How We’re Teaching Our Younger Children to Manage Money Well
Guest post from Hope
I recently shared a post about “Why We Let Our Teenager Manage Our Budget”. In the comments of that post, someone asked that I share a few additional tips for money and younger children.
We have four boys, ranging in age from 16 to 4. My older boys joke that they have been guinea pigs for all of our theories. I smile, thank them for their long-suffering patience, and assure them that we are, indeed, redefining our policies for the younger boys. So, here are my tips – only the best ones!
Allowances: Age 5-10
Our policy on paying children has fluctuated over the years and has mirrored changes in our own financial fortunes. When our older boys were in grammar school, we paid them an allowance.
They understood that this money was for doing specific age-appropriate chores that were assigned to them weekly. If they did not complete tasks in a timely, appropriate manner, then their “paycheck” would reflect their job performance.
They were expected to tithe 10%, save 50%, and spend 40%. We did not intervene in how they spent their money except in specific circumstances — they were not allowed to purchase any items we considered inappropriate or immoral. We would counsel them about items that were cheaply made.
We had a lot of conversations about “quality” versus “quantity”. A few times they opted to purchase an inferior item, and were sadly disappointed when it broke within a short time. This helped them consider the importance of our words.
Allowances: Age 11-15
By the time our older boys reached middle school, we had more children, more expenses, and less money. We also realized that their needs had changed. Older children need to begin to see the importance of saving and planning for long-term goals. So, we explained that they would no longer receive a weekly allowance.
Instead, they were to set their own goals and save for specific items. Then, they would need to find work from someone besides us. When they had saved up one half of the amount needed for the item, we would kick in the other half.
The boys have been ambitious. They have researched the best prices and values for each item. They have been paid for installing a barbed wire fence, cleaning a condo (remember all those early lessons I gave them in how to properly clean?), pet sitting, and lawn maintenance. They have purchased digital cameras, an electronic book reader, camcorders, and (most recently) a used Macintosh laptop.
This plan has undoubtedly cost us more over the long-run than the weekly allowance did. But, I believe it prepared them more effectively for life as they turn sixteen.
Prepare yourself! Soon, you will be standing at a garage sale and they will see something that they “just can’t live without”. They will plead with you to advance them money for the item.
The first time this happens reply, “Mom and Dad don’t spend money we don’t have and we expect that you won’t either. However, if you wish me to loan you $5 for that toy, you will need to pay me back $9 next week, not $5.”
Their face will fall, they will be aghast, they may even scream, “That’s not fair!” Simply reply, “No, THAT’S a Pay Day loan.”
I did it – once – with each of my older boys. Never did they decide that the price of the loan was equal to the worth of the toy. I recently overheard the older boys warning one of the younger ones, “If you don’t have the money for that, you’d better put it back. Never ask Mom to loan you money!”
What about you… do you have any tips for helping younger children to manage money?
Hope is the stay-at-home, homeschooling Mom of four boys and wife to Larry for 24 years. She loves to sing, write, teach history at her homeschool co-op. and speak to groups in her spare time.
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