On The Ninth Day Of Christmas: Offering Allowances

How do we help kids learn wise
money management?

As stated earlier, I'm not a proponent of paying children to do the kinds of chores every member of a household should take turns doing, but only for special projects one might hire someone else's son or daughter to do.

But some kind of fixed "salary" (allowance) for younger members of the household (kindergarten age and up), as a means of learning good lessons in money management, can be a very good thing, and needn't cost the household a dime.

How is that, you ask? By basing the allowance on the amount of money we are already doling out for a defined set of miscellaneous items (recreational and optional in nature) that they will now be personally responsible to pay. The defined items might start with candy bars and ice cream cones for the young to eventually having them purchase their own clothes, shoes, etc., as teens. In other words, they become responsible to manage that part of the family's finances, and learn through buyers' remorse to make wise purchases as well as to learn to live within their prescribed budget. 

Thus no more begging for things on their list for which they should have ample funds to pay for. Whether, or what, they buy will be totally up to them, as long as the purchases are legal, not harmful, and within budget, all in an effort to help them learn how life in the real world works.

Loans can be requested from a "First Family Bank of Savings and Loans", but they should carry a hefty weekly interest, deducted from the next allowance payment. The rate of interest will be the same as the First Family Bank will pay per month if the child chooses to save some of their allowance. And to encourage generosity, parents might also agree to match each child's giving to the church or to the charity of their choice.

Another component of this plan can be to have a well defined Family Legal System (a set of family rules everyone is expected to abide by), then to have a well-understood fine system that results in a modest monetary amount deducted for each infraction. Giving a fine should, by the way, never be accompanied by a lecture or lengthy sermon, but delivered in the way a professional police officer would write a traffic ticket, or a supervisor at work write up an employee for violating company policy. Thus children learn from reasonable consequences, respectfully and consistently carried out,  again based on the way the real world works. Examples of fines could be a deduction for household chores not done, or for taxi service if a child doesn't get him or herself out of bed, dressed and on the bus in time. Or for hitting or yelling. The amount of a fine, predetermined so there are no surprises, is reasonable and based on the amount of income.

This doesn't mean there aren't other consequences for other infractions, based on some kind of "restorative justice" (acknowledging a harm done and making it right). But in all of the above ways children learn from their own choices, and learn that it is wiser to live by the rules. These rules remain firmly in place until or unless modified by parents or brought about by agreements made in occasional family council meetings.

Much love, many blessings.