I first got the idea of giving Peanut an allowance long before she was really ready for it from this post by Hobo Mama. I loved the idea of using allowance as a way to teach my children about money, rather than a system of rewards. A month or two before her fourth birthday, I started to look into it more.
As I’ve said on here, we follow a lot of Dave Ramsey’s philosophies about money. This is a case where I disagreed with what he says though. He believes that children shouldn’t get allowance, but rather should be paid for “work” through chores. While I understand this and it pretty closely meshes with what I did as a child, I don’t necessarily agree with it (and there’s a big debate between experts too). If you give money for doing their chores, it gives them an out. So you don’t want to clean your room? Okay then, you don’t get money. Then they are allowed to not clean their room with this stipulation. And it takes away their intrinsic motivation.
So we decided to do an allowance without chores. The main purpose of this allowance is to teach her (and eventually them) about money. Teach them how to save and how to spend. How much things cost. How to not beg for things in the store (which does help! A quick reminder that she can buy it with her own money most often makes her decide she really doesn’t need it). How to be altruistic. And it’s working.
For the past about 8 or 9 months, we’ve been giving Peanut an allowance every Sunday. It’s on her calendar and she knows what the dollar sign means. She gets her age divided in half every week (so originally it was $1.50 and now it’s $2.00). One fourth of it goes into her piggybank immediately (trying to teach the idea of saving early, though we’re not sure if we’re going to allow her to spend it on some large pre-determined item or if it goes into her college savings or if it goes into her own bank account, we’ll figure that out soon as it’s already up to $20). The rest goes into her wallet, in which we keep a ledger so we know how much she has.
In the beginning, it was mostly just spending money whenever we were at a store and she thought of her wallet. She would go searching around trying to find something that she wanted that was low enough. One time when we went to the dollar store she got 7 separate things with the $7 she had in her wallet. A while back though, she didn’t think to buy anything for a couple months, so I reminded her one day that she had $10 in her wallet. We went around Target looking for something for her to buy, but many of the things she wanted were more than what she had. I told her that she could save for something or buy something now (I try to give her specific options, but stay out of the decision making process as much as possible). After searching around, she found a Doc McStuffins doctor set that she absolutely loved. It was $20 and I told her that she would have to save if she wanted it. He decided to put back the couple smaller things she had picked out and save all her money for the set.
I think it was harder for me to let her save than it was for her to do it. I wanted so badly to just give her a couple dollars towards the end so she could go get it already! Every time she’d find something in the store I would tell her she had money for it, but remind her that she was saving for the doctor set. Every time she decided on her own to put whatever she had back. She saved for another two months and bought her set, all with her own money. Of course her biggest memory is her grandpa giving her the last 50 cents she needed to get the set so she didn’t have to wait another week, but that’s okay.
It is one of her favorite toys and she’s done countless check-ups since getting it. Keeping it away from sister (which we’ve been strict with since Peanut bought it with her own money) has been difficult at times, but we just remind Peanut to put it away where Twig can’t get it. Now she’s saving for a Big Book of Boo Boos to go with it.
I’m really happy with how this whole experiment is going. I wasn’t quite sure if we were doing it right when we started, but I’m happy with this method now. I think in the future I’ll start adding in some money for chores (not things that are regularly expected of her, but things that go above and beyond), but for now I’m happy with where we’re at with that too. She loves to “surprise” me by hanging up her own and her sister’s laundry when I put it in front of their closet. Right now just the fact that she’s doing it to make me happy is great.
I’m also interested to see where it will go in the future with donating. She understands the idea of donating things pretty well and will help me gather old toys and clothes to donate, but I’m thinking this Christmas-time I’ll start introducing the idea of donating her own money. Many people separate out allowance to include church or donations right from the get go, but I figure we’ll introduce it more slowly. I want her giving to be from the heart, not because it’s forced. And beyond that, I don’t know! I figure, as all things with money, that we’ll learn as we go.
Do you do allowance? How much do you give your kids? Do you tie it to chores? Any advice?