Teaching kids the value of a dollar

[redmomof4]

I'm wanting to do something different this year. I'd like to designate a certain amount of $$ to each child for the school year and have them spend their own allotment. Things I'd like them to be responsible for include school supplies, clothes, shoes, coats if needed.

They still get an allowance that they are required to save half, tithe 10% and the rest is free game (they spend more during the summer but use it to buy concessions at games etc... Or save it up for the next best thing! Haha! And we will still front dance fees, sporting fees etc...

So my question is has anyone else done this? And what are some good starting amounts for the year (to include things listed above), and should I ration it like 1/2 now & 1/2 January 1 or just let them have it all up front (could be a hard lesson learned).

Lastly, they will not have this $ in their possession (it will be in acct for each) they will be able to pull it out to go school shopping or could borrow from us if something came up and then pay us back.

Thoughts? Input?

 

[worm761]

I would suggest first that you have them take some basic finance courses. There are plenty of free sources out there to teach them.

I think that it is a great idea. An old neighbor sort of did this with his daughter. He was a single dad. I took her shopping because who wants to shop with dad? He gave her a set amount for her school clothes and told her what it had to cover. I taught her in the store how to get the most for her money. Like shopping at discount stores like Marshall's or the clearance racks. She quickly figured out how to stretch that money.

 

[MomToOne]

I have a friend's mother who tried something like this. She gave them a monthly allowance that was meant to cover all of their needs, from movies to clothing to personal hygene items, etc.

While my friend handled it all responsibly, let's just say her brother didn't. In fact, he became quite "aromatic" because he just wouldn't buy any hygene items

So the mother had to break down and cancel the experiment.

I think before you try it, you need to figure out what you are and aren't willing to accept, and if there are any deal breakers, keep control of those items yourself. Think about what happens in situations like towards the end of the year when they have a big project at school that they need supplies for, but they are out of money...I personally think the 16 year old might be ready to deal with it, depending on his personality, but it might be too much for the 11 and 13 year olds. My DD13 is quite responsible with money, but I think she'd probably stress herself out with the decisions, and not buy what she really needed when she needed it for fear of running out of money too early.

 

[redmomof4]

That's interesting! of course, leave it to a boy! I was still planning on buying school lunches, personal hygiene, etc... but just make them buy "extras" that they want... new cologne, school clothes, new shoes (i.e. football cleats etc...) To make them think about whether they want the $160 ones or the $80 ones. ykwim? Still struggling with how much to start with. Dh is on board, but he's at a loss too, I guess I need to sit down and see how much we usually spend and start close to there.

 

[jjenniboo]

I don't know how much to start with but I think it's a great idea. My oldest is 10 and when she has to use her own money to buy something it's amazing how much thought is put into that purchase.

 

[4HppyCamprs]

My kids are little but they get a weekly cash allowance and have to save it to buy toys they want. They have to figure out how much they have and if they have enough to buy what they want. It has been interesting so far. One son had enough for what he wanted and the other wanted a more expensive item so he had to wait. It was a tough lesson to leave with nothing because he needed to save more for what he wanted. Also he spent all his money on what he thought he wanted but the next day he found something he really wanted more but he had spent all his money so he had to wait. Now he is doing everything he can to earn money so he can get what he wants next faster and he is more careful/thoughtful in his choices. I don't believe these lessons would be as valuable without cash nor would they be as valuable twice a year.

Sent from my iPhone using DISBoards

 

[redmomof4]

I don't believe these lessons would be as valuable without cash nor would they be as valuable twice a year.

Sent from my iPhone using DISBoards

Do you mean you think it is more of a learning experience because its in cash? My kids are 11,13,& 16 and are very able to think about money abstractly and almost always know their bank balances. I would be letting them spend all year but just didn't know if I should allot them say $800 in August or split that into $400 August and $400 in January? They already get allowances weekly, as I've stated, and are required to allocate some of that to savings, church and spending if they so choose. So essentially, they already get the jist of not falling for the instant gratification and here and now if u want something bigger. This is strictly for things we, as parents, would purchase anyway. I want them to see the difference between biting a $200 coat they will never wear (like the North Face ski jacket that still has tags on it in my hall closet) & a $110 Spyder that they may wear all the time.

