Our kids are money smart!
Posted by John | Filed under Uncategorized
I have tried and failed at introducing allowance to my kids (11 and 5) in the past. Too much, too little, too infrequent, too many strings…they thought my purse was bottomless and I was “mean” if I said no to their gimmies.
I started my kids with the magic jars last month. $1 per year of age and they have 2 jars each – marked spending and saving. I got them to decide their minimum saving contribution and explained that it was their money to spend as they wish but they can’t spend more than they have – no loans!
Then I gave my 11 year old a third jar marked “Clothes” and a notebook. She will now have full control over how her clothing budget is spent (this has always been our biggest battle). I showed her my monthly household budget and we found my expense line for kids clothes. We used a calculator and worked out how much of the money should go out of my budget and into her jar each week. We then started a running balance in her notebook and I showed her how to keep track of the cashflow.
This little excerise brought lots and lots and lots of questions! Its great seeing them take such a big interest in managing their money and wants and needs. My 11 year old has become a saver over night. She has had so much fun working out how much and how fast she can make her savings grow. My 5 year old loves counting his loonies and telling me how much is in each jar and what he’s going to buy. They both love seeing the cash visible in the glass jars.
I love that my kids know more now than I did when graduating from college! Thank you for giving me this opportunity with my kids!
May 23, 2012 at 4:32 pm
i think it is great that you are giving up control of the clothing to your kid.
I have three kids (all teenagers) and I decided
to give them a $50 a month allowance to cover everything… and I mean everything they need beyond food, meds, shelter and use of the car.
They got their cell phones later than other kids because they have to pay their own bills. None of my kids
are hung up on brand names. and if they want to buy a shirt for their sports team, THEY have to buy it. It has really cut down the cost of their “stuff”. we still pay for sports and dance etc and the initial start up equipment, but they have to pay for the stuff they have control over. I found they are frugal and even my 15 year old daughter doesn’t shop like a “Princess” or go for hair and nails etc –she only goes to the mall when she is buying a gift for someone else. Each kid is different, one is a big time saver and the other two spend some but are still careful with their money. All have healthy bank accounts. they also all chose to get jobs while in high school to supplement their allowance. Two have now turned 18 and are off the allowance. We still cover their food, housing and some car costs, but they are really handling the other expenses themselves, including activities, toiletries, clothing, gifts for others, and their own university etc. I am proud because they are also investing (TFSA) at age 18 and 19. John, you are doing the right thing!
May 23, 2012 at 7:26 pm
John and Zoey, and Gail(!),
You are so on the right track!
My husband and I found ourselves in our late thirties with a child with a life-threatening illness, still paying student loans and up to our credit limits in monthly payments! We had to re-mortgage our house to get through that crisis, and thank heavens our daughter is now doing fine.
We decided, once the adrenaline had settled down, to set our affairs in order. I, fortuitously, came across ‘Til Debt Do Us Part’, and I started working extra shifts to pay off our debts.
At that same time, we started giving our children an allowance as per Gail — they each get their age in dollars once a week. The 14 year old has been responsible for her own clothing purchases for almost 3 years now. We make sure she has winter and rain gear. She looks after everything else, and loves shopping at Value Village. For her public school graduation last spring, she had 3 dresses and 2 pairs of shoes to choose from (for under $60).
We’ve promised that what ever she can save toward her first car, we will match, and she’s saved almost $2k from working.
She keeps a journal of her savings jars, now. She didn’t last year, and had ‘borrowed’ from her giving jar for clothing purchases. We found out at one point, when she had borrowed almost $50 from the jar. I still remember the look on her face when she realized that she’d have to pay it back. Gosh, so much easier a lesson for her to learn than ours with the banks and a sick child.
She has RRSP room — and we will make sure that she invests the maximum this year. Imagine having an RRSP at the age of 14!
Our younger daughter always has at least $20 in her ‘purse’, and is a natural saver.
I’m so proud of my daughters, and so glad that we found Gail before we’d unleashed another generation of financial idiots into the world.
Cheers!
May 24, 2012 at 12:35 pm
Love your story as well, Faye! Well done!
However, I don’t think that children under 18 can have an RRSP or a TFSA.
they are not allowed to start them until 18, but it doesn’t mean that the money
can’t be saved until then and put in when they hit 18.
Our kids did very well at school and managed to get scholarships for their first year
(multiple $1000 & $2000 scholarships for a $4500 tuition, not including books) and they are going to our city’s university, not away, so they will live at home for now.
So the money in their RESP fund can then be cashed out for the year and provided they are 18 and don’t need it, it can be invested in the TFSA or RESP for the year. But our tax lady said they have to be 18
to open this and can face penalties if you are not careful about the rules.
Good saving everyone!
Maybe Gail, a suggestion for a column could be for people who have kids that want to save their money, about the implications of teenagers savings, from a tax/ investment specialist, as many of us don’t know the technical details of our kids’ investing. Just an idea! Love to read the stories everyday.
May 24, 2012 at 8:04 pm
Zoey, as soon as a person works they can have an RRSP. Just need a SIN and T4 basically. For a TFSA you need to be 18.
May 25, 2012 at 9:48 am
I need to brag a bit. My kids are 6 and 8. My 6 year old has always been an impulse shopper- He sees it -he HAS to have it- fine- he’s been doing that with his allowance money. The most recent want has been a scooter. I swear my kids are the only ones on the block without one *L* He get $3/week as spend money. For the first time he has actually been saving for a goal. He will prioritize- “Gee mom that’s a nice frisbee.”.. reply- “are you still saving for a scooter”?….Big sigh- yes I still really want my scooter. He also started looking for “money cans” to recycle and he asked for extra work around the house- Sure enough-He now has enough to pay for his 1/2 of a scooter. Then we started researching- comparing models- wheel sizes, prices at different stores etc… and he was fully participating and stating opinions. We finally decided together what the best model and price was. ( My 8 yr old was in on this too- but she is a natural saver- not as herculean a task) So each kid has $57.50 to pay me upon receipt of their scooter. It is waiting and ready to go. For all of those who argue that allowance needs to be tied to chores- money management is a life skill that needs to be learned just as much as making your bed and hanging up your backpack.