Teaching Kids About Money

[oldtoyota]

What do you do to teach your kids about money?

At Target the other night, Kidlet wanted to buy a movie. It cost $25. I suggested that she could buy it with her own money. You know what that did? It got her to look at the price.

"It's 19!" she told me.
"Yes." I said.
"Well, I only have $72 at home."

Suddenly, she did not want it quite as much.

One tricky thing is that we stopped giving her allowance. The deal is that she's supposed to have specific chores. She did not want specific chores, so we're at a peaceful stalemate. She seems not to be spending the money she has, and we're not giving her more money.

The thing is…she does chores when asked. She feeds the cat, sets the table, gets cloth napkins without being asked, brushes the cat, helps me plant flowers, sweeps, dusts, etc, etc.

My other question for you all is about allowance. Do you have specific chores? Or, do you give allowance without chores attached to it?

[tmac]

Everyone seems to have a different approach to this one. We have specific chores for each kid, but in addition, they're expected to help out for free when asked. And some bigger extra chores do come with extra funds. They buy their own extra toys (except for Xmas and birthdays) and if they want clothes beyond the basics, they buy those as well. We don't pay a lot, but it's a couple of dollars per week. Enough for the Goodwill or dollar store toy section.

Our oldest is 17. He works for our business occasionally for spending money at our entry level rate ($20/hour). He still has specific chores that he gets paid for, but it's pretty silly. Like, $1 per week.

We don't often field requests for extra stuff anymore, because they know we'll just say, "Well, let's check the Bank of Mom and see how much you have to spend," or "Sounds great! Put it on your Xmas/Birthday list."

[Norrie]

I'll be watching closely, because even though our kids are already 12 and 10, we still haven't settled on a system that we really like. They each have about $750 in savings, which is mostly birthday/Christmas money that they've saved. They're both pretty protective of their money (especially once it hits the bank. They HATE withdrawing it for any reason), but our son is more open to spending. Last night he was trying to talk me into taking them to the ice cream place and said, "I will pay for it with my own money, because I want to know what it feels like to spend on something like that". I was too lazy to take them, and we had ice cream at home, but I thought that it was a pretty good attempt on his part.

I don't like the feeling of paying kids for chores, because I put a lot of emphasis on the fact that we should all work as a family to keep the house running smoothly. Pretty much if you're asked to do it, you need to do it, and I don't like the idea that special requests would be worth additional cash.
For instance, recently I asked my son to do some things (hang up his sister's forgotten towel, take some clean clothes to her room, clear her place at the table) because she was really sick and not up to it. I want him to understand the spirit of helping just for the sake of helping when someone needs something. And our daughter will do the same for him.

But my best friend and her family have done allowances/chores for 14 years, and it works beautifully for them.

I'm more looking into how to teach them about interest, spending wisely, and a life-long love of saving.

[oldtoyota]

My kid is good at the saving part. What feels strange is talking to her about buying something, because I want to teach about saving. However, it is hard to teach about saving if there is no spending--if that makes sense.

[tmac]

That totally makes sense. Gotta spend some at some point.

A difficult lesson my kids are slowly coming to terms with is the idea that cheap =/= a good deal. My son had $2 to spend and asked to go to the dollar store. Fine. He picks up a $1.50 toy that, granted, looked pretty cool, but was also poorly constructed. I pointed out the specific things that concerned me about it, but he chose to go ahead with the purchase. It broke on the walk home. Very sad, but he made the connection. Next time, he said, he'll check to make sure it's sturdier, or save more money to get a better one. He also asked if I thought buying things at Goodwill would make more sense, since if the toy hasn't broken by the time it gets there, chances are it's pretty sturdy. Good point, I thought.

[Norrie]

My kid is good at the saving part. What feels strange is talking to her about buying something, because I want to teach about saving. However, it is hard to teach about saving if there is no spending--if that makes sense.

This is exactly right. Our daughter would just save and save and save every single penny that she ever received if she had her way. But I'm trying to teach her that part of being good with money is learning how to spend responsibly and with intention, as it's unreasonable to think that you can go through life without ever having to shell out. At the same time she has something big that she's saving for (a dance convention trip in a few years), and I admire her focus.

