Allowance is what you are Allowed: Early Lessons in Financial Responsibility

Posted by Susan Epstein on August 30th, 2010 at 01:50pm

The beginning of the school year is a great time to set up an allowance plan for your kids. This is not payment for chores, rather, teaching them how to manage their money.

1. Each child is allotted 3-5 envelopes (depending on the age and stage and needs of the child)

2. Each envelope is labeled with something like:

• spending Money $1.50 (little things, gum, candy, little toy, etc.)
• Lunch Money $5.00 (to bring to school)
• Bank deposit Money $2.00 (College Savings, First Car Savings,-something BIG and long term. Open up a children’s savings account and let your child watch the money grow and the interest accumulate. Kids love this!)
• Something I am saving for Money $1.50 (Something your child is asking for a bit bigger- new game for computer, toy, etc.)
• Charity $1.00 (Church, Synagogue or charity of child’s choice)

3. Decide how much you want your child to put in each envelope.

4. Pick one day a week.

5. Make sure you have $1’s and change.

6. Hand your child the wad of cash and change and have them divide it up and put it in the correct envelopes.

7. Now for the fun part! Before you go to the store, tell your children, if they want to buy anything they need to bring along their “Spending Money” envelope.

8. When you get to the store, do not get involved with the purchase. Let them decide how to spend their money.

9. If they ask to borrow from one envelope to put more in another envelope, let them; but have them write an IOU to that envelope and tell them that until the IOU is paid up each week’s “spending money” has to go to the other envelope.

10. Let them feel their successes and their failures; this is a wonderful lesson to give your kids!

A few tips that have helped parents not forget to pay up:

• Take out cash at the beginning of the month in 1$ bills and set aside.
• Give them their money at the weekly family meeting (make this part of the agenda)
• Make a weekly trip to the bank with your child so they can deposit into their long term savings account.

Let me know how this works and share your child’s money learning stories here!

Tags: allowance, Chores, consistent parenting, Family, kids behaviors, kids chores, Parenting Calm, parenting powers, susan epstein

Under Children+ Family+ Teens/Tweens