Another installment in my Question and Answer series! This was sparked by a post from a favorite college friend on Facebook. It was interesting to see the responses.
How do we do our finances with our kids?
Get ready for the mother of all posts!
Previously, we were the typical parents. If the child needed something we would usually buy it with all types of prerequisites, like “you have to clean you room and do this laundry list of jobs.”
If it were for sports or an athletic event they were playing in, we would shell it out for the sake of the event.
We have always emphasized living frugally, living within your means, getting an education and budgeting, but as parents we know that doesn’t always play out as planned.
But, that all came to a halt in February, after a 21 day vacation, when various family members made such comments as…..
“Everyone in our town gets their stuff paid for, why do I have to earn it?”
“My friends don’t have to buy their shoes?”
“What’s my allowance at college going to be?”
“Why do we have to do jobs?
“You guys are rich and have all the money in the world?”
Wait a minute! Where in the world did that last statement come from?
I can’t remember having all of the money in the world, but we have been blessed and made good choices with our money from the first day of our marriage. Never having debt outside of mortgage, has made many options available to us and no doubt we have a nice lifestyle….but really “all the money in the world and rich- Warren Buffett is rich!”
That last statement was so disturbing!
What was killing me was the perception some of the children had and the entitlement they felt. Yep, entitlement, the curse of this generation.
How we manage our children’s finances-
Here is the best part, I was reading another college roommate’s (who I absolutely adore) blog and she recommended an APP for the iPhone called Bank of Mom.
Part of my problem was managing the kids money that they were earning. I couldn’t keep track in the course of a million other things I had to take care of.
I quickly downloaded the APP and I absolutely love it. It simply helps me manage better. Our financial program is still the same it has ever been.
About the APP Bank of Mom
“Bank of Mom lets you shift your kids’ allowance from a cash operation to a line of credit, teaching simple financial concepts along the way. Create an account for each child, and make cash deposits for chores or allowance. You can also bank activities like sleepovers, or time for TV or video games. If you reward your kid with TV time for unloading the dishwasher, for example, you can shelve those dishes in her account and let her “withdraw” when she wants to bliss out on Nickelodeon.”
We have four requirements-
Rule #1 You have to earn it.
The app allows me to do keep track better and it helps them manage their money better.
I simply negotiate each of the jobs that I need to have done at a fair wage. I feel like I am paying generously. The app has helped me mange the finances better.
But on the flip side, they are paying for higher ticket items, I would have to pay for anyways like shoes and yearbooks, in someways I think I am saving money.
Elizabeth, 8, had no problem taking out $22.00 for a yearbook, which I would have probably bought anyways, but now I am getting work out of it.
Noah, 11, wanted a new bike, he saved the entire amount and never worked harder. We could barely squeeze work out of him before.
(Still not feeling to great about this purchase!- But it was HIS money!)
Deductions……There are some rules with it-
I have a huge long list of behavior issues that they will be deducted for.
Ex: Leave your backpack on the floor. -$1.00
Eat outside of the kitchen -$1.00
Trust me- One child lost $30.00 just in household behaviors last month that I am trying to nip.
I am saying yes instead of no to many more things.
Even at the grocery store when asked if they can get a treat, my response- “Sure, I will just deduct that from Bank of Mom.” All of sudden the thought process begins….some children have declined to buy it.”
Rule # 2- Kids have to pay their tithing to the church.
LDS members pay 10% off their gross income. I know some of your jaws are dropping, but you get it back ten fold. We have never missed paying our tithing and pay it every check.
We have had everything we have ever needed and live off 10% percent less than most of the world.
We will discuss this priciple in more detail down the road, it deserves a post of it’s own.
Rule #3 You have to save a percentage of it.
All of my kids are good savers, but several are good spenders as well. Meaning the money is burning a hole in their pocket from the get go.
They each have a bank account.
They are required to have a part in each purchase and they are required to put a negotiable amount in the bank.
Our children’s finances are not perfect yet, but I believe it is helping them understand to budget and save.
Rule # 4 Learn money management skills.
This is in the making, children learn financial skills from parents who manage their money.
Tips to making it work-
Problems arise when one is the Santa Clause and the other is the enforcer.
We had to work out those issues early on. Everyone thinks Dad is much more laxed than mom.
Both parents have to do it together!
The key to success-Discuss it often! And trust me, I am soooo fatigued by the discussion.
How are you doing finances with your kids? I love tips and suggestions!