1. Saving where you SAVE UP for something. For example, you want a $50 Imaginext toy. You have $20 from your grandma. This means you need 30 MORE dollars before you can buy it. So you'll need to save your $20 plus start to save other money you receive until you reach the $50.
2. Saving where you are actually putting money into a bank account, and saving it there. This is not the type of situation where the boys would be allowed to go to the bank to withdrawal money. This would be a true savings. (No withdrawal system.)
So I started to research allowances about a year ago. I still haven't found the "perfect" system. Growing up, I didn't have an allowance. The jobs we did around the house were expected, because we were a member of the family. We were not compensated for these jobs. I understand this school of thought. And I've read plenty in my research of situations where others believe this as well. However, where does the money come from when teaching a child to save? In my research, I've seen all kinds of systems for allowance, dollar amounts, etc. While searching and searching, nothing was perfect to me. In the meantime, Brewer started asking for an allowance. The timing of allowance was beginning to align. I was researching; he was asking.
As we close this year and start 2012, it seems like a good time to start a new system in the house. I modified a couple of different allowance systems I liked and came up with our own. The majority of what we are doing is based on Dave Ramsey's Financial Peace Junior. You can find out more about it by clicking {here}. We have the full set from Dave Ramsey include the chore chart, the children's books, the three banks (giving, saving, spending), etc. We aren't using all the pieces, as we are using what works for us.
I ordered chore cards from an etsy seller. You can click {here} to see her listings. Of course, I had to make changes to this as well so that I could really make it work for our family. I requested she put magnets on both sides of the cards. I hung the chore cards on a magnetic board in our kitchen. When the chore is showing, this means the chore is available for Brewer to do. When he finishes the chore, he can ask me for "approval". Once I approve his work, he can flip the card to the star side to show he has earned the money. Each chore card has a money amount on it. He can decide how much money he wants to make in a day.
There are three cards at the top of the magnetic board that do not have a money value associated with them. These are jobs that Brewer is asked to do, because he is a part of our family. We all have to do our part to help our family. If he does not do these three each day, then at the end of the day he cannot get paid for the other jobs completed.
With the system set up right now, we'll have to pay Brewer at the end of every day. I don't think I want to do this. So I'm going to have to come up with some type of tally chart for us to tally his daily earnings; we can pay him on PAYDAY.
When Brewer does get paid, he'll have to take 10% of his total and put into the GIVE bank. Then he'll take the remaining money and divide it in half. Half will go into the SAVE bank and the other half will go into the SPEND bank. I don't like that it is called a SPEND bank...as I want Brewer to realize he is saving this money too but that he can eventually spend this money. Another part I still need to tweak to make work for us. There is a workbook that comes with Financial Peace Junior. So we worked on numbers today with it. (Brewer loves math so this helped make it fun.) In the workbook example, Dollar Bill (one of the characters in the book) earned $8. We figured out that 10% of $8 is $0.80 and that money went to the GIVE bank. This left Dollar Bill with $7.20. We figured out that half of $7.20 is $3.60. Therefore, $3.60 will go into the SAVE bank and the other $3.60 will go into the SPEND bank. When the GIVE bank is full, we'll let Brewer choose a charity or our church to give the money. When the SAVE bank is full, we'll take it to his savings account at Wells Fargo. He will be allowed to use the money in the SPEND bank, when Lou, Brewer, and I agree on something that he wants to buy.
This is newly implemented in our home. We'll see how it goes and make tweaks to it along the way. I'm also willing to match Brewer dollar for dollar in his SPEND bank if he is working hard for a big dollar item.
What do you do for an allowance? Any ideas to can pass along to help us in the process??
