scholarship and this summer both nabbed internships as freshmen, which is unheard of, because the companies were eager to have interns they didn’t have to pay, so the stipend has opened doors that are closed to others.

    The scholarship money comes out to about $100K each(tuition rises every year but their scholarship covers it!).

    No allowance, no amount of birthday or Christmas money could have covered the college costs as they have.

    I have one kid who was born with no concept of money…spent every single penny the second he got it..so I was a little worried about how my kids would handle money as adults but because of their work ethic, they have all been great so far.

    And because they are so used to me being all in their business, I still have a lot of ability to speak to them about how they spend their money!

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    Andrea Reply:

    Good to know — thanks for all the tips and advice as to what worked for your kiddos (who obviously seems to be doing VERY well for themselves!) Way to go mom 🙂

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  13. Brenda

    03/15/2018

    My kids are both really into doing extra work for money. They rule at our house is the longer it takes you/more I have to yell at you to do it the less they earn. For example, They want money, I say pick up sticks in this area of the yard for $10 (might take an hour max). an hour later they (there are 2 of them) are arguing about how to do it, whose working more. I tell them it just went down to $8. They are still fussing about it and ask for help, it goes to $5. Usually, they aren’t required to finish the job if they don’t want to, but they forfeit all money they were trying to get. This is only extra chores for extra money, not normal chores, like helping with dishes, cleaning their room.

    If they want extra money, I don’t want it to cause me a headache and involve lots of nagging and yelling!

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    Andrea Reply:

    This is a great idea! I love that you will dock their pay for not doing it efficiently! Nothing bugs me more than lazy, slow workers. I want to teach my children that even if they are paid by the hour someday, they should still work quickly and be efficient!

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  14. Tonya

    03/15/2018

    So many good ideas here! Thanks for sharing. Our 8 year old and 6 year old have a “chore” chart. I use that term loosely because they don’t have chores really. It is things to make our morning, afternoon, and evening run smoothly. Make bed, brush teeth, put dishes in the sink after eating, washing hands after school, hanging up back packs and coats, etc. They are able to earn half of their age for completing those tasks. Spending jar gets 60%, savings jar gets 30%, and charity/tithe jar gets 10%.

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    Andrea Reply:

    Thanks Tonya! I’ve wondered about implementing a chore chart — nora is definitely old enough, but not sure about the rest of them. Maybe this coming summer, we’ll give it a try!

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  15. Wendy Pray

    03/15/2018

    When our children reach secondary school, we pay them an allowance each month that equals what school lunches cost, plus about $10-15, plus a tithe. Then they can choose how to manage this money each month. If they want to make their own lunches and use the money, or save it for other things, they can. If they choose to spend it on lunches, they can. Even if they do that, they have a little bit of money left over ($10-15/month isn’t much, but it is a bit.) If they run out of money before the month is over, then they have to make lunches the rest of the month. This has really taught them some money management skills. It also has taught them to know themselves. (One of my children learned to put all her lunch money into her school account at the beginning of the month because she wanted to use it for lunches, but learned that she would spend it otherwise if it was still in her possession.) This practice has served all six of our children well.

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    Becky Reply:

    Love this! Give’s them a choice and some ownership. Thanks for sharing

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    Andrea Reply:

    So smart Wendy! This is great advice for younger parents who are looking for ways to teach children more money management skills!!

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  16. Luba @ Healthy with Luba

    03/15/2018

    I do not have children of my own, but my parents did not give us allowances. We never felt deprived although my parents were not rich by any means.

    However, I did begin both of my first jobs at age 15. Receiving a pay check definitely changes one’s view on money.

    When I went to college, it was sad to see the number of college students who always had money for treats and were always late on their school bills. My parents taught me to pay my bills first (after giving).

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  17. Becky

    03/15/2018

    We do a monthly allowance on the first of the month. We do not tie it to any kind of chores and have communicated with the kids that it’s to help them learn to manage their money and to learn about how we have to make choices about what to do with our money. They are required to save half, “share” 10% (tithe – but they can choose church or another giving opportunity through school or whatever), and the remainder is their spending money. They mostly have been spending pretty frivolously, but they’re starting to want to save up for bigger things.

    We give them opportunities to earn extra money by doing extra work. They are expected to fold and put away laundry, help with trash and refilling toilet paper, and help to empty the dishwasher when it’s their turn. Extra jobs they can earn money for (and we really just make up the work and the dollar amount on the fly) include dusting, yard work, and other odd jobs.

    We also automatically transfer $5/month into their bank accounts and have considered matching funds for extra money they save in the bank. Gift money early on was put directly into their bank account. Then, we required that they save some of it. Now, they choose what to do with it. Since they’re saving for bigger things, they are choosing to put it in spending (which is functioning as a sort of savings right now until they have enough for the big thing).

    We didn’t want to tie chores to allowance because their chores are “usual” things that we all do to keep the house running. So, we have really made a point of talking about how allowance is to practice good money management.

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    Andrea Reply:

    Thanks for sharing Becky! We also do the auto transfer every month — I think it’s nice to keep it increasing at a steady rate.

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    Jana Reply:

    We also gave our boys a monthly dollar amount to help them learn money management. That was our main purpose for giving them the money. We did not tie it to “chore” activities, because doing household “chores” is the way a family works/lives together. We began when the boys were maybe in 5th or 6th grade to give them a monthly amount. They needed to save and tithe some of the money, and could spend some of the money, if they wanted. They spent their own money on concessions at basketball and football games, roller skating parties, etc. As they got older they wanted to purchase more expensive things, so they learned to save for those items. We feel they learned money management, which was our main goal.

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  18. Shelley

    03/15/2018

    Hi, I thought I would chime in. We have an 18 & 19 year old. From the time they were very little (don’t remember the age, sorry) we opened a bank account and put any large amounts of Christmas/birthday money in there-one set of grandparents always gave them $50 and a small gift. We felt like the presents were always more than enough. When they were around 4 or 5 we told them that we were going to live in the “country” some day and they ought to start saving up for a 4-wheeler. Whatever they saved, we would match. They became little workers for anyone and everyone. The unspoken rule was 10% to God (church), save 50% and spend 40%.

    They were around nine and 10 when we finally bought a house out in the country. Sadly, we still do not have the money to match their money so they pooled their money together and bought an $800 piece of junk four wheeler that they had the greatest time riding until we surprised them with a brand new one for Christmas a couple years later. We then encouraged them to start saving for their first cars and said that we would match what they saved. They both were able to buy decent (not super nice) cars when they turned 16.

    We are not against it, but we never did weekly allowance thing. We felt like we were family and pull together accordingly. Nobody was giving daddy five $5 for cutting the grass every Saturday 🙂 however, they could earn extra money doing a chore that was on the family list – like cleaning out the garage before we got around to doing it as a family, if that makes sense… sorry so long

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    Andrea Reply:

    Thanks for sharing Shelley! So many good ideas here!

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