 

[4HppyCamprs]

You know your kids best but as a bank teller I can tell you I have seen plenty of adults coming in to pay off overdrafts that were adept at understanding the concept of balancing a budget and using a ledger and yet for some reason were disconnected from the actual process of spending money because it was just numbers on paper. Cash is harder to part with. Ask all the people carrying credit card balances. It is just to easy to shuffle money in books. To physically remove 200.00 from your 400.00 cash is harder than just writing the credit and debit in a ledger. My experience in working with reasonable intelligent adults who still manage not to grasp money or budgeting or the value of a dollar.

I see you also posted on the cruise board so maybe you will get lots of responses with additional input

Sent from my iPhone using DISBoards

 

[redmomof4]

Point taken! I agree with you. So a way around this maybe to actually have the cash in envelopes for each child in our lock box at home and they have to make a withdrawl to spend. Hmmm, gonna look into the book mentioned by a pp also. Thanks

 

[Aliceacc]

I just posted this on your other thread, but thought I would add to the discussion here as well.

The BEST thing we've done was pushing our 15 year old to get a job this summer. He's working as an assistant in a doggie day care place in town. He started just about a month ago and works 2 or 3 days a week for a few hours.

He knows that in 2 years he'll want a car, and in the meantime he wants an iphone. He knows that, while we're happy to provide him with a phone that texts, if he wants an iphone, he's responsible for the phone and the additional costs.

Each time he gets paid, he gives me roughly a third for the bank for that car, and does what he wants with the rest.

He's suddenly a lot less likely to spend money without a good cause.

Last time I asked, he had $75 towards the car, and about $120 towards the iphone.

 

[texasroni75]

I can tell you from personal experience that my kids tend to be VERY frugal when it comes to their own money (cash on hand). For example: If we go to the mall and just say "we need to pick out three new shirts for school today", and we are paying - they will pick a dozen and say the NEED them. But, if we hand them $50 and say you need to use this money for 3 shirts, and after that you can keep the change for yourself - they will be VERY choosy and buy only what's on super sale, knowing that there will be some cash in their pocket for hanging with friends, etc. So, basically, if it's mom and dads cash they spend freely without thought, but if it's THEIR money, they are stingy as can be!!

 

[kkmcan]

My kids are the same age as 2 of yours (16, and 13) and I thought about trying this for back to school items. Turns out we didn't that much this year so I never gave it a try.

I know already how it will work with mine but I was hoping that my ds would learn a valuable lesson, since he's a spender. DD is a saver! She got a her first job last spring and she's has saved all of her paychecks just cuz she said "it didn't feel good to spend money". After all that saving she broke down and bought herself a new guitar that she has been wanting forever. We went to a local music store and picked one out and then left. We came home to research where we could possibly buy it for less and found the same thing on ebay brand new for $80 cheaper.

DS, however is constantly picking out things that we cannot afford in this household and are just not a good value for the money. For instance, he found some website where you can build your own Xbox remote with custom colors and buttons etc. The cost of $150 for one remote. Uhhhhh, I don't think so. Our black remotes are fine. I don't consider that a good value. It replaces something we already have that works fine just so it looks cool. I don't know how to break him of wanting these ridiculous luxury items.

Dd's guitar purchase is different because yes, we do own another guitar but it was not hers, it's her dads and it was so large for her she had to lay it flat on her lap instead of holding it properly. It was so frustrating for her to play. She needed one that fit her (she is really petite).

 

[4HppyCamprs]

My kids are the same age as 2 of yours (16, and 13) and I thought about trying this for back to school items. Turns out we didn't that much this year so I never gave it a try.

I know already how it will work with mine but I was hoping that my ds would learn a valuable lesson, since he's a spender. DD is a saver! She got a her first job last spring and she's has saved all of her paychecks just cuz she said "it didn't feel good to spend money". After all that saving she broke down and bought herself a new guitar that she has been wanting forever. We went to a local music store and picked one out and then left. We came home to research where we could possibly buy it for less and found the same thing on ebay brand new for $80 cheaper.

DS, however is constantly picking out things that we cannot afford in this household and are just not a good value for the money. For instance, he found some website where you can build your own Xbox remote with custom colors and buttons etc. The cost of $150 for one remote. Uhhhhh, I don't think so. Our black remotes are fine. I don't consider that a good value. It replaces something we already have that works fine just so it looks cool. I don't know how to break him of wanting these ridiculous luxury items.

