How do you do allowance?

[minkydog]

My first grader slops the hogs, chops a cord of wood, and has breakfast ready for me when I get up. She also changes the oil in the truck every 3000 miles. She doesn't need an allowance. She does it for the pure joy of it

Well, at least she hasn't taken out a loan yet

 

[testifyoncruises]

Well some teens are having to cut back...

http://www.nytimes.com/2009/12/26/business/26teens.html

I think the purpose of being a parent is to raise someone who no longer needs us. I think there is value in getting hard lessons in life early on and that knowing the value of a dollar and what living within your means are key. That's why I think it is important for them not to get a loan for school but to work hard and pay for it themselves no matter how long it takes to get that degree.

I happen to think that a degree is important for knowledge, but not the be all end all. I think working for herself is the ultimate goal we wish for her.

 

[aprilgail2]

You get all of that out of her for $1 a week! My kid would tell you to keep the $1.

LOL---mine would too!!
I give my daughter 1.00 per year of age--so now she get 10.00 a week- most of which she saves. Its not tied into chores or anything like that--those she does because she is a member of the family and if I need her to do anything I just ask her to mop the floor or whatever and she will do it.
She has her own youth bank account that she puts her money in- I like it because it is just hers, she can do with it what she wants- if she takes money out to spend it on stupid stuff then thats her decision. College I have a 529 for and my brother also has a very large account for her -he is single and a teacher so he has plenty of money...he is determined that she not have to work and take loans out to pay for college like he did-he wants her to be able to concentrate on school and not have to work at the same time.

 

[MarkBarbieri]

We give our kids a weekly allowance of 1/2 their age in dollars. The money is contingent on any particular tasks. They do their chores as a core responsibility. They also earn extra money by converting video tapes to DVDs.

We feel a 529 offers far more limited use and the government says what the money can be used on. We are funding our retirement first anyway so a 529 never made sense.
...
I love UGMAs far more than anything else on the market. The fund we have them in historically has outperformed anything available in any 529 in any state. The management fees are far less in this particular situation which is why we went with it.

I dislike 529 plans even more, unless it is a grandparent contributing to the fund. Personally we have our kids' college funds in non-traditional "college" funds--money markets, etc. because there aren't the limitations one use and quite frankly since it is our money, we want to have a say in how it is used. If they get enough in scholarship money, etc. and don't need that money I don't want penalties to have to use our money. More power too you if you are ok with your child using that money for drugs.

I am fully aware of the tax implecations on the UGMA/UTMAs and 529s, there are other vehicles that offer the same, if not better, tax treatments for college savings but since you are fully aware of them as well, there is no need to explain them either.

I'm surprised to see 529 plans viewed so negatively. What are people's concerns with them? I like 529 plans because the earnings in the plan are not taxed if used for college expenses (with that being very broadly defined).

I avoided UGMA/UTMAs because I want to keep control of the funds. If I didn't have something like a 529 available, I might be willing to take the control risk as a way to cut taxes.

 

[aprilgail2]

I'm surprised to see 529 plans viewed so negatively. What are people's concerns with them? I like 529 plans because the earnings in the plan are not taxed if used for college expenses (with that being very broadly defined).

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I love the 529 plan! My employer takes the money right from my pay check each week so I never miss the money since I have been doing it since she first got her social security number its never been in my check since then LOL...I get the break on my NYS taxes each year and if she doesn't use it for college it stays mine (which she is well aware of!) and my brothers account stays his (though he has already said he would give it to her for a car and house but that is up to him...he could keep it if he wanted)

 

[golfgal]

We give our kids a weekly allowance of 1/2 their age in dollars. The money is contingent on any particular tasks. They do their chores as a core responsibility. They also earn extra money by converting video tapes to DVDs.







I'm surprised to see 529 plans viewed so negatively. What are people's concerns with them? I like 529 plans because the earnings in the plan are not taxed if used for college expenses (with that being very broadly defined).

I avoided UGMA/UTMAs because I want to keep control of the funds. If I didn't have something like a 529 available, I might be willing to take the control risk as a way to cut taxes.

529 college expenses are NOT broad-room, board, tuition and supplies-that is pretty much it. You can't use the funds to say, buy a car for a student go get back and forth to school with those fund. Then, what if your child doesn't go to school, you have the hassle of transferring the beneficiary, etc. What if you have a medical emergency and NEED those funds when they are 12? I just like having more control over the funds. Like I said, I like to see GRANDPARENTS do this for kids but I like other options for parents and their kids--plus, you end up with a year like 2008 and there goes 1/2 of your money for college . I get the same tax treatments for our plan for the kids with out the penalties attached if the money isn't used for school is all.

Edit--we also live in a state with a really bad state matching program so that is a lot of why we don't like it. If we lived in a state like Kansas where they match $6000 without income guidelines-that would be a different story but our state only matches funds if you make less then $35K/year so not many people can do that.

 

[MarkBarbieri]

529 college expenses are NOT broad-room, board, tuition and supplies-that is pretty much it. You can't use the funds to say, buy a car for a student go get back and forth to school with those fund.

