We have never before done allowance in the Kennedy house. The kids have gotten money to spend once or twice while on vacation and that usually ended up resulting in anguished decission making processes which culminated in the purchase of a piece of junk that promptly broke.
Then I read a book.
So many things have changed in our life because I read a book.
Not all of them good.
The book that changed things this time was this:
(full disclosure: I am an Amazon Affiliate which means if you click on the above link and buy that book or something else I get a little money.)
When I read this book I realized that allowance was not about chores (which are done inconsistently around here and so connecting allowance to work would be too difficult to navigate). Chores are about the work that must be done to live. They are service, not paying jobs.
Allowance is about learning how to handle money. Allowance is a curriculum plan for financial education. And learning how to handle and use money is an absolutely necessary life skill that many college graduates never learn till they get their first real job (and by then it may be too late). Now, when they are young, is the time to distinguish between "want" and "need" and figure out how to get all that we need and some of what we want.
These concepts prompted us to try allowance as our financial-education curriculum.
So I thought I would share our experience over the last two months.
Here is what we did:
We decided on $10 a week per child. Though the book recommended calibrating the amount to the age and giving yearly raises (timed to birthdays), we decided our kids could all start in the same spot and if we give raises they would be tied to Jim's raises at work. In other words, when the family income increases their spending power increases.
Each child has three jars. One for saving, one for giving and one for spending.
Each week they must put at least $4 in their savings jar. To use their savings jar they have to set a goal (not too far off---so saving for a car or college is not the point here, we're talking something more short term--an amount that would require anywhere from one to six months worth of saving time.) The goal can be an amount, or a thing (approved by parents) they are saving to buy. They can also dip into savings when buying gifts for others.
Each week they must put at least $2 in their give jar. This money is meant for charity. They can put it in the basket on Sunday or donate it to some worthy cause (chosen with our guidance). So far a few dollars have gone into the Sunday basket and "big" plans have been made to send money to the Pope, priest friends, and other worthy causes, but none of that has happened yet.
Each week they can put $4 in their spend jar. This money can be spent on (almost) anything. We give them guidelines, but the point here is to waste their money.
Yes, I said the point is to WASTE their money. Here you want them buying that junk they are always begging for, and then regretting it later.
The guidelines we give for this money is that they can spend it on toys, art supplies, food, clothes, etc. I will no longer buy those things outside of what is needed.
In fact, one particular area that is "want", not "need" is Starbucks. I am in the habit of stopping and getting myself an iced tea, which had led to the habit of getting them snacks. We no longer spring for those snacks (unless we are out as a family outing). If we are running errands I try to have some healthy snacks on hand as an alternative and then they can use "spending money" for anything else they want (within reason--I do control portion sizes and take into account what other sweets they may have had).
Here are the challenges:
Coming up with cash each week is a challenge. I am not used to having cash in my purse and when I do it isn't $30 dollars. That being said, after the first few weeks (and once the kids began really using their money), the bank (the extra jar with change etc.) was often full enough to pay out the weekly allowance.
Do the kids carry money with them? Not usually, unless there is some planned spending going on. But I front the money and they pay it back. They need to have a fairly accurate idea of what they have in their spend jar, and for some that isn't a problem at all. I have to remember to have them pay up when we get home.
Here is what we have learned:
I have learned that two out of my three kids really don't care that much about treats at Starbucks, or any snack foods for that matter. When it is up to them to pay, two of my kids ALWAYS pass. The other one (the one who is my mini-me) will always choose a snack.
I have learned that my kids are really generous when it comes to gift giving. They love to spend their money on their siblings and parents. I was surprised at the things they have come up with to buy for each other. So far, we have had one birthday and one baptismal day (in which the one celebrating buys small gifts for everyone in the family).
I have learned what toys/supplies/junk they REALLY want. In fact, they seldom ask for things anymore when we are at the store. I can get through Target without hearing how some kid "desperately NEEDS" some item that they never knew they needed before that moment. Of course, I, on the other hand, do NEED those things I buy! (tongue firmly in cheek)
Which brings me to the last point: Far from making my kids focused on STUFF, the allowance experiment has tended to focus us all on what we really need and only the best of what we want.
So far, so good.
UPDATED: I understand some people have not been able to see the link above. The title of the book is The Opposite of Spoiled: Raising Kids Who are Grounded, Generous and Smart About Money by Ron Lieber.