When we started our family, we wanted to put some things into place to help our kids learn about money. This is kind of a hard thing because you have to choose what you expect your kids to pay for, and what the family economy will be like. There are a lot of opinions about things like whether kids should have jobs in high school and whether they should be given allowance.
When I was in school for my Marriage and Family Relations degree, this was a topic that came up in a few different courses. The research varies, so suffice it to say, there are a lot of different ways to handle money in a family, and various methods have good outcomes. I know a family that didn't allow their kids to have jobs while they were in school, and now those kids are all successful adults whose incomes have far surpassed their parents'. I know families whose kids were expected to work and pay their way for everything, and they, too, are very successful, affluent adults. So when it comes to kids and money, there's no perfect way, but there are many ways that work out. The most important thing, in my opinion, is to model living below your means, and be grateful for what you have.
A few things we have implemented with our kids in regards to money are:
1. Starting a savings for them early on
From the time our kids were babies, they've received some gifts in the form of money. We put that money in the bank - even if it was just $20 a year. As they got older, they started being more aware of their birthday and Christmas money, so occasionally, it doesn’t make it into the bank, but about 75% of the money they've received as gifts has gone into the bank. This hasn't amounted to tons of money, but it's something.
2. We give unconditional allowance
That makes them sound spoiled, but it's $5 every two weeks when they are little (to match our pay day, they also get pay day), and then when they get older, it's $10. So it's seriously next to nothing. The purpose is to give them the opportunity to practice having money. They need the chance to make stupid decisions. They need to learn to save or wait for things, and anticipating a few dollars every two weeks helps them do that.
I am also always willing to come up with a plan for them to earn some money if they want to.
3. We pay for what they need as long as they are being responsible
We cover the expenses of their extracurricular activities and things like gas and insurance as long as they are doing well in school, behaving at home, driving safely, meeting curfew, and helping out when asked.
4. We do a "savings match"
We opened a savings account for each kid with two simple rules:
1. We will match any money they put in that savings account up to $1,200 a year.
2. They don't get the money until they turn 25.
We did this so they will have a little bit of savings in young adulthood, but we didn't want to hand it over at age 18 or 21, so we decided to go with 25. We wanted them to have the experience of doing something now that will benefit them later. So far, Nicky and Daisy have caught on really well, and they have chosen to save as much money as they can. Zoe is starting to understand more. Eva, on the other hand, has put $8 in that account for a whopping total of $16.
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We definitely don't know yet if we've made the best choices, but we've had some positive results. All of our kids have gone through a phase where money burns a hole in their pockets, but as they've become older teens, they've shown a lot of responsibility. Nicky and Daisy have become savvy shoppers, and they both love buying things second-hand. Zoe spends a little more, but she always knows exactly what she wants. Eva... well... let's just say we're still going to be working with that one for a while.
One thing I need to work on with my kids is showing them more of the cost of living expenses we have so they can get familiar with the services we pay for and how much things cost. As our income has become a little more flexible, our kids have gotten accustomed to things like streaming services and family outings. They don't remember that we went without internet for three years because we couldn't afford it or that we used to mow my grandma's lawn for $20 a week, and that's all the money we had for groceries.
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I wanted to share this in case other parents are looking for options for how to work with kids and money. I got the idea for the savings match from someone else and modified it to work for our family. Where past generations have not thought it appropriate to talk about money, I think it's very important to have conversations about it. Some aspects of finances are definitely no one's business, but I think it's important to teach our children how to handle money.
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