Some people feel that in order to teach children money management, they need to give them money in the form of allowance to manage.  I disagree.

I think teaching kids money management skills are very important – but I don’t pay my kids for the chores around the house.  I feel very strongly that a family is a team, and a team works together to accomplish their goals.  One of my goals is a reasonably functional home, and I expect every child to do what he’s asked to do without any complaining or negativity.  I’ve never paid them any kind of allowance, and I doubt that I ever will.

But how do my kids learn to manage money?  They earn it.  You might think that a six or seven year old can’t do much, which is true.  But then again, they don’t need very much!  And when you open your eyes, you’ll see small opportunities for them here and there.

I’ve always supported my kids ideas initiative in making money.  When my 7 year old son wanted to sell muffins in front of our house to passerbys, I helped him buy the ingredients (which he reimbursed me for after his sale).  When he was 9 and wanted to rake yards, I loaned him the money for a rake and jumbo garbage bags.  When he was 11 and wanted to mow yards, I took him to buy a used mower and loaned him money again.  This has meant time and energy on my part, but I’ve considered it well spent because it empowers a child, instead of keeping him dependent on my wallet. 

All of my kids started their own savings accounts when they were young.  They started it with cash that they received as gifts – kids savings accounts have very low initial balance requirements.  The first bank they started with required $25 (so they had to save their money for a while at home), but their current bank requires just $1 to get started.  When we went to the bank make deposit (sometimes just loose change), they counted their own money, and filled in their own deposit slips from the age of 6 or 7.  I would stand next to them at the teller window, but they would give their money to the teller and do the interaction.  The bank tellers always said how glad they were to see such young kids learning to be responsible – one told me he didn’t know how to fill out a deposit slip until he was 18!

I’ve always encouraged them to save their money, telling them that if they save now, they’ll have it later when they have a bigger and more meaningful goal that will provide them with much more satisfaction.  I don’t define what a meaningful goal is – it’s their choice later on.  When one daughter was 11, she had an opportunity to go on a 3 day dog sledding trip.  It was $600, and we told her that if she was willing to pay for half of the cost, we would pay for the other half.  She excitedly agreed, and still feels that it was worth every penny spent.  It was a once in a lifetime experience that she’ll have special memories from for the rest of her life, that she was able to have because she consistently saved her money and it was there for something she really wanted, when she wanted it.

Recently, someone gave us some toys (I posted about it) that weren’t suitable for us.  Some of those toys were somewhat haphazardly treated Barbies.  The 6, 7, and 9 year olds organized all the toys that we got, and then brushed the Barbies’ hair and dressed them.  After doing this, they looked quite nice, and I mentioned that we could offer them for sale on Craig’s List, and it would be a good deal for everyone all around – the buyer could get a bunch of dolls in good condition cheaply, my kids could make a little money on them, the original owners got them out of the way, and the landfills would be a little less crowded. 

I posted for them, about 13 or 14 Barbies with accessories for $20, and after a week and a half, someone emailed about coming to see them.  At breakfast, I asked the kids how they felt it would be fair to give out the money for the Barbies.  They agreed that we should split it 4 ways – equal amounts for the three of them and me (that was their idea, not mine, because they said I did the work of posting it :)).  And that’s what we did.  Do you think they learned something about the value of money?  Do you think they learned to see value in things that others didn’t see?  You bet. 

The next upcoming opportunity for them will be their entries in the state fair.  When you see the small dollar amounts of the premiums (prize money), you’d think that it could never add up to much, especially since you can’t win first place in everything.  But when you have a number of exhibits, it adds up.  My two older daughters each earned about $100 two years ago in the state fair, and about $50 from the county fair right before it.  I don’t think I’d encourage them to participate soley for the purpose of making money – the fun is in participating and seeing your exhibits displayed.  The prize money is a nice side bonus.  But once they have the money, I’ll again encourage them to put it in a savings account after giving ten percent to charity. 

So true to my motto of empowering my kids, I’ve registered them for the fair at their request.  I’ll help them find recipes if they want help, buy them the ingredients for the baked goods (we’ll only enter the sections for baking, food preservation, and garden – in the past my girls did much more and it was a huge amount of organizing for me to get them in the right place at the right time for the various exhibit categories).  I’ll help them out in the kitchen with baking if they want, and we’ll have a nice time together doing it.  I’ll drive them to the fair, pick up their entry tags, help them affix them to their entries – but I will not give them money.  And they will have an opportunity to manage their own money.

I could go into details to tell you how effective this approach has been, since with my older kids it’s very obvious.  They are light years ahead of their peers.  But I won’t.  I’ll just continue to stand by my way of doing things, of helping my children earn their own money and learning to manage it. 

Avivah