One of my 2020 family goals is to get an allowance system going for the boys. They are very interested in money and want money to spend but, being five and six, aren't great at managing their money (of course!). As in, they like to get it out and play with it, or give it back and forth to each other, lose it, and usually want to know what they can afford to buy once they have about three dollars.
Chris and I want to have ongoing conversations with the boys about money and to set them up to have good financial sense by the time they are ready to move out of the house. Setting them up with their own money feels like a perfect teaching tool. At this point we want to help them understand the value of a dollar (as in, what can you buy with $1 versus $10 versus $100, etc.), get a sense of how long it takes money to accumulate, and also to teach them that you don't only spend money. You also save it and give it away and those practices can be even more fulfilling than spending.
I knew our boys were ready for some kind of allowance or money management opportunity but I didn't know where to start. Should they have chores with assigned monetary values? Should we dictate how much they save/spend/give? How often should we be handing out allowance? I had many questions. Luckily I had heard recommendations for the book The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, and Smart About Money and it answered all my questions.
Incorporating some of the book's recommendations plus our own thoughts these are the allowance practices we are instituting:
+ The boys will received a weekly allowance. The book makes the argument that a month is a really long time to kids so getting a weekly allowance will help make money management more of a regular practice. We decided to make Fridays payday. :)
+ Allowance will not be tied to chores or behavior. Also recommended by the book. I do want to come up with some "above and beyond" chores that could earn small amounts of money. Currently we already expect them to get dressed, make their beds, put dirty laundry in the hamper, bring their dirty dishes to the sink, and help out with basic household cleaning when we ask. Above and beyond chores might include taking out the compost, taking out/in the garbage and recycling, helping to unload the dishwasher, etc. As they get older I envision that these chores will become expected chores and we'll come up with new above and beyond chores.
+ Each will get a Moonjar bank for collecting their money. I love that it has separate sections for spend, give, and save. It also came with a little balance book and we'll help them write in how much money they put into each jar and add up the totals each week.
+ Each will get $3/week in dollar bills. The book recommends giving allowance in dollar bills because it's easier to count and manage for kids. I went to the bank and got $120 in one dollar bills so we'll be set on allowance for several weeks.
+ For now they will have to put $1 each into their give and spend jars each week and either $1 or no dollar into their spend jar. Dashiell surprised us and for his first allowance allotment put $2 into save and none into spend. Cedric put $1 into each jar.
+ Birthday or Christmas money can be put into whichever bank sections they wish.
+ "Spend" money can be spent at their discretion. I'm sure navigating this will be a learning process and we'll probably come up with further guidelines. Such as do they need to have their money with them to buy something or can they pay us pack at home?
+ "Save" and "give" money needs to accumulate to at least $20 before it can be spent/given. I think it could also be a good idea to get the boys to identify what they are saving for and then have them save up for that. I don't want to just let them go to Target with $20 burning a hole in their pocket. For the "give" money I'd like to talk with them and figure out what kind of cause or organization they'd like to donate to.
We just started this system with them last week so we're new at this but I'm excited about it. I'd love to hear any of the strategies that work for your family!