[gooki]

He also asked if I thought buying things at Goodwill would make more sense, since if the toy hasn't broken by the time it gets there, chances are it's pretty sturdy. Good point, I thought.

Smart kid. You're doing something right.

[tmac]

He also asked if I thought buying things at Goodwill would make more sense, since if the toy hasn't broken by the time it gets there, chances are it's pretty sturdy. Good point, I thought.

Smart kid. You're doing something right.

Why, thank you! I shall remember that the next time he sticks duct tape to his head and ends up with a big bald patch.

[oldtoyota]

My kid is good at the saving part. What feels strange is talking to her about buying something, because I want to teach about saving. However, it is hard to teach about saving if there is no spending--if that makes sense.

This is exactly right. Our daughter would just save and save and save every single penny that she ever received if she had her way. But I'm trying to teach her that part of being good with money is learning how to spend responsibly and with intention, as it's unreasonable to think that you can go through life without ever having to shell out. At the same time she has something big that she's saving for (a dance convention trip in a few years), and I admire her focus.

I admire her focus too.

[SingleMomDebt]

Have you seen this Chore Stick project? http://www.gingersnapcrafts.com/2011/09/fab-friday-5-chore-sticks.html

I like this idea for extra chores. I do expect the norm: clean your room, put your stuff away, dishes in the dishwasher, homework done, etc... but there are times my daughter 'needs' money. I thought about doing something like the chore stick project. which would give her the incentive if she needed it.

[Cwadda]

When I was little the ice cream truck would always roll around in the summer months. All the parents in the neighborhood would buy the kids ice cream for $1-2 per item. Instead of following suit, my mom took us to the grocery store, let us pick out any ice cream we wanted, and said we could eat two :D She explained it costs significantly less to buy ice cream in the store than marked up from the truck. Of course I was totally on board with that idea.

[NonprofitER]

A friend with older kids (14 and 16) told me that they have 3 rules for how their kids manage money - and I appreciate all of them.

1) The kids earn money from an early age - but not from basic chores.  Basic chores should be done because its part of living together as a family.  Extra/ special tasks were offered as money-making opportunities, and babysitting/ grass-cutting was encouraged early on.

2) Kids must always save at least 50% of anything they earn.

3) Kids may never spend more than 50% of savings for any one item, with the exception of car and tuition costs.

[RootofGood]

For the 7 and 9 year olds, we give $2.50 per week allowance.  We plan to increase the amount as they take on more responsibility (it used to be slightly higher for the older kid but she regressed in responsibility).  Chores include cleaning up after themselves, feeding the cat, cleaning their room, occasionally folding their laundry, emptying trash.  The oldest loves cleaning toilets so we don't deny her that luxury and sometimes give her extra $$.

They lose a quarter when they are bad (usually after a warning or three).  They can gain quarters if they go above and beyond or are particularly helpful, caring, kind, etc.  So it's an allowance for completing a variety of chores and a reward/punishment system. 

When either kid gets to 4 quarters remaining, they lose tv and computer privileges.  This usually leads to reading books and doing arts and crafts, and I often hear "OMG you should take away our tv and computer privileges more often Daddy because we love reading and doing arts and crafts."  Explanations that they can do anything they want whenever they want (if both of them have 5+ quarters remaining) fall on deaf ears - they need a parental unit to force them to not watch tv or use computers. 

My kids are incredibly mindful of prices, value, and unit costs.  They understand that much of what you see on the shelf is packaging and slick marketing and they can reduce the product to what you actually get.  A barbie set with a big box and lots of plastic and cardboard might only contain one doll and a pair of plastic shoes - they see it as a doll and pair of plastic shoes (from experience they know the box ends up in the trash soon after buying it).  They know the $1 store often sells similar stuff as Walmart and the toy store, except it's $3-5 at walmart and $5-10 at the toy store.  They know books are expensive at the book store and free at the library (they are still learning that most books are read once and then eventually donated or given away after they collect dust for a few years).

I let them make money mistakes.  It's better to learn remorse and how it feels to waste money and be duped by advertising and clever packaging when the amount in controversy is $20 instead of $20,000 or $200,000 (in the case of a new car or new house, respectively).

