When Kids Manage Their Own Money

  Teaching kids about money has been a challenge in these modern times.  Kids don’t see mom and dad pull out cash for things other than vending machines.  It is almost like money is no longer tangible. In an effort to teach my kids in a hands-on way about money management, we started them with a small weekly allowance.  They received their age in dollars each week with one dollar going to saving and one to charity.  That left their age – $2 each week for wild spending sprees. I really tried to let them decide how to spend THEIR money.  It was hard sometimes to see them spend it on ridiculous stuff, but I figured it was better for them to learn that lesson over a few dollars than later in life when the stakes are higher. It was all going fine until…well, let me tell you the story.

When Kids Manage Their Own Money

Our home economy is not unlike that of major countries. Those in charge met for a financial summit to determine the outcome of the poorest citizens. After much negotiation, it was decided that a welfare system of allowances would be enacted. Reid (5) was to receive $2/week and Ryan (7) was to receive $3 per week. The new economic policies benefited me the most. My recorded message at the store was  no longer “no”. I would just state what items  were  eligible for reimbursement from the home government and what would  be the responsibility of its citizens. Ryan soon became a bank.  He was a fortress of savings and loaning! He also became involved in all purchase negotiations – no matter whose money was involved.  The Bank of Ryan believed that he always knew what was best. The Bank is a bit sneaky and is on the Home  government watch list. Reid’s money burned a swift hole in his pocket. He tended to toss it down hot potato-style at Target mere moments after it was  issued. The Bank of Ryan supervised all purchases and issued high interest partial loans when it was to the Bank’s benefit. On the last Target trip the Bank of Ryan was using strong arm tactics to spend Reid’s money for his own benefit. I stepped in freezing the Bank of Ryan’s assets until a full audit could be conducted assuring a S&L crisis aversion. Reid set his sights on a more expensive toy then he could purchase under his current economic conditions and went home with money in pocket to save for the next trip. A few days later I was surprised when Reid mentioned that he had no money. We hadn’t been anywhere that he could spend it. I had even recently seen it in his kitchen jar. “Where did the money go?” I asked. “I gave it to Ryan.” Reid answered. “Why?” “Because he helped me.” “Oh, that is nice.” I replied suspiciously. “RYAN!!!!” I called. “Where is Reid’s money?” “Reid doesn’t have any money.” “He did this morning. What happened since then?” “Oh, he paid me.” “Paid you for what?” “To get his clothes out of the closet this morning.” “How much did he pay you?” “$5.50” “Wow. That seems generous of him to spend 2 1/2 weeks worth of allowance. Why would he do that?” “I told him there was a spider in there.” Nice. Reid was informed that both Rhett and I would have helped him for free. Ryan had created an artificial demand for clothes retrieval services through spider guerrilla marketing resulting in significant price gouging.

Kids Managing Money Resources

That story happened a few years ago and I have learned a lot since then!  Isn’t it funny how our kids can teach us a lesson faster than anyone?  One of the things I use now for managing kids allowances is a handy iPhone app. We also have a list of kids chores by age and a big collection of the best chore charts for kids. Please share how you help kids learn about money by posting your ideas and suggestions on our FB wall.