Building Net Worth $6.00 at a Time

Our daughter (soon to be 10) has the opportunity to earn up to $ 6.00 per week in allowance.  She is paid every Saturday night, which is when my husband and I “close out our budget week.”  We pay her the same way we get paid — electronically.  We tell her how much she earned and she can add it into her own personal budget spreadsheet on the computer.

Currently she is “funding” the following savings categories that she created:

• Charity (this usually means buying items for Operation Christmas Child)
• Church (she makes her own offerings as she sees fit)
• American Girl
• Animal Jam (online game – she has to pay for her membership or ask for it as a gift)
• Clothes (for non-essentials, like earrings from Claire’s)

There is also a column for “Debt.”  She has been in debt to us before (for an Animal Jam membership promotion).  Dad does not accept only $1.00 in repayment either.  Debt is a bummer! This debt experience sent her looking for “extra” work around the house so she could have her allowance and have money to repay debt. This is what Dave Ramsey calls “getting yourself a second job delivering pizzas.”

Finally, there is a column for her savings account.

(Money allocated in budget + savings) – Debt = Net Worth, calculated right in the spreadsheet.

In nine more years she will be eligible for student loans, credit cards, and car loans! I truly hope her experiences now are giving her a foundation for making financial decisions down the road. My feeling is that the college years take you from making very few decisions about money to making money decisions that affect your financial health for a good part of adulthood… and THAT is a whole other post!

Busted Bubble – There’s No Money Tree

Santa Fe, NM

I may be a grown-up, but I still haven’t gotten over the fact that there is no magic money tree.  I bought a nice pair of dress pants for church… and it is never fun to enter those purchases into Quicken and deduct the money out of the budget, even when I have funds saved for such purchases.

My daughter is now learning about this hard reality as she transitions into allowances and chores.  “Teachable moments” are cropping up left and right!

“Can I have money for the Scholastic book fair?”

“No, you haven’t read the last book I bought but you are welcome to use your own money.”

“But I am saving my money for something else!”

“Me too!”

She went on to wonder what would happen if she were the ONLY one in the class with no money for the book fair.  I said she would have to tell her friends she is saving her money for something else.  This conversation, for me, echoed many of the financial decisions my husband and I are making every day.  Why do we only have 1 bathroom… because we are saving for something else.  Why does my husband drive an ‘entry-level’ car… because we are saving for something else.  Freedom from debt is a wonderful situation, but it is still a life filled with many purposeful decisions about money.

Oh, and the book from the book fair that she reeeaaaally wanted?  The library has a copy waiting for us on reserve.

 

The Truth Hurts…. Waitress and Maid No More

Dr Kevin Leman, a family psychologist whose writing I have enjoyed, asks parents to consider “Are you running a house or a hotel?”  When your kid drops a towel on the floor, does the maid pick it up?  Does the front desk provide convenient reminders to pack backpacks, and remember library books?  Is there express laundry service when too many socks have been abandoned under the bed instead of making the journey to the laundry chute?

Ouch.

Not only does my daughter get tired of me telling her to do things, I get tired of listening to myself!

Enter the chore chart.  We have tried various systems but perhaps never really thought through what outcome we were trying to achieve.  I would like to improve her independence, reduce my nagging, and give her more experiences with money.

We settled on 6 basic items to do every day, and an opportunity to earn up to $5.00 a week.  This money can be used for her personal church contributions, earrings at Claire’s, apps for iPad, and the like.  I hope this experience can provide a foundation for the bigger “wants” that await in middle school… iPhones, Ugg boots, Vera Bradley backpacks.  Mom and Dad definitely live by a budget and when we make a luxury purchase we see what kind of a bite it takes out of our fun money.

We printed a chart off that she can maintain, and she will be paid on Saturdays when we close out our budget week.  We shall see how it goes… day 1 was fantastic and quite refreshing for me!

What experiences have you had with getting your children to contribute to the work of running the household?

Carnival Games – Teachable Moment

Roll Out The Barrel….

We have a tradition every year of celebrating Oktoberfest with friends at a local beer garden. With the festival comes the lure of … carnival games.  Doesn’t every parent look forward to an opportunity to bring home a betta fish in colored water, or a set of pink and purple stuffed horses?

This year we offered our daughter a choice … she could play the games as in years past, where Dad usually spent $10.00, or she could “bank” the $10.00 and use it for something that might have a higher fun quotient.   She chose to pass on the games, and have the $10.00 to spend later.  She was a trooper that night resisting the lure of knock-off inflatable M&M characters and pink dolphins.

Today an opportunity arose to take advantage of that $10.00.  She has really wanted to get a membership to an online game she enjoys called Animal Jam.  I reminded her of her fun money and she was over the moon to be able to get this membership, and still have a bit of money left over.

My money management lessons don’t always pan out as I hope, but this was a win-win for both of us!