[SingleMomDebt]

When I was little the ice cream truck would always roll around in the summer months. All the parents in the neighborhood would buy the kids ice cream for $1-2 per item. Instead of following suit, my mom took us to the grocery store, let us pick out any ice cream we wanted, and said we could eat two :D She explained it costs significantly less to buy ice cream in the store than marked up from the truck. Of course I was totally on board with that idea.

Great way to teach a lesson! ha.

As for allowance guidelines, I hear its kosher to give children 1/2 their age in allowance per week.

[socaso]

A friend with older kids (14 and 16) told me that they have 3 rules for how their kids manage money - and I appreciate all of them.

1) The kids earn money from an early age - but not from basic chores.  Basic chores should be done because its part of living together as a family.  Extra/ special tasks were offered as money-making opportunities, and babysitting/ grass-cutting was encouraged early on.

2) Kids must always save at least 50% of anything they earn.

3) Kids may never spend more than 50% of savings for any one item, with the exception of car and tuition costs.

I love rule 3! It answers a niggling doubt in the back of my mind regarding teaching kids about long term savings. I'm going to use that one. My biggest worry was that my kids would save just enough for the latest gaming system or other gadget then blow all his savings on that.

[oldtoyota]

My kid is getting $8 now and is expected to purchase birthday presents for friends. I enacted this rule because said child was being miserly and not spending anything. Seems weird, huh? Here I am on the MMM board encouraging my kid to consume. I feel weird about it, yet she can't learn to think about purchases if she never makes them.

She does two chores now. She does not get reminded. If she does them, she gets the money. If she doesn't she doesn't get the money. Five weeks passed with no chores. Then, she had a present to buy...so she got more serious about it.

This is better than the plan we had in the past, yet ideas from some of you have me thinking of ways to improve upon what we're doing. Thanks!

[gimp]

I love the idea someone wrote about - they give their kid ever-increasing amounts of money for an allowance ($50 a week at age 10, and increasing from there) but then "bill" an appropriate amount for "room and board", clothes, etc. As the kid gets older, the allowance and bills increase (to get closer to simulating real prices), and other things start having to be paid for from the allowance. Quite brilliant: most of the "paycheck" has to be saved to pay what's owed every month, and the rest can be spent, wasted - or saved - and if it's saved, turns out to be a fairly large amount of money over time. (I think their stated goal was that saved money would be enough to buy a decent used car at 16.)

[usmarine1975]

We are not at the allowance stage yet (although he does get all our change).  Our son is only 2.  But we have one fast rule.  Any money that comes from grandparents, great grand parents etc.... is our son's.  We initially opened a savings account at a credit union for his money.  It has grown rather quickly.  We have now moved it to a brokerage account so that it can earn more then .01 %  it is again a custodial account or (his money).  We won't borrow from it or withdraw it for our own expenses.  We now have baby number 2 on the way and will have to start the same thing for #2 not finding out sex till day of birth.

With our change we have made it a fun activity for our son to feed the piggy bank with the change.  We also take him with to the credit union when we deposit the money.  He is able to watch us dump it into the coin counter and the taking of the slip to the counter.  He is 2 so I don't think he totally gets it but I think as he get's older he will.

[rocketpj]

Our 9 year old has had an allowance for 4 years.  One month into it he got tired of candy and asked me to save it for him to buy an iPad (a friend of his had just bought one from savings).  I helped him set up an ING account with a direct deposit of $5/week, leaving him $1 for himself each week.  A year later he asked me to put the other dollar in as well.

So, now he has a lot of money in his account - he has put the occasional birthday or Xmas cheque from a relative in there as well.  Every once in awhile he decides he is going to buy a tablet or an Xbox, but I usually wait a couple days and he changes his mind or forgets about it.  Lately I've started talking about what else he might do with the money, and how much might be in there if he doesn't touch it and keeps adding until he is 18. 

It all sounds great, but he basically doesn't need any money and hasn't needed any discipline to save it - it just happens automatically.  A good lesson in automated savings, but it all feels somewhat pointless - like I'm just building up his bank account and a couple years from now he'll blow it stupidly on some kid stuff.  Hopefully I'm wrong - so far he is doing it exactly right, but I'm not sure he's actually learning much since he doesn't exactly live in any meaningful scarcity.