Dd's guitar purchase is different because yes, we do own another guitar but it was not hers, it's her dads and it was so large for her she had to lay it flat on her lap instead of holding it properly. It was so frustrating for her to play. She needed one that fit her (she is really petite).

Again mine are younger but the reason this started was because of a endless desire for skylanders. Endless. I got a good deal on a three pack of skylanders so I bought it. Two days later (two!) my son asked me which ones he could have next. I felt my heart palpating at this lack of appreciation. The school uses marbles for good behavior and takes some away for bad and then at the end of the week what is left is used to purchase things from the teachers treasure chest. We do not have marbles laying around so we use dimes. They have to count their money weekly and they have to keep at least one weeks allowance in the pot (we learned it was no good to have a empty pot when we needed to take a dime away). Well like I said one son went willy milky shopping and got a cheap trinket. The other saved and got a transformer he really wanted the following week. They both know going into the store how much money they have and have to look for things in their price range. I have also told DS that online is frequently cheaper as well. Well watching his brother get what he really wanted and having no money of his own to spend was a bitter pill. Lesson learned I think. Last night he finally had enough for the skylander he wanted and he knew the best price was on amazon so we ordered it. Now he will have to wait on shipping but that is sometimes the only way to get the best deal (no instant gratification). It is all a work in progress but I am happy we are trying to instill a sense of value to money and some lessons are sticking

My mom doesn't get money. Doesn't get that paying 150.00 for a haircut and highlight means she worked 10 hours in order to pay for a 1 hour service. Great if it is what you really want but the money has personal value not just numbers in a ledger.

She is wasteful with money it is like sand to her it just fills back in from somewhere. Working 2 hours to pay for a pizza is fine if it is what you want but not if it was not a good pizza! It is disposable. 2 hours of work with nothing to show so it should be excellent pizza. Okay mini rant over

Sent from my iPhone using DISBoards

 

[MKCP5]

We did this many years ago for summer spending. We gave each child --then 12 and 14, a set amount of money the 1st of June. If we went somewhere as a family. to dinner, a movie, vacation, DH and I would pay for it. If they went places with their friends they paid for it out of their budget. Their job was to budget things over the course of the summer to decide what they found worth using their $$ for. If something came along at the end of the summer and we felt they had been good stewards of their $ we would help out.

 

[GadgetTheInventor]

Your kids are going to pick up on your financial habits regardless of what system you implement to "teach" them about financial responsibility. Is the system that you are using with your kids a scaled-down version of how you manage your own finances? Does it allow the opportunity for those tough discussions about the strengths and weaknesses of your financial history? Honesty, transparency, and reflection are going to be much more beneficial than any set dollar amount to spend or save.

I don't see there being a most effective course to teach financial responsibility since every family has a unique set of financial circumstances and values. Teaching self-control within those parameters is easiest when the adults in the family are good role models. If the system you choose to manage your money works for you, then it will be good enough for your kids until they move away and can make any changes they desire.

 

[dpswift]

You know your kids best but as a bank teller I can tell you I have seen plenty of adults coming in to pay off overdrafts that were adept at understanding the concept of balancing a budget and using a ledger and yet for some reason were disconnected from the actual process of spending money because it was just numbers on paper. Cash is harder to part with. Ask all the people carrying credit card balances. It is just to easy to shuffle money in books. To physically remove 200.00 from your 400.00 cash is harder than just writing the credit and debit in a ledger. My experience in working with reasonable intelligent adults who still manage not to grasp money or budgeting or the value of a dollar.

I see you also posted on the cruise board so maybe you will get lots of responses with additional input

Sent from my iPhone using DISBoards

Totally agree. DD 20 just lost a job that she was wonderful at. Never had a work related complaint and was working her way up at an amazing rate. But she lost her job due to too many bounced checks to them.

DS 21 refused to buy himself Chinese food when he saw the cost. He has debit cards and does fine.

 

[drcmk]

You have to think about the extent to which you will be able to accept any bad decisions that your children make within their budget. If a child decides not to buy a coat or new shoes, can you live with them being cold or wearing ragged old shoes? If they haven't saved enough for school supplies towards the end of the year, what will you do?

