Money Management For Small Children

We're trying to teach our daughter a little about money. Each week she gets $5 allowance. This may seem like a lot for a 6 year old. She has jobs, etc....she needs to do to earn this.

The large amount is because in our kitchen we have 3 jars-Spend, Save, Give-She distributes her cash each week as follows-$2 each in spend & save and $1 in give. She can spend the "spend" money on something parent approved that week or save up for something bigger.

She's really comfortable with this set up and even when she gets, say $5 or $10 in a Valentines Day card from her Great Grandma Ruth, she still divides it up. She actually has quite a bit of money saved up as the "spend" days hardly ever happen. All large cash gifts go right to the bank though.

Before we went to Florida my parents gave her $20.  GASP! With the stipulation that she didn't need to do that. That she could SPEND the entire thing on something big (for a kid anyway) there. Or little things.... (Damn Grandparents....) But when she got to Florida she met up with her other grandparents who bought her a boatload of things, a friend at the pool gave her some things and we bought some vacation things. She probably got more little things last week than she has since Christmas. Nothing huge, just a huge amount of it.

She also watched cable and ate white bread... It was an awesome vacation for her.....

And so she never spent the $20.  In addition to that, she received $20 from Will's Aunt & Uncle. And so now I have a 6 year old walking around with $40. $40 that she really isn't sure where to spend and what to get (and she can't really conceptualize what she can get for $40 anyway.) And she usually has a really hard time choosing something she wants to purchase anyway. And it's really $40 + what she already has in the jars at home and in her piggy bank. All told she probably has about $85 in this house.

So after thinking long and hard about it the other day she came to me. Serious. She had figured out what to spend her cash on.

She announced to me:
"I'm buying WHITE BREAD with my money and you can't stop me MOMMY...."

I don't even know what to say about that. I bought whole wheat that looked a little like white bread...I wasn't sure if white bread was on the "approved" list or not....

Then this past week my husband was getting really frustrated with how messy her room has been since we returned so he came up with a brilliant (?) idea. He told her that if her room was not picked up by the end of the weekend then he would do it, but that he would charge her $5.  Also, he would pick her coat up off the floor but THAT would cost her $.50 EACH time.

Today, sensing that her time was getting short, she ran upstaris to her room and came down to where my husband was sitting and plunked down $5 and gave him a big thumbs up.

After we recovered from the shock of this (and the covert laughter) and determined that my husband probably DID have to pick up the room he told her that he would do it, but that he would do it HIS way, throwing out whatever he thought needed to go.

She then asked if she could just give him 1/2 the money and that maybe he could help her.

He actually agreed. (Sensing, I think, that she was not going to pick up her room at all if she could just pay him $5 to do it.)

So for $2.50 my husband helped her clean her room. (The cost of the room clean should have probably been higher, like $15 or something to really drive home the point.)

She also asked us if she could just pay one big amont for coat pickups-Kind of like arrangement we have with the plow guy!!!!! 

We declined.

I'm not sure these are the lessons that we were trying to instill with this entire process, in fact I am SURE they are not, though I think they may still serve her well in the long run ;-) She is certainly getting a financial education.

And we've certainly learned a few things as well.....

I will also say that at a recent fundraiser at her school for a local children's hospital she donated $10 of her own money without asking us for any. (And in the process, secured another $10 from her grandma for the cause.)

We're also taking some of that extra cash to the bank to put into her savings account.