The observations by several posters that “no one gets paid simply for existing” are kind of funny. Actually, when I think about it, it seems like children get everything simply for existing – as they are supposed to! And by “everything” I mean shelter, food, clothing, and some minimal level of toys or entertainment – I don’t mean everything they want. At least I think that’s one way to look at it.

When you insert an allowance into the equation, the matter just switches from the child having to go through a parent to request and get approval for purchases versus making those decisions directly.

The money to the child is divided into 3 and goes to
a) current spending
b) future goal
c) charity

I am wondering if this seems right. As an adult would/should we be splitting the money we earn the same way.

Shouldn’t the individual ( or child ) decide how much needs to go in each bucket. I agree that charity is an essential part of finance, however, if you and I as adults might not give a third of our money to charity, is that what we should teach our children?

My daughter (now 26) started out with a quarter a week at about the same age. On trips to the store, she would point at a comic book and ask “how many quarters is that?”, then point at a bicycle and ask the same question.

Eventually, she learned the value of a quarter and started saving. In kindergarten, she was the first kid to start saving “tokens” for a bigger prize from the treasure box.

Allowances are a good thing…

However I’m not disagreeing with you on the value of “gentle but clear guidance”. Indeed, the book I was praising definitely used that approach.

Where we’re not seeing eye to eye is on whether separating an amount into piles is too complex for a 4 year old and on the value of saving (or giving charity) from a young age.

I have 4 children, born in 3 different decades (the 70’s, 80’s and post Y2K). Between them, my adult children have 3 children of their own, 2 of whom I live with and take care of on a regular basis. My experiences, as someone pointed out, are anecdotal but they span a period of 30 years, both genders of children and different life circumstances over that time.

Could I be wrong? Of course. As a parent with 30 years of experience I have an advantage, but I’m hardly infallible. For one thing, as bethh pointed out, each child is different and has his or her own personality. But there are many valid generalizations that can be made about behavior and I think it’s pretty clear that small children are fascinated by money, especially coins.

Part of that, I think, is that children see adults handling money and see what that money can be exchanged for. But I also think that handling coins is inherently pleasureable. They stack, they clink, they’re heavy, they roll, they’re fun.

My 6 year old spent time on Sunday counting out dimes and sorting them into an empty egg carton as a matter of fact!

As for saving, I support saving and I can require a child to save a given amount when they have a particular goal in mind but I don’t think I’ve ever required a child to save just for the sake of saving. Giving charity is a different matter. Our religious beliefs dictate our behavior there. Even in preschool each of the children gives a penny to charity daily and I think it’s wonderful that, when my 6 year old finds a quarter on the sidewalk her first thought is to find a pushke (a charity tin) to put the quarter in! Two or 3 pennies out of the quarter would have been sufficient but she already feels that she doesn’t need to benefit from somebody else’s loss and that the money is best given to charity.

Additionally, my mother put all gifted money into a passbook account that I could not access. She invested parts of it in short-term and long-term CDs and would show me the passbook frequently so I could see how my money was growing in exchange for being tied up for a fixed period of time.

I pitched fits the first few times when I realized that I couldn’t spend any of my First Communion money or my birthday money. But eventually I realized that saving was not optional and I got over it and learned to make do with what little I had access to.

When I was 13, I started working under the table at a restaurant doing yard work and odd jobs. My parents made it clear that if I got a job, they would drive me to work.

I’ll tell you what, because of this I’ve always been a big saver. I saved more than I spent all through high school. In college my friends would earn $5000 in the summer working construction, and they’d come home each Spring dead broke, or worse, deep in credit card debt. As for me, I’d earn $3000 at my summer cashier job, and I’d come home with $1800 to spare.

You could argue I didn’t live la vida loca, and I missed out on some life opportunities there due to my frugality. Maybe so. But there are ALWAYS bigger, better, flashier, more expensive life choices we could make. The point is, I lived within my means because that was the life I knew, and it all started with my crappy little $1 per week allowance.

I think Trent’s idea is a fine one. I don’t mind the forced savings. After a while you lose the sense of entitlement to the gifted money and you realize that you’re sitting on an asset that’s there when you need it. It’s a good feeling.

1. make sure you actually follow through on this. My parents started this idea with me, but it fell apart pretty quickly.

2. Be flexible when it’s your daughter’s turn: you may find that she ticks differently than your son, and another setup may work better for her.

Looks like a great start!

1. Gifted money is just that — a gift. Let the kid do what he wants with it. It’s generally given on a special day and I feel you’ll be taking away the specialness of it by making him save a portion of it.

2. If you find 3 jars is too much, you may try using just 2 jars. Have on for saving and one for spending. Every so often have him go into the savings jar to make a donation to someone. This could go in conjunction with something else, like when you purge his toys and outgrown clothes. Explain that since Christmas is coming up (or whatever special thing is approaching) it’s time to go through and pick out the things he no longer wants or don’t fit or whatever and it’s also time to give that same organization money so they can buy the things they need that are not donated. I worked in non-profit for years and my daughter (5 years old) understands this quite well.

FWIW, I have kids of my own. But I haven’t really found a massive distinction between those with and without children. Sure, people without kids give stupid advice, but so do people with kids. Besides, most people were raised by parents and, therefore, can contribute to such conversations based on their own experiences as a kid. (In this instance, I think it’s just as valuable to hear from people whose parents took different approaches as it is to hear from people who are trying things with their own kids. I’d argue that it is actually more useful in this case to hear from other adults since, in this case, we are interested in the outcome of child-rearing practices.)

Bottom line: if people are offering anecdotal experience, then they are offering anecdotal experience. I think the one-up-man-ship of “my experience is more valid than yours” is futile and entirely unsupportable.

At least in our cases, it definitely helped to educate us about money and it trained us to think about immediately dividing any incoming money into different categories. I still do it today.

A child who doesn’t eat vegetables can develop nutrient deficiencies that affect her long-term health (although I’d posit that if her parents presented her with vegetables prepared in such a way that they taste good, she’d eat them willingly AND develop a healthy relationship with food).

A child who doesn’t do her homework won’t learn the things she’s supposed to learn, which will make subsequent years of school that much more difficult (and although a good teacher can give her students adequate incentive to do their homework, not all teachers are good).

A child who doesn’t keep her room clean can trip over a pile of books on the floor, fall, and break her leg in such a way that the doctors have to insert several steel pins for it to heal properly, resulting in awkward encounters with airport security personnel for the rest of her life (this happened to me; unfortunately, I still struggle to keep my room clean).

But if a child makes a few unwise purchases at the age of four, what’s the big deal? This is what I want to know. The worst I can see happening is that her parents will have to explain to her that no, you can’t have this book or that doll or that Lego set – you could have bought it with her allowance, but you already spent it all on candy or ice cream or 50-cent doodads. But after enough experiences like that, the kid *should* eventually learn not to spend all her allowance on candy or ice cream or 50-cent doodads. And maybe I’m misunderstanding, but it sort of seems to me like those in the “forced saving” camp are so convinced that their kids will never actually learn that lesson on their own (or, maybe, won’t learn it early enough for their liking) that they feel they might as well not even try. And I find that confusing.