Middle-aged married mom looking ahead while enjoying today Yesterday DS3 bought a truck and a 4-wheeler! I was surprised since he hadn’t discussed it with me, but he’s 18 now and he used his own money.
When our DS1 was very young I read several articles about teaching kids money management skills. I was interested because I felt like WE were just learning money management skills at that time and I didn’t want to repeat the cycle of learning about money ‘the hard way’. [I ought to blog sometime about our ignorance and some of our terrible decisions during those days…] One thing struck me as I read the articles: kids can only learn to manage money if they have money to manage. So based on that premise, I created our family’s money program for kids and though I would tweak some things if I were to start again, overall it has been effective. My boys know so much more than I did at their ages – all of them.
We started an allowance at age 5. The DS received one quarter per year of age each Sunday. Then beginning at age 10, he received 50 cents per year of age each Sunday. At age 13, it bumped to $1. At age 15, it bumped up again to $2. At age 18, it stopped.
It wasn’t just the amount that was progressive – the financial responsibility was too. So at age 5 he just paid for candy and extra toys. I never had to say “no” to a kid whining for candy in a check-out aisle. Instead I said “Of course you may have those M&Ms – did you bring your money?” Or “Do you have enough?” By age 15, the boy was expected to pay his own entertainment expenses including gas, movies, dates, and also buy his own clothes. I didn’t have to debate about what clothes brand was ‘cool’ and acceptable – he could buy whatever he wanted. Also at age 15, I opened a checking account at the credit union and began direct depositing the allowance instead of using cash. That’s when he received his first debit card.
The boys also had chores but they weren’t linked to the allowance. The chores are mandatory because they live here – only some special jobs qualify for payment and they’re optional. Over the years I sometimes gave advice, even unsolicited advice, but I never made rules about how money was spent or saved. They decided for themselves whether some expensive things were worth it and they learned fairly young how to calculate sales tax. They’ve learned what banks do when your account gets even a teensy bit negative. Recently they’ve learned that when you sign up for a deal online sometimes there’s VERY small print that indicates that you’ve really purchased a subscription and the company will hit your account every month.
At age 12, I established a savings account for the DS and I agreed to match contributions, BUT the savings could not be touched until age 18.
When he turned 18, DS1 had a princely sum of $350 in that savings account. For six years all his savings efforts plus matching contributions: $350. He even had a job for the last few months of that time. DS2 decided when he turned 15 that he didn’t really need $30/week so he requested to have $10/week put into his savings. With matching, that was $20/week. (Yes, it did hurt a little…) At age 18 he had $4000 saved up. He asked me then to show him about investments so I helped him set up a Roth IRA. He could only put about $1200 in it that year because it’s all he earned. So now DS3 just turned 18 last month. He also had parts of his allowance directed to the savings like DS2 plus he would occasionally hand me money earned from a job. I once had to double $900! He also heard from DS2 how much more investments earn than savings so when he was 16 he asked if he could put some of his savings in a brokerage account so long as he still didn’t touch it until 18. I agreed to that. He had just over $7000 in the two accounts combined when he turned 18. I think he’s probably just spent the savings money and left the $2000 in the brokerage account. As for DS4 and DS5, it appears that they’ll be somewhere in the middle. One has between $1k and $2k and the other between $2k and $3k. The one with more requested a brokerage account too. They’ve still got a year and half before they turn 18.
What’s interesting is they all learn from one another. In some ways DS1 was at a disadvantage because he was first. But even so, it’s about learning lessons while the stakes are low. He was recently eligible to sign-up for a company’s 401k for his student job while in college and he did make that choice because he’d learned the value of automatic savings from his brothers.
Money Management For Our Kids
January 25th, 2020 at 01:46 pm
January 25th, 2020 at 04:30 pm 1579969834
January 25th, 2020 at 04:50 pm 1579971038
January 25th, 2020 at 06:28 pm 1579976911
I've just today heard from DH that for the new-to-him vehicle, DS3 didn't think about tax, title, & license fees, or insurance, or even that cars don't come equipped with EZ Pass! (He drove on the turnpike to pick it up in Philly.) So the lessons continue... Hehe.
January 25th, 2020 at 06:57 pm 1579978637
Interesting point on your DS new car...the cost is more than what you agree on a the dealership. I hope he knows that cars will require maintenance too.
January 25th, 2020 at 07:28 pm 1579980499
And you did remind me of something: once ours turned 15 - the age at which they became responsible for clothes - they started appreciating getting clothes for gifts. One even requested underwear for Christmas!
January 26th, 2020 at 03:05 am 1580007908
January 26th, 2020 at 03:37 am 1580009866
January 26th, 2020 at 07:33 am 1580023998
January 26th, 2020 at 08:10 pm 1580069419
January 26th, 2020 at 10:39 pm 1580078376
January 28th, 2020 at 12:59 am 1580173195
January 28th, 2020 at 01:05 pm 1580216723