I couldn't live with this plan. There are certain necessities that it is my responsibility to purchase for my child and that includes basic, weather appropriate clothing and school supplies. If my child wasn't able to or didn't want to buy those things, I'd still have to buy them. I think helping your child keep track of what was spent is a good idea. I would not let my child make financial choices if they couldn't live with the consequences because I am ultimately responsible for the consequences. That is the difference between a child and an adult.

 

[pocomom]

You have to think about the extent to which you will be able to accept any bad decisions that your children make within their budget. If a child decides not to buy a coat or new shoes, can you live with them being cold or wearing ragged old shoes? If they haven't saved enough for school supplies towards the end of the year, what will you do?

I couldn't live with this plan. There are certain necessities that it is my responsibility to purchase for my child and that includes basic, weather appropriate clothing and school supplies. If my child wasn't able to or didn't want to buy those things, I'd still have to buy them. I think helping your child keep track of what was spent is a good idea. I would not let my child make financial choices if they couldn't live with the consequences because I am ultimately responsible for the consequences. That is the difference between a child and an adult.

I think it can work, and I know I use this for vacations , Christmas spending etc. and I plan on using the large lump sum method for other things as mine get older, but I'd I'd agree with pp that the things you pick to be included need to be within your comfort zone if the kids make bad or different decisions then you would. I wouldn't include a winter coat, basic sneakers, etc, but would include all entertainment, and extra purchases. I think the beauty of this is staying out of the decisions, AND not rescuing the kids . Perhaps making it half a year long, will give them more chances to practice their skills....probably depends on where your kids are at financially speaking too.... My older dd is a natural saver, at 11 she has $800 in birthday and babysitting money in the bank for a car...., and recently returned from camp with all the money I sent her with, because "she didn't really need anything" My 8 year old tends to spend all the money we give her the first day of vacation. I let her run in a shop to get pretzels for a snack when her little brother was asleep in the car one day. Handed her a 20 and said bring me back the change... She did, a couple of coins... Spent nearly $20 on different treats they had there for what was supposed to be a hold me over snack until we got home. Though I do think overall, these experiments are helping her understand what money really means, and what is and isn't worth it.

 

[ceecee]

We did it with DD and it really didn't work. I kept a ledger like a check register. The problem was we would advance her an allowance or $ so it was like overdraft protection, she really didn't care how much she had. Like the above poster said don't "rescue" them from their bad decisions let them learn from it. We did it wrong so it didn't work.

 

[minnierocks]

My kids are in college now and both are very good with money...here are some things that we did over the years. We never did the allowance thing, but we did start talking about how we handle money when they were very young. For example..to stop the "Can I have?" question at the grocery store each child had $2 to spend on anything they wanted. If they chose to save it and not buy anything...then that was even better. They were always given a spending limit on vacation and if they chose to not spend it, then they could keep it. I had one child who never wanted to spend it and that was fine with us. We always bought lunches, personal items, school clothes etc. They were encouraged to get summer jobs when they were older...and they did.
We did try the experiment that the original poster suggested and it was a great success. I think they were 13 and 15 years old. Each child had $250 to spend and they had a list of things they had to buy...such as shoes, socks, jeans etc. Both of them had to go through their closets/drawers and make a list of what they needed. My daughter still does this every fall and summer so that she doesn't buy things she doesn't need. Knowing that they only had so much money made them think twice about $100 shoes and $80 jeans. They also paid attention to what was on sale and where. It worked for us.
Even when they had a summer job, we bought school clothes and supplies. They were not unreasonable in what they wanted to buy.
When they started driving, their insurance was their responsibility. It made them keep their grades up for that good student discount. When they insisted they needed a smartphone with data, they bought the phone and paid for the monthly portion of their data package. A phone is a necessity but data isn't. We talked about credit cards and student loan debt and lots of other things over the years. I think it paid off. My son is graduating from college with no debt and works hard. Our daughter worked hard at her grades and earned almost full scholarship for college. I am really proud of them both.
I know that everyone will not agree with how we did things but it's ok. Each family handles money differently and have different comfort levels of debt. Passing on some sort of financial information is so important for them to be able to handle money when they are on their own. Good luck...whatever you decide!