Savings account for your children/Allowances?

[Annie68]

Just wondering how many out there have savings accounts for the kids? I went today & signed them both up for one, finally. I've been meaning to do it for awhile, just never got around to it.

I am also wondering what type of allowances you all give them? I have always been against giving money for doing certain chores around the house, I look at the chores as something we all do because we are a family...not something I need to pay them to do. I watched a financial show late last night though, and they were saying that kids should be getting allowances to help them learn money management. I decided to set them up with a set amount each week, with some rules. How do you do it with your kids?

 

[SandiH]

Our kids receive an allowance each week. They are age 7 and 10. It isn't tied to chores but more of a tool to help them learn money management. Each week they need to put some in long term savings (think car), some into giving and some into their personal spending.

They can use their personal spending on whatever they want. It is usually a Gameboy game or PS2 game or something along those lines. If we go on vacation, I will spend a certain amount of money on souveniors and they need to pay for anything above that dollar amount. If they want more than a few books for the book order, they will need to pay for that. When they get older, they will need to pay for their movies, extra things that teens want, etc.

Their giving money is for any charitible giving they would like to do. My oldest sponsored himself in the school jog a thon. They have given money to th Sea Otter exhibit at the aquarium and to the animal shelter.

Their long term savings is for a car that they may want to purchase when they learn to drive. Their dad and I will match up to a certain dollar amount to help them buy that first car.

My oldest does earn extra $$ each week that he scoops the dog poop. Nobody wants that job and he likes the extra cash!

 

[laurie31]

We started giving our girls allowance when they turned 6. It's not tied to chores as Mom and Dad don't get paid for laundry or dishes either, it's just part of life.

We chose the amount of $2.50, as that works out to $10 a month and it easy for them to divide up. DD1 has a cat and DD2 has a dog. We make them pay us 25 cents a week for the pets, toward their food, vet bills, etc. We wanted them to learn that pets are a responsibility that goes beyond fresh water every morning. They also give 25 cents a week to our church. Tithing is very important in our faith. (no debates on tithing please - that's not what the OP wanted to talk about - it's just something we feel strongly about teaching our children to do with their money). We talk to them about what the money is used for (both at church and for the pets) so they will understand why it's important. That leaves them with $2/week to blow or save as they see fit. It's hard to stand back and watch them blow it, but it really does make an impression when they buy something you knew was not worth it, and then they find out for themselves that you were right. Sometimes when they find out they will have to by a thing with their own money, suddenly it isn't that important. That are also learning to save for things. Sometimes they get frustrated that it takes so long, and I tell them that's just how I feel saving for a car!

They also have savings accounts where we put larger amounts of money that they get at birthdays and Christmas. They are allowed to "blow" some of that money too, but we get them to save some as well. We also add our own money in there too from time to time. They are told that is money for college. We want them to understand that they must save for college and it's very important.

We also have a mutual fund for their college savings too, as the interest on the bank savings accounts is almost non-existent, but we wanted them to have their own accounts so they can see their savings grow and earn interest. They can learn the basic principles of money management.

Now that dd is 9, we have started letting her see some of the bills. She had no idea how much it cost to have water, power, gas, phone, cable, internet, cell phones, etc. and now she understands that these things cost and that's why we work and earn money. We've also talked about prices while grocery shopping (although I confess to usually shopping while they're at school as it's easier). We haven't told her specific amounts of things, like she has no idea what the mortgage is (she's still a kid - she could blurt it out at school or something) but she knows we have to pay every month for the things we use and take for granted. So many kids grow up and have no clue. It's hard to teach finances (as it's sometimes hard to practice what you preach) but it's worth it

Next I want to teach her to do laundry

Laurie

 

[RobinMarie]

Allowance = age and half goes into the bank for college.

My 8 yo daughter earns 8 dollars a week and receives half of it and watches her college account grow. She has chores to do but her allowance is for her to learn how to budget and make small purchases without my approval needed.

 

[Just2554]

My first savings account was after my First Holy Communion. My mom started it for me and put the $200 I received in the account as a start. I also earned an allowance when I was younger for doing chores around the house. It helped add to my bank account and allowed me some personal spending money.

 

[KelNottAt]

For us, allowance = half of age. Of that, half is cash, half is check. The check goes in the bank.

DS is 12. Allowance = $6. $3 in cash, $3 in check.

Not related to regular chores (set the table, make your bed, take out the trash, etc,); but they can earn extra for exceptionally big jobs...shovel 18 inches of snow, rip out a flower bed, etc.

 

[Annie68]

Sounds like I'm on the right track then!

