Allowances: How We Do It

Until recently, we were the last people you'd want to ask about tips for teaching kids to manage money. We never had a consistent allowance-giving system, for two reasons:

1. We'd agree to give our kids an allowance, but on the designated day, we never had the right amount of cash on hand.
2. Even better, on the designated day, we'd completely forget. Because we're awesome parents like that.

Then, a real-life friend and erstwhile blogger (hi Camille!) recommended this book: The First National Bank of Dad: A Foolproof Method for Teaching Your Kids the Value of Money.


The Professor and I both read and decided to take the plunge. I realize there are divergent, even strident, schools of opinion on whether kids should be given an allowance, whether it should be tied to chores, etc. etc. etc. (I KNOW! Imagine that! Strident schools of opinion on a parenting-related subject!) But sometimes you just have to make a decision, jump on someone's bandwagon, and go with it.

So here's what we do now. The Professor, a.k.a. Grand Poohbah of Spreadsheet Making, created this Google Document, representing the "Daddy Bank Account," for each child. On Sunday, they each get money in the amount of half their age added to their account. No cash required.

Now, here's the kicker. They can spend all the money they want, without strings attached -- as long as the money is in the account. If we're at a museum, and in the gift shop Caroline sees a cheap dolphin pendant necklace encrusted with fake sequins, and it costs $6.99, and she just has to have it, we simply check her account. If she has the money, she can waste it on the piece of junk make this meaningful investment ... and learn the hard way that a) the necklace falls apart after two days, and b) she won't have the money in her account tomorrow for blowing on the next impulse buy opportunity that wafts her way.

OR, they can choose to save the money, keeping it in the Daddy Bank at a higher rate of return than the local credit union offers them. Interest compounds weekly. It's an incentive to save, and so far, we're pleased with the results.

Ian is learning that while he would love to buy himself a treat at the coffee shop we visit once a week during their improv classes, he wants to save up for the latest, greatest Nerf gun even more. (This is a logic any ten year old boy will instantly appreciate.)

We also encourage tithing, although we don't require it or specify exactly how much they should give. God loves a cheerful giver, right? Our personal belief is that it's our job to set the example, teach principles and lend guidance, but to let them own their charitable impulses. For example, they each have a child, of their respective age and gender, sponsored through Compassion International. We cover the monthly sponsorships, but the kids can contribute extra money for a birthday gift for their sponsored child.

That's what works for us.
Over and out.