Teaching children about money can be a challenge for any parent, especially in an increasingly cashless society.
For example, my wife and I set up a plan for giving our children an allowance, but when the time came to pay up every week, we often found that neither one of us had any cash. That meant digging through the change cup in our kitchen, car cupholders, pants pockets and elsewhere looking for loose quarters, dimes and nickels, often coming up ridiculously short and promising to make it up the next week.
At which time we would inevitably face the same problem again.
But last year, after reading about alternative allowance ideas in various family and parenting magazines, my brilliant wife came up with a hybrid that seems to be working.
When our children turn 4 years old, we start giving them an allowance equal to half their age in dollars each week, with a raise every two years ($2 a week for a 4- or 5-year-old, increased to $3 a week when he or she turns 6, etc.). They are expected to give 10 percent of that as a church contribution and save half for college and/or church missions. They can use the rest to spend as they see fit.
We've been comfortable with those amounts, and our four children have been, too.
However, as I said, we never seemed to have cash on hand. And even if we did pay on time, the little ones would inevitably forget to bring money with them when we went to the store. That meant they would either be disappointed at not being able to purchase an item, or we would buy it for them and forget to have them repay us out of their piggy banks.
Under the new system, we obtained four check registers, such as you would use to keep track of debits in your checkbook. Every week, we "deposit" allowance in their registers by writing in the proper amounts. We periodically "withdraw" some of that money by giving them actual cash for church contributions or to put in their bank savings accounts. My wife, Stacey, keeps the registers in her purse, and as she says, the rest of the money is theirs.
"They can 'debit' it by saying they want to buy something, and I will take that money out of their account," Stacey says.
After about four months on the new system, it seems to be a hit.
"They like to look in their books, in their little ledgers, to see how they're doing," Stacey says.
"I always had heard that making them spend actual money is the best, because it's much more concrete. But this seems more like the way people spend money now. When they say what they want, I show them the receipt, and we take it out of their account. They seem to really like it."
Our oldest daughter, 12, says she liked the fact that, under the old system, she could look in her money jar and count how much cash she had.
"What I didn't like was that sometimes you guys didn't have the cash, so we couldn't have it for a while, and we didn't have the money to spend for fun stuff and things," she says.
She says she likes the new system because now she always gets her allowance on time, and she can use the portion that is available for spending when she is with Stacey at a store. She also thinks she's saving more, because she doesn't see the savings book all the time the way she could see her money jar.
"You don't really think about it, so you don't want to spend it all of the time," she says.
"I want at least half of the money that's not for my education to go to my (church) mission, because I want to do one. But there's nothing that I would want to buy in two days or anything like that."
So that's the system we're using now. I would be interested to know what you think of it. Are there pitfalls we haven't considered? Changes that could make it better? Or have you used a different system in your home that worked well?
I'll share some of your thoughts in a future column. Or, if you have personal finance comments or questions, send them to [email protected] or to the Deseret News, P.O. Box 1257, Salt Lake City, UT 84110.
e-mail: [email protected]