Allowance

[Lee-Bee]

Our daughter is only 22months so we are not there yet but we have already been discussing it (briefly here and there) there are many ways to approach it.

What about having a set amount, and set chores/expectations...if your child opts not to complete his tasks then he is penalized by not receiving part of the allowance. Similar to being paid to do his chores...but I think it has a different impact to see first hand that when they choose NOT to do something they don't get a reward, versus being paid to do it.

We do know that what ever we decide allowance wise we will have a set budget for buying our daughter items ( new school clothes etc) if she feels she needs to have the latest fashion (which cost more) she is responsible for the extra cost. Meaning, we will pay for the best bargain price and she can opt for the bargain items or pay to top up to get the fancier items. This will continue though highschool when she is working part time jobs.

There is so much to learn in regards to financial management. We hope she will learn it through us so she is on solid ground when she is responsible for herself. Something as simple as giving a set budget for an item she needs (new bike helmet) and making her search store flyers until it is on sale for that budget price. Rather than just running out and buying the first one we see.

Anyways, back to allowance I recently read a book where the family had a complete banking system (they had numerous teenage children). Everything was credits and deposits. If they were in 'overdraft' they had to balance out their account through extra jobs, selling stuff they own, working outside the home etc. It was pretty neat. I can't recall the book title at the moment but it had referenced this site http://www.famzoo.com/ which is an actual online family bank that can be used as part of it.

Anyways, so many things to consider and it can be really involved if you choose it to be. My aunt and uncle are huge on the stock market. My cousins have been buying and selling stock since they were about 5yrs old. Since their parents involved them in what they themselves were doing the kids naturally learned at a very young age how to make decisions to manage their own stocks. They didn't use much money at all in the process as they bought single stock shares.

Money management begins very early in life, through observations and most importantly through first hand experience!