Teaching kids about money and responsibility

Sayer was SO jazzed to be able to take a tag off of an 'angel' tree before Christmas and get a gift for someone that she began asking about getting money so she could do it herself. So we agreed that we'd start giving her an allowance after her birthday.

On her birthday I got out a jar of change and a dollar bill. She knows that the dollar is the same as having 100 pennies. So I explained that a nickel is the same as 5 pennies and a dime is the same as 10 pennies (and gee, isn't it funny that the dime is worth MORE than the nickel but the nickel is *bigger?* :) and that a quarter was the same as 25 pennies and that there were 4 quarters to a dollar, 10 dimes, and 20 nickels. I'm not sure how much of that actually stuck, but we'll go over it again a time or three :)

Then I gave her 6 quarters and talked to her about having 3 different banks to collect her allowance. One for spending, one for saving, and one for sharing/giving. Spending is for her to use whenever and on (nearly) whatever she likes. Saving is for saving ... though we may allow spending from this jar after saving up for some big item. Sharing is for setting aside money to use to buy gifts for other people, whether they're family, friends, or strangers.

She is free to distribute her $1.50 into those banks in any way she likes. But I want to encourage saving and sharing, so I have a little plan. I don't think she can quite grasp the concept of interest, but she can probably understand that for every $.50 she puts into savings I'll add a dime, and for every $.50 she puts into sharing I'll add a nickel. And perhaps at the end of the year when we take out the money to count it I'll add another dollar for every $10 in each jar.

And yes, this is an allowance, as in free money. It's not tied to doing chores. Chores are expected. And we've decided that the bonus items that Sayer (and later Duncan) might get for doing something especially wonderful or thoughtful will likely be coupons for outings or activities rather than cash payments. But it could be both. A quarter and a coupon for going to the beach? Maybe :)

But I hope that I'll be able to use the allowance to teach her not just about currency and it's values in relation to other currency, but also about the value of an item (do you really want to spend $4 for that little plastic dodad thingy? do you think it's *worth* $4? how long did it take you to save that $4? is this item worth all that time? etc), and the benefits of saving and sharing.