Last year my husband and I started giving the children an allowance. My goal was to begin teaching my children a little about finances. I have read many books and websites giving advice on how to successfully manage allowance in your home. After much discussions and a few fail starts we have come up with a system that works for us and while there still needs to be a few more tweaks I am please with the results so far.
I am going to describe our family's approach to allowance by no means is this the only way to do this. Nor do I admit to being an expert on this matter.:) Take from it what you will:)
For now we decided that we would give each child .50 cent per year, in other words they would not be receiving the same amount. Currently Little Man (age 7) receives $3.50 per week while my Princess (age 9) $4.50 per week. I should also mention we pay the children in US currency.
We first tried giving the kids a weekly allowance but that failed almost immediately because I never seem to have the exact amount of money to pay the kids on Saturday. Since most of the time I have British Pounds Sterling in my wallet. After a rough couple of months I switched the payment schedule to monthly, which is much more manageable for us to keep. I simply call my husband at work to remind him to stop by the bank on base before coming home and then we can pay out the allowance on or very near the end of the month. Since we have started this system we haven't missed a month (although we have been late a few times but only by a couple of days:))
I purchased for each child a Moonjar Money box. This bank allows the children to separate a portion of their allowance into spend, share and save. Each month the children put a portion of their monthly allowance into each section of the bank. We decided at the beginning of the year 2011 the children would pick a charity to donate to. It is the end of 2011 and the children pulled out their money and chose a charity of their choice to make a donation too.
They gave their share (donate) money back to Dad who went on the web to donate the allotted money to the sites of the children's choice. Little Man decided to donate his $25 to Wood Green Animal shelter. The money he sent in was able to feed the rabbits at the shelter for a month. Princess decided to donate her $33 to Panthera an organization to help endangered big cats. The Children were there and watched Daddy make the donation in their names:) to their charity of choice via the computer.
This year we are doing the children's charitable donation a little different as I want the children to see first hand what their money is doing in helping others, so my husband and I had Little Man and Princess each sponsor a child from Save the Children foundation. We let the children pick the area, age and the child they wanted to sponsor from the website and each month the children will be putting their share money towards this endeavor (Mom and Dad will be making up the money difference:)) I am hoping that my children will be able to correspond with their sponsored child and thus getting a better understanding of how their money is helping others.
The other goal that I made for the children last year was they were each responsible for purchasing their sibling's gifts for Christmas and birthday. I was please to see the children really took an active interest in picking out the right gift based on their siblings current interest. While they did keep an eye on the price it wasn't the deciding factor in their gift choice.
My goal for the upcoming year is even more responsibility with money management. Since both kids seem to be a bit of a hoarder with their spending money, Mom and Dad are still buying too much of their stuff. I will begin devising new goals for the upcoming year that will have the children even more responsible to purchase their own things throughout the year using their own spending money:).
So tell me do you have a system in your house for allowance and how does it work?