Kids and Money Management

[Anonymous]

Here is the scoop.  The DH and I feel that now is the time to really teach our kids about finances.  They are more curious than ever, and with the current crisis, the youngest one seems to think he will either be homeless, as an adult, or live with us.

Hmmm...

So we decided to let them in on a secret.  They have savings accounts.  They have bonds that they know about, but to them the money isn't real.  So we starting looking for a way to introduce the idea of being responsible with money.

USAA has prepaid debit cards (no fees) that you can load with amounts as small as $10.  So we are getting ready to embark on a new journey.  To start the kids will each be given a weekly amount (we hold 10% for savings, and 10% for charity).  From this amount they must buy their own snacks and lunch materials.  Whatever is left over they may spend as they wish.  

We plan to get really bold in the future.  Adding money for clothing, and letting the kids decide what to buy.

Do any other members want to share their experience in preteen money management?  Horror stories, or things that worked well?  We really want to teach the kids about managing money.  So we figure we need to pass some expenses their way.  

Thoughts are appreciated. 

Message Edited by miahmarie on 03-21-2009 08:23 PM

[haulingthescoreup]

I wasn't nearly that organized of course, but one semi-related thing I did was have them balance the checkbook every week. It got started as a means of making long division relevant, I suppose, but it was an eye-opener for them to see how slowly money comes in, and how quickly it goes out, and how much things cost in general.

You mentioned something about clothing expenses in the future: a friend put both her daughters on regular allowances and quarterly clothing allowances beginning in 8th grade, and she said they very quickly figured out the idea of buying stuff that lasts. Also, they didn't seem to lose their clothing (at friend's houses, left in cars, etc.) as often. Our kids wore school uniforms/ dress code stuff, and that helped enormously with day-to-day clothing expenses, but there's plenty out there for kids to buy for other times.

[Anonymous]

Hauling,

I love the idea of having the kids balance the checkbook!  I also like the idea of the quarterly clothing allowance.

It is difficult trying to determine just the right thing to do.  Both boys are great at math, but when it come to money they love to spend.  I am just now seeing that there are lots of available tools, I just have to have the discipline and time to implement them.

[MattH]

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@Anonymous wrote:
...

USAA has prepaid debit cards (no fees) that you can load with amounts as small as $10.  So we are getting ready to embark on a new journey.  To start the kids will each be given a weekly amount (we hold 10% for savings, and 10% for charity).  From this amount they must buy their own snacks and lunch materials.  Whatever is left over they may spend as they wish.  

...

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I like the idea of having them buy snacks and lunch from a fixed weekly amount, because if they overspend and run out of lunch money before the end of the week they'll learn an important lesson in a way they won't forget, BUT in a way that also won't have long-term consequences.

[Anonymous]

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@MattH wrote:

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@Anonymous wrote:
...

USAA has prepaid debit cards (no fees) that you can load with amounts as small as $10.  So we are getting ready to embark on a new journey.  To start the kids will each be given a weekly amount (we hold 10% for savings, and 10% for charity).  From this amount they must buy their own snacks and lunch materials.  Whatever is left over they may spend as they wish.  

...

---

I like the idea of having them buy snacks and lunch from a fixed weekly amount, because if they overspend and run out of lunch money before the end of the week they'll learn an important lesson in a way they won't forget, BUT in a way that also won't have long-term consequences.

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Matt, I felt the same way about lunch.  My boys love food-it seemed liked the easiest expense to start with.  We have always given them some spending money, but we also carried the expenses as well.

So luckily, they are off track for the next four weeks.  It should give them some time to adjust.  I hope!

[barbaralee]

Yeah, my son is 9 years old and other than household chores his "job" is to make good grades and practice piano/soccer. We do give him bonuses for some extracurricular activities, like the spelling bee. We've been doing an allowance for him for quite a while now, once he hits $1000 it's put it in a CD. He does sometime takes money out, but he's responsible for balancing his deposit book as well.

For a 9 year old we do give him (what I consider) a large allowance. But I look at it as not only teaching him the value of money, but also as an investment (he's better at saving than his parents are )

This may sound silly, but I've looked into an IRA for him because technically you can start an IRA at any age; but if you don't own a business and are working for the man it gets tricky opening an IRA for a child.

[Anonymous]

We do the lunch money thing too with our teenager. She get cash for a week or two of lunches and if she runs out before time...then she is out of luck. Her school charges per item and you can blow a bunch of money really quick. She only screwed up the first time and since then she has done awesome and not losing weight so I guess it has all worked out! LOL!  I know that she figures out what days she wants to spend extra money....like on pizza day for a second slice. I think this is a good transition into learning to keep a budget.

[Anonymous]

Wow barbaralee, good for you!  The boys have savings bonds, which have done very well, considering the market.

I like the fact that your nine year old has CD's.  That is very cool!  From what I heard on the IRA's, the child must have income to get one.  But someone broke it down that if you started the IRA when the child was 16 and invested for four years the maximum, then they would be good to go.  Not sure if that really works.

[Anonymous]

Wildcat, that is so good to hear.  I really wanted to give the kids something that they could handle to start.  Since they are home for the next four weeks I figure we can hear them complain, if they screw up lunch.

Baby steps.  I'll keep you posted on whether it works or not.  They do have chores, but they are not paid for them.  I do not get paid, so why should they.  But they have been paid for good grades, and reading books.  If they want more, they have to earn it, 

I am hoping, we can teach them to spend below their means.  It is a tough world out there.  I screwed up, and I definitely paid the price.  I want to give them the opportunity to learn from my mistakes.  Hopefully it turns out well.

[Anonymous]

I have a 11 and 13y/o and they are both given a weekly allownace of $20 each. They were told when we started giving them it that it is to last from Saturday till Friday and if they spend it all the 1st day on junk food then they will be broke until the following weekend. We also explained that since we started giving them allowances they will have to use it for lunch money/snacks and anything else they want and not need while outside with friends. They also were told that if they go over there cellphone minutes or text more than they have, the cost of overage will be deducted from there allowance.

They have done fairly well with a few slipups but nothing major besides my 13y/o running up an additional $125 cell phone bill which she then went without an allowance for over 1 month till she paid it off. My 11y/o also has saved a few weeks and then went and bought new jordans since she wants not needs new sneakers.