Nothing says that you can't use a 529 and save additional money for other general life costs like having a car. When I think of college savings, I think of college expenses - tuition, fees, room, board, books - all of which are covered.

Then, what if your child doesn't go to school, you have the hassle of transferring the beneficiary, etc. What if you have a medical emergency and NEED those funds when they are 12? I just like having more control over the funds. Like I said, I like to see GRANDPARENTS do this for kids but I like other options for parents and their kids--plus, you end up with a year like 2008 and there goes 1/2 of your money for college . I get the same tax treatments for our plan for the kids with out the penalties attached if the money isn't used for school is all.

Transferring beneficiaries isn't that hard. It's much easier than trying to claw money back out of an UGMA if you have a kid that goes astray and is likely to waste the money.

As for 2008, that happened to anyone that saved money in the stock or bond markets. There wasn't anything special about 529 vs UGMA for that.

You get the same tax treatment? How so? As far as I am aware, 529 and Coverdell's are the only way to pay no taxes on college savings growth.

 

[golfgal]

Nothing says that you can't use a 529 and save additional money for other general life costs like having a car. When I think of college savings, I think of college expenses - tuition, fees, room, board, books - all of which are covered.



Transferring beneficiaries isn't that hard. It's much easier than trying to claw money back out of an UGMA if you have a kid that goes astray and is likely to waste the money.

As for 2008, that happened to anyone that saved money in the stock or bond markets. There wasn't anything special about 529 vs UGMA for that.

You get the same tax treatment? How so? As far as I am aware, 529 and Coverdell's are the only way to pay no taxes on college savings growth.

Pm me if you want the details of our plan.

There are plenty of ways to get similar tax treatment as a 529 plan.

 

[PollyannaMom]

Do you base your child's allowance on performance or just give it to them for money management skills or do u do a combo of both....

DS's allowance is more of a learning tool. (In fact, when we started, he got the odd amount of $1.41 - a dollar bill, a quarter, a dime, a nickel, and a penny - to learn the amounts.) It has increased as he's gotten older, and the goals now are money management and math skills.

He can earn extra $ if he does something "above and beyond" around the house - washing my car or something, but regular chores like cleaning up his room aren't tied to his allowance.

 

[testifyoncruises]

I'm surprised to see 529 plans viewed so negatively. What are people's concerns with them? I like 529 plans because the earnings in the plan are not taxed if used for college expenses (with that being very broadly defined).

If you are not worried about state tax savings, you can put 529 funds in any state. I know that Clark Howard puts NY, UT and one other states plans the highest on the list.

My main reason for not liking the 529 is DP and I have one child. There would be no other beneficiaries to switch it too. We also think what 529 funds can be used for is too restricted. For one it cannot be used for say backpacking and travel through Europe and Asia. The funds cannot be used for investing in a new business venture.

These are all practical life lessons in our opinion that are just as valuable as what can be learned from a book.

 

[clh2]

We do not tie allowance into chores. After all, when they are older and have outside jobs, they will no longer be willing to do they chores because they won't need the money. I, however, will still need them to do the chores. I have chores that must be done and I don't get paid to do them, and as they get older, nobody will pay them to keep their own places clean. No chores are something you do for the good of the family.

We also subscribe to this theory. Household chores are something to be done...JUST BECAUSE YOU LIVE HERE.

For awhile - we did something specific with DD...The first hour of chores she did "for free". but if she went above and beyond that - we would pay her. I totally got the short end of the stick last summer - DD started mowing the grass - AND SHE LOVES IT. Leaving the whole inside of the house to me.

This week - I won't push the shores expectations at all...it is exam week for our H.S.

 

[testifyoncruises]

My question for those who just give their kids money, what will happen to them when the money tree runs out and they have to actually work to earn their money?

I just doesn't work for us, but if it works for you...

 

[JerseyJanice]

My question for those who just give their kids money, what will happen to them when the money tree runs out and they have to actually work to earn their money?

He'll get a job.

I was raised by parents who grew up in the Depression and suffered lean times in their own childhoods. When I turned 13, all the other girls at school wore very specific articles of clothing that my parents would not spring for, for example, Lee jeans, Keds sneakers, a certain type of jacket. I found a job babysitting so I could buy myself the clothes that I felt I needed to fit in at school.

One day soon, I expect that DS will be wanting things we won't want to fund, so if he really wants them, he'll have to go to work during the summer.

Right now, he does some chores because he is a member of our household. He is not paid to do them. His "job" at the moment is to get good grades, and I'm happy to say that he does.

 

[aprilgail2]

My question for those who just give their kids money, what will happen to them when the money tree runs out and they have to actually work to earn their money?

I just doesn't work for us, but if it works for you...

What happens when they grow up and no one pays them to do chores in their house anymore?? Same thing that the kids that don't get paid for their chores do- they get a job

 

[testifyoncruises]

What happens when they grow up and no one pays them to do chores in their house anymore?? Same thing that the kids that don't get paid for their chores do- they get a job

Well we believe in tying money given into work being done.