He does occasionally get a couple dollars from a specific chore, but he usually doesn't want to.  I'll give him $5 if he mows the lawn - but only if he asks me for permission.  He has several chores that are not linked to allowance that he does without complaint for the most part. 

[DaKini]

Very recently i had the tought of how to teach about money when the kid does not know numbers or the "value" of the coins.
After all, money represents a variety of mental models, not only metal with a number on it. So i wondered what i want to teach my kid - was it the basic lesson "you can exchance it for goods" which is not so meaningful to a 4 year old? Or the message that it can replicate itself, which is surely relatively pointless to a such young child that barely knows numbers, not to speak of an understanding of "value of money"?

I definitely want to start early with teaching the basic fundamental models required for a sane financial life. I think that the "exchange it for goods" thing is not the most important lesson and it can only be understood when the kid knows numbers AND has a roughly estimate of the coins "value" (which is "exchange-power").

Suddenly, it stroke me:
Currently, our kid has an sweets-box that is replenished every sunday; basicalla this is a kind of "allowance". There is scarcity in sweets and he sort of values it; the kind of that he knows when its empty, its empty, so he suffers from having to wait until sunday.
But wait; this world is the "child model" of our monetary parents world, just the currency is a different kind.

So here comes my question (i hope others have experience already with this idea):
What do you think of paying dividends on sweets-investments? The kind of "for every 2 sweets in the box at sundays, you will get an extra sweet on top outside your box" (the box is a physical limiting factor by purpose).
Do you think this will work? Do you think my educational intents will be serverd, or do i teach something bad i do not see here?

I do not think using sweets as "paycheck" for chores is a good idea, however. I dont know why. What do you think on this topic?

[usmarine1975]

My own thought in relation to my son is that getting him to recognize money is futile at such a young age.  I think as he ages this will change and I don't think any fast rule exist for any child.  Different children will get this at different points in life.  Some never really do get it as so many adults don't save a dime.  I think as parents we use whatever means we can go get our children to understand the idea of saving.  If Sweet's works for your child go with it.  If not keep looking for what does.  My approach is to show my children through my own actions.  I don't expect that my children will take the exact approach I do but if I can get them to recognize the benefits of saving, living within their means etc... I will consider myself successful.

My son enjoys feeding the piggy or putting coins in his bank and my hope is that the love of feeding the piggy will translate later into an enjoyment of saving money from any and all checks etc...

[soccerluvof4]

I have kids 15, 14, 10 and 8. I tried the chore list thing so they would get an allowance and didn't seem to work.  My daughter 1 of 4 the 14 year old is the most consistent but does exactly what you tell her. My 15 year old son is a good kid, gets good grades but is just simply lazy!! and the two youngest are probably overall the best.  So now with it being summer I have cut off the allowance and do group projects.. Yesterday the two oldest took everything out of the garage , swept vacuumed and reorganized and I just said next time mom sneaks you a few bucks you earned it. Today all 4 will be weeding the yard in quadrants. I have not found the solution or what works best but this is working for now! As far as teaching them about money that is a seemingly daily thing. The oldest again when he wants something it doesnt matter what i say he justifies to himself why hes buying it but the other day had the balls to say " how does that family spend the money the way they do" it was an opportunity to teach him about they have nothing, lost there house and so on.  So i will just keep fighting the battle I guess and try new things.

[Emilyngh]

I do not believe in paying for chores.

My daughter does chores because she is part of the family and it is her obligation to help out.   My understanding is that studies show that once something is paid for, it becomes a financial transaction and is thought of differently by both parties (eg., one is setting it up for the child to choose to not help out if she doesn't need the money, people are less generous with their time and effort when paid for it b/c it doesn't have the emotional reward that it would when motivated by helping the group, etc).

However, I do believe in an allowance.   This is just a small amount of money(her grade in school in dollars per week, eg., $1 a week in 1st grade, $5 a week in 5th, etc)  to teach DD how money adds up if it's saved and to give her a little bit of spending freedom and practice making choices, etc.   It's not linked to chores, or behavior, etc, but is just for existing and being a member of the family.

I, personally, think that there is currently too much of an admiration in the US of paid-work (vs really evaluating what is the best use of one's time and appreciating that most regardless of whether it's paid or not) and don't want to reinforce this with my daughter by artificially linking pay to the work she does.