I started my 10yo DS off with $10/week ($40/month) and my 14yo DD with $15/week ($60/month). I told them I would like to see 25% minimum go into savings. My DS has already stopped asking for little things, seems that that cheap toy isn't as appealing to him when it's coming out of his own money! I am still going to give money for some things, just trying to make them realize how quickly the little things add up. My DD is a great saver, she's already planning for college and auto expenses. She was never one to ask for a lot, my DS is the opposite.

I was surprised that the Financial advisor was saying you should give your kids 3x their age each week in allowance, that seemed like a lot of $$. She did say to let them buy their own clothes, friend's gifts, school lunches, & fun expenses with it....I'm just not ready to lump all that on them. Maybe I'll gradually increase to that?

 

[aprilgail2]

My 5 year old gets 5.00 a week, most of which she banks since she is CHEAP!! She has a savings account in a local bank and I help her fill out her deposit slips and I stand outside the door, she goes in, waits on line and deposits her money, gets her bankbook back and a lollipop and comes back out very proud of herself for doing it on her own!

 

[tiggerlover]

My son (9) gets $5 a week and is not tied to chores. He does have chores, but they are his part for being in the family. He spends $1 a week on offering for church and the rest he can use as he wants. Sometimes he blows it all at once and sometimes he saves it for something special. On special ocassions (Halloween, good report card, Christmas, birthday, etc.) basically when he is given money, a portion goes into his savings account. He is also free to contribute to savings from his allowence if he chooses.

 

[Frantasmic]

This is how it is done in the Fran household.

From birth, we have saved $100-$125 a month for each of them in a money market account for young investors. It has a name but I forget.

At age 5, they start earning their age per week as an allowance, not tied to chores. Of their allowance, 20 percent is saved in a piggy bank at first, at the real bank later. 10 percent is also to be given to charity, so they have to learn to make do on 70 percent of their allowance.

They can spend it however they want to spend it.

At age 14, we intend to make them even more fiscally responsible. They will work out a budget and get a certain amount per month to buy clothes, lunches, etc. from their own checking account.

 

[Feralpeg]

DD gets $20 a week allowance. Her allowance goes toward spending money, buying gifts, etc. The money she earns from any jobs she gets goes into a savings account. I buy her $100 worth of stock a month through Sharebuilder. The stock will be for her retirement.

 

[magicfan]

Our kids do have savings. As for allowence, we havent set up anything yet. We just give them whatever we feel like, when we feel like it, but they have to earn it by doing some chores. We are wanting to come up with a better routine than that and have been thinking about it. Haven't made any decisions yet. One of my kids told me the other day that her friend gets $20 a week and doesn't have to do any chores! That will not be the case here.

Oh, and my kids are young---that's why they don't need so much.

 

[beattyfamily]

I have a savings for each of my girls for gift money. We also give them allowance not tied into chores. They get the amount of the ages but we divide it in half and give them half and put the other half into their savings. So my 9 year old gets $5 and $4 goes into her savings. Next year, she'll still get $5 and her savigns will get $5 and so on.

Trying to teach them the value of a dollar.

 

[LisaR]

Everybody keeps saying it isn't tied to chores. What do you mean by that? Do you give your kids allowance every week no matter what they have done or not done?

My kids have daily responsibilities that they are required to do as part of living in this family. They do not get paid for these. They also have "extra chores" that must be completed each week in order to recieve their allowance. If the extra chores aren't done, they don't get paid.

Lisa

 

[Annie68]

Everybody keeps saying it isn't tied to chores. What do you mean by that? Do you give your kids allowance every week no matter what they have done or not done?
Lisa

What I meant in my situation is that my kids are expected to do chores every week, as we are all a family & everyone should take a part in keeping the house running. I don't want them to feel that it is optional depending on whether or not they want $$ that week. I guess that's why it's taken me this long to decide to give them allowances. I felt I was meeting their needs, getting them extras, & we all seemed fine with that. Then I started talking with other parents & I realized the reasoning behind their allowance was not paying them for chores. It was to teach them money management, that even though something was "please mom, it's only 8 dollars!" that it all adds up. I caught a financial advisor's show on TV and I decided to give it a shot. The kids were thrilled with the idea, my DS has figured out how much he'll have saved in 8 years if he puts it all in the bank! Who is this kid?! Now instead of bugging me for little things, he decides it isn't something he wants to spend his money on & puts it back . My DD already had quite a bit saved up, but she is thrilled at being able to save a set amount towards a car/college expenses on top of whatever she earns babysitting (and working, when she starts).

I loved reading all the different posts, it seems that there is no right or wrong way to do this!

