Allowance

Colin and I have done a lot of talking and reading about the issue of allowance for our children. We were both raised a little differently when it came to allowance. We want to be sure that our children acquire good money handling skills BEFORE they are expected to live in the adult world and make HUGE financial decisions.

When Colin was young he got 25 cents a week for allowance and was expected to put a portion of it in savings, a portion to tithing and a portion he could spend however he liked.

I, on the other hand, didn't get an allowance, mostly due to the fact that there were six kids in my family and my mom was a single parent ... our allowance was being able to eat three meals everyday ... I'm okay with that. However, most of us got jobs as soon as it was legal for us to have one and the money we earned burned holes into our pockets. My dad set up savings accounts for us when we were younger, but it was pretty much understood that we couldn't touch that money until we reached a certain age (I think 16 was the magic number) and then most of us blew that money too.

In high school we learned how to balance a check book and maybe even buy fake stock, but I never had a lesson on how to manage a household budget. You think that would have made the high school curriculum at some point.

SO, Colin and I have decided that we want to be a little more proactive in teaching our children how to be good stewards of the money that they are and will be blessed with in their lives. We started our journey by reading some good books on how to manage money: "Total Money Makeover" by Dave Ramsey, "How to Manage Your Money" by Larry Burkett, "First National Bank of Dad" by David Owen and "Young Bucks" by Troy Dunn. The first two books mentioned helped Colin and I get our personal finances in order and the last two books are geared towards parents teaching their children about finances.

Honestly I didn't think we'd have to start talking about finances with Jackson so soon, but the other day he was asking me if he could purchase a new train for his train set and we began talking about starting an allowance. Without any prompting Jackson brought up the idea of allowance at LEAST three more times within two days.

He's TWO! He'll be three in a little over a month, but I didn't think we'd be talking about allowance until he was at least five or six. I don't want to stifle his interest though and we'll take baby steps now to prevent having to take major leaps later.

So, after lots of thought and discussion here's what Colin and I came up with for our children. (Disclaimer: we have every right to and KNOW that this plan may and most likely WILL change over time as we discover its strengths and weaknesses. Also, the topic of teaching a child good money handling skills is a HUGE topic and I will only be covering a tiny portion of it here. I will most likely blog about this topic more as it occurs in our life as a family.) Here's what we've got so far:

Being apart of a family comes with certain responsibilities and certain privileges. Some of those responsibilities include taking care of the house and faithfully fulfilling ones commitments. These are the day to day responsibilities that come with being a part of a family. Therefore, we feel that those responsibilities should NOT be given a monetary payment such as an allowance. In other words, I expect Jackson to make his bed, brush his teeth and flush the toilet and NOT have to pay him for it. However, there will be future opportunities for Jackson to earn extra money by doing jobs above and beyond his normal responsibility (again ... another future blog). But, we first want to teach him how to manage small amounts of money.

In addition to potentially obvious benefits like being loved, family laughter and fun, sleeping inside, wearing clothes, and eating three meals per day, a weekly monetary allowance given to the children is a significant privilege as well.

Why give an allowance at all?

Giving an allowance allows our children to share in the benefits of the family and teaches lessons about tithing (giving back to the Lord what He has first given to us), developing a heart of giving, money management (spending, saving, giving, how to respond to not having enough money to make a purchase or making poor purchasing decisions, etc.).


What an allowance is NOT:

a payment for services

something that is removed as a discipline: except for very rare cases where:
The disobedience involves the allowance itself
The disobedience involves how the child spends money

something that is stopped because of illness, vacation, etc.

something that is increased due to a busy week in family responsibilities

An Allowance, the details:

We've decided that our children will start getting allowance around age 2 (or whenever they start to show an interest in learning about money handling skills). From age 2 to age 6 they will receive a weekly allowance equivalent to their age (i.e. 2 years old = $2.00 a week). At age six we will no longer increase their allowance, but plan on introducing them to the idea of saving and investing their money (we'll cover that in a different blog as Jackson gets older).

How we expect our children to spend their allowance:

10% - tithe the first 10% to our local Church
90% - spent on whatever the child wants within moral and legal limits

Why are our children forced to tithe the first 10% of their allowance? Shouldn’t tithing be something that springs from a grateful heart and not something forced onto people?

Colin and I discussed this topic quite extensively and came to the same conclusion about tithing as we did about church attendance. We require our children to attend church to create a habit and pray that their hearts will follow suit. So, as parents, one of the goals in providing an allowance is to teach lessons and establish habits. We are working to mature a habit of giving into a grateful heart for giving. We understand that once our children leave our home we will no longer be able to influence how our children choose to give or not give. We want to do all we can now to encourage the activity of giving. Once the activity is established, we can work on the heart-felt attitude for giving. It is hard to establish a heart for giving if one is not regularly giving – thus our requirement.

Why don't we have a requirement for saving?

Teaching our children about money is a lot like eating an elephant, it is best done through a 1,000 small steps – over a long period of time. After all, eating an elephant all at once only makes you sick. When children are young days feel like months and months feels like years. Teaching them how to "save" with a traditional savings account will not teach them the benefits of saving because their tiny attention spans won't wait around to see the fruits of their waiting.

As our children get older we have ideas and aspirations about teaching them how to save and earn interest on their money as they save. I'll blog about this more in the future, but if you are hungry for more, you should check out "First Bank of Dad" by David Owen.

So, Jackson received his first $2.00 of allowance today and he and Colin went to the toy store this afternoon to see how much a Thomas the Train would cost. I fully expected them to come back with a completely different purchase knowing that Thomas was out of his price range. To my surprise Jackson did not buy anything ... except a 50 cent ride on the Mickey Mouse car at the front of the store. I'm anxious to see what my little man will do with this newly acquired privilege and how quickly he'll pick up on the money handling skills we teach him.