[Happy Little Chipmunk]

We started with the three compartment bank when the kids were little: 1/2 of your money to spending, 1/4 to gifts&donations, 1/4 to long term savings. The kids (11 & 14) opened bank accounts with their long term savings when they turned 8. The daughter then did research and moved her account to a credit union a couple years ago to get a better rate with CDs. (We need to start on index funds with her!)

How we deal with chores and allowance continues to evolve, but generally there's a set of chores that everyone just does because we are family. And there's a set that they can do whenever they want if they want to earn some cash. And if they want "bigger money" they can negotiate for bigger projects (pet sitting for neighbors, yard work for us or whatever.)

Allowance is tiny, just $2 per week. More money requires some effort. But if we are doing a special family thing (like the music festival we go to every year), we will give them a special spending allowance for that event. The daughter likes to get that cash up front and then will spend only a small amount of it. The son asks us to give him one day's worth of money at a time and then will spend exactly that amount. We also give the daughter a set clothing allowance every 6 months and she's become a better shopper because of it. The son would never think to replace anything he is wearing, so I still buy his clothes.

I need to rejigger all this. We haven't used the chore chart for a very long time; generally we just discuss & negotiate now. But the chore chart was VERY popular when they were little. It used to be really had to get any buy in on chores. The chart helped that but now they've grown beyond it and are more helpful in general unless suffering from hormonal meltdown.

[GizmoTX]

We did a chore chart with stickers when our son was young to help him remember what he was expected to do & when. He earned a tiny age-appropriate reward only after he consistently met the challenge. Later on this became money paid weekly. In high school he had a monthly allowance for routine expenses like lunches & clothing items, because he needed practice in budgeting & spending. He did his own laundry from age 13. He wanted to earn the Entrepreneur merit badge in Boy Scouts which requires starting & running a business for 6 months; he decided to grow & sell tomatoes in the back yard, netting $400 each summer for 2 summers.

We matched our son's summer job earnings in a Roth IRA when he was in high school & beginning college. Last summer as a rising junior, he had an engineering internship that earned well over the Roth IRA limit, so we encouraged him to deposit the limit amount without any matching.

We started teaching our son about financial management at an early age. I took him to the bank to purchase I-bonds when he had accumulated enough, since they pay more than a savings account. When he was a HS freshman, we helped him open a bank account that included checks as well as a debit card. When he was old enough to drive a car & purchase gas, he added a credit card (with us) with the bank; we wanted an initial low limit, no annual fee, & it accumulated reward points. He has been responsible for paying the card balance completely every month, using his checking account online. He started using Mint in college & tracks roommate transactions with the Splitwise app. He recently qualified by himself for a much better reward credit card with no foreign transaction fees. BTW, he bikes to classes.

Every step has created the opportunity for learning & questions without overloading him with too much information all at once. He's leery of investing rather than saving, so that's our next step.

[MrsPete]

We've always given an allowance.  The kids have always put aside a portion for savings and have been allowed to use a portion for spending.  They've screwed up more than once, but that has to happen with small kids -- has to happen if they're going to learn. 

Around the time they started school, we started giving them money for specific purposes . . . and requiring them to plan those purchases.  For example, buying school supplies was one of the first "money projects".  We'd give them X amount and tell them that they needed to buy their school supplies with that money.  The money was always enough to cover every thing and to allow a few splurges but not to splurge on everything (for example, they could probably have the cute notebook with the puppy OR the glittery pencils, but not both).  As they grew older, they started getting allowances for their back-to-school clothes and other things.  These have always been GREAT learning projects. 

Now our high school senior gets X amount per month, and she divides it between savings, gas, toiletries, school supplies, and outings with friends.  I gave her a "bonus" with which to buy her cap and gown, senior pictures, yearbook, etc.  Again, it's enough to pay for a few splurges, but not everything.  She's frugal to a fault. 

My college girl doesn't get an allowance, but I do pay for her tuition and other school supplies.  I give her money when the fall semester begins and then again when the spring semester begins -- and that has to last.  She supplements it with her job, and she's doing very well with her finances. 

[DaKini]

With my 4 year old i try to show him what interest is.
He has a sweets allowance which is refilled every sunday. For every piece that is still in the box at sunday, he earns one piece extra, this is explicitely named "interest". So far he saves one or two pieces reliably.