 

[LisaR]

What I meant in my situation is that my kids are expected to do chores every week, as we are all a family & everyone should take a part in keeping the house running. I don't want them to feel that it is optional depending on whether or not they want $$ that week. I guess that's why it's taken me this long to decide to give them allowances. I felt I was meeting their needs, getting them extras, & we all seemed fine with that. Then I started talking with other parents & I realized the reasoning behind their allowance was not paying them for chores. It was to teach them money management, that even though something was "please mom, it's only 8 dollars!" that it all adds up. I caught a financial advisor's show on TV and I decided to give it a shot. The kids were thrilled with the idea, my DS has figured out how much he'll have saved in 8 years if he puts it all in the bank! Who is this kid?! Now instead of bugging me for little things, he decides it isn't something he wants to spend his money on & puts it back . My DD already had quite a bit saved up, but she is thrilled at being able to save a set amount towards a car/college expenses on top of whatever she earns babysitting (and working, when she starts).

I loved reading all the different posts, it seems that there is no right or wrong way to do this!

I do understand what you are saying and I agree with you to a certain extent. My kids are required to do certain things around the house that they do not get paid for at all. DH and I came to the same conclusion as you. If we aren't giving them any money then how can they learn to manage money? So now they have their regular resposibilities that they have always had that they don't get paid for plus we came up with some jobs that we felt went above what is normally expected and we are willing to pay for. However, just like in a real job, if you don't do it or you don't do it well, you don't get paid. I am still not following the "it isn't tied to chores" phrase that a lot of people have said. Is everyone saying they just hand their kids money once a week just for the heck of it without any strings attached?

Lisa

 

[Annie68]

Is everyone saying they just hand their kids money once a week just for the heck of it without any strings attached?

Lisa

I guess I'm looking at it differently. I don't want them to earn their allowance, they get it because I want to teach them money management skills (like a fringe benefit). Would I give it to them if they blew off their chores? No, but that would be because they are disrespecting our rules & all benefits to living in the house would freeze until we could fix the problem.

A nurse that I work with told me that her 12yo DS had refused to do his chores, she told him no chores=no allowance and he said "fine". She said he'd start doing them again when he wanted $$. That is just wrong to me!

 

[laurie31]

I guess I'm looking at it differently. I don't want them to earn their allowance, they get it because I want to teach them money management skills (like a fringe benefit). Would I give it to them if they blew off their chores? No, but that would be because they are disrespecting our rules & all benefits to living in the house would freeze until we could fix the problem.

A nurse that I work with told me that her 12yo DS had refused to do his chores, she told him no chores=no allowance and he said "fine". She said he'd start doing them again when he wanted $$. That is just wrong to me!

I agree with the above. I'm not interested in them "earning" their money, and the senario with the kid who decided the chores weren't worth the money happened to us. It was hard to come up with an additional punishment for not doing chores, since we'd already "taken away" the allowance. So, chores are expected because you live here and we work together as a family. If they aren't done, there are consequenses, but losing allowance is not one.

We also offer "extra" chores that can be done for money, but the primary purpose of the allowance (for us!) is to teach money management. Also, it replaces all that stuff they were nickle-and-diming us with before. They used to beg for this and that every time we went anywhere. Now they know they have to buy those things with their own money. It works much better than just saying no all the time. (or giving in because it's "only" $2 or $5 or however much - that stuff adds up! ).

Laurie

ps - I know of families who do things lots more indepth that we do and their kids pay taxes from their allowance back to their parents, (to simulate Real Life) and buy stocks and all sorts of stuff. Allowance it whatever you want it to be.

 

[BuzznBelle'smom]

My older two (DD10, DS8) each get $5 a week. Out of this, they pay for $1 for school banking (in a "real" savings account) and any school lunches they wish to purchase. I want them to understand making choices with their money. If they choose no hot lunch, they get to keep the money. If they fail to do a chore, they must pay a quarter to the parent who did it for them (some things, like feeding the cat, you just can't leave until tomorrow!). In addition, they can earn extra money by doing extra chores, such as sweeping the garage.

Each child also has an e-trade account. This is to help them understand the stock market. While some might think it's a bit "much", they also have trust funds (set up by Grandma), that they will control at age 18, whether I like it or not. While we adults all plan on this money going for college, the nature of the trusts is, we have no say past their 18th birthday, so I have a strong incentive to teach the kids about long term goals and the value of an education! In any event, the stocks have been great--each kid made their own picks--DD has Wal-Mart and Disney (that's my girl!), both of which are very "real" to her. DS has Caterpillar--we got it when he was 3, he hasn't wanted to sell it, because it's done fantastic! We point out to him, where there's disaster, there's rebuilding, and where there's rebuilding, there's Caterpillar! We initially got it because we knew he'd like the big trucks--I'm kicking myself for not purchasing some for DH and I.

So far, DD is a real tightwad with her cash, and thinks nothing of having large amounts on hand for months. I wish I had her discipline! DS loves to spend, but is more willing to do the chores to earn the extra for trips to the $ store and so forth. So, so far, so good.