Money-Savvy Moppets: Getting an Early Start with Financial Literacy

So many people struggle with money issues. It's never too early to begin setting your kids on the right financial track for their lives!

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I'm over at Pam Barnhill's site again today, sharing my Wee Financial Wizards post that will help you see that it's never too early to start developing good financial sense in your kids.

Click on over to get a bit of a background on it all and then jump back here to see how G and I decided to handle the allowance issue and start things off with Gv.

It's interesting to see how controversial the subject of allowances and kids can be. There are just about as many different views about it as there are families and I don't think there's any right or wrong way to approach the topic.

What I do think is important is for each family to carefully consider what is best for their situation and to go with that.

That's what G and I did. We thought about our own childhood experiences, read plenty of articles and books, and considered Gv's personality before determining which course to take. Then, when Gv turned five, we put our plan into place.

First, we talked the process up by telling Gv in the weeks leading up to her birthday that five was a special year and came with new responsibilities and privileges.

Then, on her actual birthday, we took her to open her very own account at our credit union. (Credit unions often have special kids' accounts with fewer rules and fees.)

She was so excited to make her first deposit that she paper-clipped the transaction receipt to her shirt and wore it like an award ribbon!

Her initial deposit included all the small change she'd found and collected in her few years on earth, freed from her piggy bank and painstakingly counted out as a family the day before.

It wasn't much, but that didn't matter. It was a very exciting time for her to experience such a grown-up thing on her own and since the account had no minimum balance requirements or fees, the process couldn't have been simpler.

When we arrived home, we also explained that Gv would begin to receive an allowance each month. This was money that she would receive just by being a supportive member of the family and although she wouldn't earn it by doing anything in particular, she could potentially lose it some months if she didn't appropriately contribute to the good of the family.

In other words, we don't tell her that she has chores to do, but there are plenty of expectations for all of us in order to be helpful to the family. G is expected to go to work to earn money we can use to pay for our basic necessities. I'm expected to keep the house clean and cook the meals and facilitate the learning that Gv does each day. Gv is expected to keep her room clean, put her dishes away, and help with various other tasks (like unloading the dishwasher and folding clothes, helping to bring in and put away groceries, and whatever other things are appropriate for her at the time.)

Curious about what types of chores you can give your wee ones? Check out this post to learn all about it!

That's a very simplistic way to describe what we all contribute, but our main goal was to get across that there are things that we all just do because we're a part of the family. That doesn't mean that G can't fix dinner or Gv has to always empty the dishwasher or that I can't earn money by coaching at the rink, but the point of it all is that when you're a part of a family, you just help to make life better.

We decided to give Gv 4 quarters a month to begin with. We felt that was a reasonable amount and the four quarters make it easy for her to put one in her save bank, one in her God bank and then the other two are left up to her.

Her different piggy banks (& change purse, for when she goes out shopping!)

She has a "fun" bank that she's allowed to access when she wants (like for trips - link - or things like when she went to the State Fair with her cousins - link to photo), but it's been interesting to see that in many months, she's opted to put more than one quarter into her save or give banks instead.

You wouldn't believe how often she begs to take the money out of this thing to count it. And I indulge her. Every time. (woo-hoo! bonus math work!)

It's neat to see her get just as excited over adding to those two areas as it is to spend

We've also explained to Gv that she can earn extra money whenever she wants by asking to do extra jobs that are outside her normal expectations as part of the family. We add things like cleaning the baseboards and grout to this list, since more typical/regular tasks are just things we all have to do as part of the family.

It's been about a year since we've started this new practice with Gv and G and I have been happy with how's it's gone so far. We enjoy seeing Gv get so excited over putting her own money in the offering plate at church, she has a blast occasionally being able to make a trip to the bank to make a deposit in her account, and she is currently saving up all her spending money to take us and Grammy and Papa out to a fancy dinner, just for fun!

While we sometimes have to remind Gv to pick up her room or ask her to help with some household task, she'll often offer to help when she sees there's work to be done. And we're happy to not have her allowance tied to something she does, since we want to promote a sense of responsibility to the family outside of extrinsic rewards.

The subject of finances might look different for your family -- and that's okay -- but this is what works for us and it will be fun to see what further developments we make to the system as she gets older!

Do you give your kids an allowance? If so, what does it look like at your house? I'd love to hear!  Either leave a comment below or email me at lisahealy (at) outlook (dot) com.

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