What do you think of this experiment?

[NumberJohnny5]

Our kids get approximately $1/wk per year of age. I don't change it every year, son got $5/wk when he was 4, 5, and 6; then it jumped to $8 for age 7, 8, and probably 9.

40% goes to spend; can be spent immediately on (virtually) anything
30% goes to save; at age 4/5/6 they had to want the item for at least a day; at 7/8 they have to want the item for at least two days
20% goes to invest; at this age they're saving for a first car or college
10% goes to donate; they get to pick the charity (son picked buying toys for his class)

We also have a clothing allowance for our son, equals about $60/yr.

The key, is they buy most of their stuff with their money. That would be a really big allowance, if we were buying stuff for them all the time. Small gifts for birthdays and Christmas (i.e. under $100 for both kids...third kid hasn't been around long enough for a birthday or Christmas yet, so we'll see). I did buy tablets for them. Still buy clothes for our younger daughter (who has no clothing allowance). Scooters, they bought. Roboraptor, son bought. New socks, son bought. Happy meal toys, they buy (if we buy the happy meal, we charge $2 for the toy, but cover the food cost). If they want to spend $30 on a stuffed animal at Disneyland...sure, why not? It's their money, and maybe they need to make some mistakes to learn from. Or maybe the really silly purchase wasn't so silly after all (different priorities and all that).

[mudgestache]

We tried the allowance plan and it was a disaster. Kids only did chore when they wanted money for something. My oldest works a bit babysitting and is very good with saving but the younger 2 (10 & 12) spend it the minute they can. We stopped buying them things and tried to get them to start saving. Despite countless tears, they still won't save up for the bigger things they want. I grew up with parents that forced savings and I blew that money the minute I turned 18. I was hoping if they experienced the negative consequences of not saving they would eventually get it but it's not working. I'm not sure where to go from here with it.

[EDSMedS]

My kid is good at the saving part. What feels strange is talking to her about buying something, because I want to teach about saving. However, it is hard to teach about saving if there is no spending--if that makes sense.

This is exactly right. Our daughter would just save and save and save every single penny that she ever received if she had her way. But I'm trying to teach her that part of being good with money is learning how to spend responsibly and with intention, as it's unreasonable to think that you can go through life without ever having to shell out. At the same time she has something big that she's saving for (a dance convention trip in a few years), and I admire her focus.

I married a woman just like your children!  She LOVES to save and save but still dislikes spending.  It has been a point of contention for us b/c though I am a spend-thrift, I am impulsive!  When I have saved for something and know I have it in my priorities, BOOM, it is mine! 

One way we have worked through this is budget discussions.  Money shouldn't lay around with no purpose (YNAB!!!).  We mark clear categories that my wife is interested in supporting financially, and re-evaluate and research while saving.  Once the category is fully funded, I use my charm to get her to POUNCE. 

I'll tell you, this "burden" I have - "forcing" my wife to spend - is FAR more pleasant than the opposite!!

[farmstache]

We tried the allowance plan and it was a disaster. Kids only did chore when they wanted money for something. My oldest works a bit babysitting and is very good with saving but the younger 2 (10 & 12) spend it the minute they can. We stopped buying them things and tried to get them to start saving. Despite countless tears, they still won't save up for the bigger things they want. I grew up with parents that forced savings and I blew that money the minute I turned 18. I was hoping if they experienced the negative consequences of not saving they would eventually get it but it's not working. I'm not sure where to go from here with it.

I'm still producing my first kid, so please take this with lots of grains of salt, but what if you do the 3-way-piggy-bank? You basically give the allowance in 3 boxes (I saw some transparent ones that looked more enticing, but writing the full amount on the outside of the box might help to visualize the growth too, and at that age you can even have something like a bank statement): Use, Save, Give. Most people will do 50%, 30%, 20%. Give can include birthday gifts for friends, or charities, etc. It's usual that kids leave money in the Give box for special occasions or while they pick what they want to give, instead of spending right away, and this could be the start for your kids.

