Kids and Allowances: How to Raise Financially Responsible and Giving Children

my worldraising giving children

I decided it was time to begin giving my daughter an allowance, when her requests for trinkets at the Dollar Store turned a thrifty excursion for paper plates into a pricey shopping binge.  Since I had arrived at the decision that she was old enough to learn about the value of money and budgeting her resources, I concluded she was also mature enough to consider others’ needs along with her own.  Thus began a practice in our home that we all refer to as “Spend, Save, Give to Charity.”

Every week when my daughter earns her allowance (and yes, I am one of those old-fashioned Mamas that is a stickler for earning…daily chores and all), she sorts the money equally into three separate plastic mugs (purchased at the Dollar Store that started it all!).

Tips for Teaching Children to Spend, Save, and Give

1. Encourage your child to put a portion of their money toward items they'd like to buy. We did this by labeling the first mug “Spend,” which, in essence, is her “mad-money” mug. This is the other term we have coined to represent the fact that she can use this money on a whim or as part of a plan, but it is hers to spend on her heart’s desires whether it is a cool new hat or fun new toy.

2. Instill in your kids the importance of saving part of their earnings. To do this, we labeled the second mug “Save.”  Since we’ve got over a decade before car-buying or college tuition is a need, she doesn’t have any huge expenditures just yet, but her Save mug represents bigger purchases, like an American Girl Doll, new trendy hair accessories or a digital camera, for which she will need to accumulate funds over time. My hope is that the Save mug will teach my daughter about delaying gratification and setting priorities on her list of wants.  Likewise, she is learning relativity when it comes to the pricing of the different items she covets, and gaining a better understanding of the difference between “everyday” items and “special” ones.

3. While helping teach financial responsibility, also encourage giving. We do this by labeling the third mug “Give to Charity,” which could go to a charitable organization, a project, or, if applicable, to your church group.

It is important to me to raise children who are aware of their blessings and understanding of those who have less—not just monetarily, but also physically, emotionally, etc. For every quarter that she has to spend on herself, she sets aside the same amount to donate to the charity of her choice. For her little friend diagnosed with Juvenile Arthritis and for tickets to a Pancake Breakfast to raise money for my friend with breast cancer, she is learning to give as much as she gets and care for those around her.

For the time being, the equal contributions to the Spend, Save and Give to Charity mugs are my rule.  My hope is, however, that as she grows and matures and starts gaining more independence in how she earns and spends money, this foundation in balancing saving and giving will stick with her.

More great suggestions from Signe Whitson, LSW.  These tips and many more can be found on her blog on passive aggressive people.  Her work with children for over 10 years has given her many ideas to better our families, children and ourselves.  Her advice is shared with you from My Baby Clothes Boutique.
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