My kids have been getting allowances for a few years. We consider an allowance to be a tool for learning financial skills. They're given half their age per week. They can spend it on whatever they want, though I have occasionally required a 24-hour cooling off period before a major purchase. If they're going to make stupid purchases, I'd far rather they make them at age 9 with $100, and learn from the experience, than at age 29 with $10,000. In that sense $100 blown on a stupid toy is money very well spent.
For a while we did the piggy bank thing, encouraging them to divide their coins between "spend", "save" and "give" banks. It didn't work very well. First, they played with their coins, and they all got mixed up, not only between "spend," "save" and "give", but between children. I'm not sure if there was ever any deliberate theft, but I could see that underhanded redistribution of funds was going to be very tempting. As would theft from the "laundry findings," the "change pot" and mom and dad's wallets. Secondly, we would forget to distribute the allowance, and would lose track of how much they were owed. They would go weeks and months without thinking about allowance, and so would we. I loved that they were not waiting with bated breath for a weekly bequest and collecting and hoarding it with single-minded focus, but it was very difficult to keep track of what was owed. Thirdly, they would never have their money with them when they wanted to purchase something, or they'd want to make an internet purchase, so I'd end up using my plastic and if I remembered to pay myself back later from their piggy banks, I would end up with hundreds of coins. And I'm pretty bad about getting to the bank.
Our allowance is not contingent on chores or behaviour. Partly because I don't believe in behavioural manipulators anyway, and partly because to me, contributing collaboratively to family work is just part of what it is to be a family. I cook vacuum and do laundry (I do, really ... just not always as often as I should) not so that dh will give me money for an occasional latté, but just because. And I want the kids to contribute "just because" too.
Besides, when my eldest was 7 she busked (played her violin outdoors with the case open) at the Garlic Festival for 20 minutes and made $75, and I realized right then and there that a smart kid (and I have a few of those
) would figure out that busking at a market every few months was going to be far easier and more lucrative than putting away dishes, washing bathroom floors and folding laundry day after day and week after week. If I turned chores into an economy, my kids would find better ways to earn money -- and I would have no recourse.
So we do the allowance thing. But because the piggy bank approach was chaotic, we turned to a ledger system. Each child has a ledger into which we enter their credits and debits. At first I worried that because they weren't seeing their money in concrete coinage, it would all be too abstract to them. But it has proved an excellent tool. All money is abstract anyway. Coins and bills are tokens, not things with inherent value. And so much of today's society (especially where we live, far from corner stores and malls) is cashless. Unlike a good portion of the last couple of generations, maybe my kids won't grow up feeling that credit card spending "doesn't quite count". When I forget to enter their allowance, the last date is listed in the ledger, and we can easily play catch-up. When someone is wondering why they never seem to have very much money, they can look back and review their spending patterns and realize that a large bag of chips every two weeks and a Runescape membership fee a month almost equals their monthly income. They can see at a glance that they did have rather a lot of money until they spent a fair bit on two purchases that right now don't seem like they were the most sensible investments. They can review their saving and spending habits and learn from the choices they made in the past. And when they're in the city or purchasing on-line they never have trouble accessing "their" money, since it resides in the Bank of Mom, and mom and mom's wallet and credit cards are always close at hand.
The other thing we've recently instituted is a separate page in the ledger for money earmarked for charitable giving. Every time I enter the kids' allowance I ask them if they want to earmark some of it for charity. They almost always do ... and I enter that portion on a separate page until they have enough and/or find a suitable cause that they want to give some.
It works really well for us.
Miranda
: I must live on another planet or something. But not only did having to save money teach him counting and patience, it also taught him compromise when what he wanted just wasn't available anymore (it was listed everywhere at 150 at least). He ended up getting himself a Sonic Nintendo DS game, which was half the price Bumblebee would have been and he still had lots of money left to save more. He's been amazingly dedicated to saving and he weighs the pros and cons of spending it everytime we go out. Many times he decides he doesn't want something enough to spend his money. Today he bought an 8 dollar 3D pokemon puzzle and spent a couple hours putting it together. It also helps him when we refuse to buy something because of the price- he can internalize it better since he has his own money saved up.