This alone wouldn't solve this, but you could try to establish a rule, like: you can only take money off the Save box once a month (or an amount of time you think they can visualize, maybe a semester for older kids or a week for younger). From everything that you *leave* in the Save box, I'll add a dollar to every 10 (or some proportion you deem acceptable), but you'll need to wait until the next retrieval day to withdraw. This might make things click for them.

That said, delayed gratification is really hard to teach. There's the marshmellow test for 5yo, so at that age you already see the different behaviours. Try to think about how you taught yourself, and try to mimic that experience. Of course you won't let your kids go hungry, but you can feel free to be a little less than kind, like put some "essentials" like clothing into their allowance. As Louis CK said, our job is to make them into good responsible humans, not make them happy. :P

[legacyoneup]

Well, let's check the Bank of Mom and see how much you have to spend.

LOL. Loved this!

[RunningWithScissors]

Really enjoying this thread.

We also took the basic/unpaid chores and extra chores for money approach.  However, to ensure that a couple of unmotivated teenagers did their basic chores each day, we tied access to Wifi in the house to completion.  They had a couple of hours after school to chill and do chores (usually about 20 minutes worth), but didn't get to access their favorite entertainment, video games, unless one parent gave the approval.  The computer router was also unplugged during the day and at night to reduce distractions.

By the time they were finishing high school, they were given a semi-annual clothing allowance and a list of 'must haves' such as boots which were non-negotiable.  Interestingly, one kid went for a minimalist but high-quality wardrobe, while the other loved the cheap, mass wardrobe from vintage and thrift stores.  They both figured out budgeting and 'wants vs needs' quickly. 

[Bearded Apprentice]

Excellent thread!  I am a new mustachian and still in the process of doing an M180.  My wife nor I had the benefit of any of this being taught to us growing up.  Having only found this blog and forum a little over a month ago and having a 4 week old I've started researching when and how to teach this to our child.  I don't want our daughter to learn how we did.  Although I don't have anything useful to add to this thread I want to say thanks to those who have posted their ideas and what they have implemented with their children. 

Ideas I've learned here I plan on testing-
1-The allowance amount suggested that correlates to either their 1/2 their age or their grade level.
2-Having unpaid/basic chores that are just part of contributing to the family.  Extra chores/responsibilities for their allowance $
3-Having  50% saved/spendable/charity(will work on the other %'s) buckets
4-Back to school/clothing allowances to teach budgeting and where they will hopefully learn researching and buying thrifty or used things will make their money go further
5-shutting off wifi/computer router/video game access if extra motivation is needed

When age appropriate to implement some sort of compounding lesson to the savings category to help push the value of putting money in an index fund over it sitting in a "piggy bank" or savings account. 

[SingleMomDebt]

A friend with older kids (14 and 16) told me that they have 3 rules for how their kids manage money - and I appreciate all of them.

1) The kids earn money from an early age - but not from basic chores.  Basic chores should be done because its part of living together as a family.  Extra/ special tasks were offered as money-making opportunities, and babysitting/ grass-cutting was encouraged early on.

2) Kids must always save at least 50% of anything they earn.

3) Kids may never spend more than 50% of savings for any one item, with the exception of car and tuition costs.

How did I miss this earlier? Love it! I'm going to use this one. Thank you posting it.

[LiveLean]

I learned so many lessons about money as a kid by mowing lawns starting at age 11. It taught me the value of my time and how much work translated into $15-$20 in early 1980s dollars and what that money could buy. That, combined with my parents general mustachian example, laid the groundwork for where I am today.

Problem: today's kids don't mow lawns or have the equivalent experience. And now that mine are 12 and 9, I worry that they're not learning finances the way I did.

[Dijonaise]

With my 4 year old i try to show him what interest is.
He has a sweets allowance which is refilled every sunday. For every piece that is still in the box at sunday, he earns one piece extra, this is explicitely named "interest". So far he saves one or two pieces reliably.

What do you think of this experiment?

Interesting approach! You might have trouble with modeling compounding interest. If he is saving one or 2 pieces each week, that means he reached a steady state of consumption higher than your original seeding. Trying to think of a solution...

[RootofGood]

Problem: today's kids don't mow lawns or have the equivalent experience. And now that mine are 12 and 9, I worry that they're not learning finances the way I did.

Kids don't mow lawns for cash any more?  Oops, my neighbor was doing it wrong when she hired the neighbor kid across the street.