We have been rehauling our "family economy" system since the beginning of this year and here is a brief description of how we are trying to teach basic financial mgmt to the kiddos. Mind you this is pretty new, but so far has been effective for us.
The old system: give allowance at the beginning of each month (equal to kids' ages), make sure they are doing their "normal jobs" (chores that they do not get paid for) during the week, and 2-3 Saturday jobs.
Why it didn't work for us:
#1 - The kids didn't care too much if they lost their allowance. I kinda had it set up where they lost their allowance if they do not follow-through (keep leaving their bedrooms dirty, not picking up clothes, toys). One of my kids decided it was worth it to lose the allowance so he/she didn't have to pick things up/put away stuff. Except when there was something she/he wanted. Then a bad case of the "gimme's" followed.
#2 - They still did their Saturday jobs and their normal "unpaid" jobs (i.e., make bed, do homework, practice piano, etc) but they needed constant reminders and nagging, bribing, etc :), which I would rather not do.
#3 - I also didn't like the paper job charts, and the kids really didn't really take good care of their charts - it would help to have a board of some sort to display them on (I didn't).
So to this method's credit -- I think it could have worked, because I know someone who does this and it works perfectly fine for them.
Why it worked: The kids have gotten used to having chores they are responsible for on Saturdays. And that they couldn't go and do fun stuff until chores are completed. I found out instead, that friend play-dates are very effective tools to getting those chores done FAST.
Allie saved $13 to buy her new betta fish, Squirt, and his needs.
Improved System (sorry, long post!):
1. Get job charts for each child.
We use myjobchart.com to organize our chores (divided up into day and night chores, extra, weekly, every other week, only on certain days, etc).
For each chore completed, points are earned (my call). Example, 5 points each for "make bed", "loading own dishes in the dishwasher" and I assigned higher points for things they struggle with or I want them to do longer and more often without nagging - 15 points for "practice piano", "practice sports", "read scriptures".
Before school in the a.m. and/or before bed, I let them log on to their own page (myjobchart gives each child their own "chore,extra chores, and rewards" pages) and check off what they did. This is what Allie's and Collin's look like respectively. It only takes less than 1 minute to do, and the pages are so cute, and even claps for them when they click on "I'm done." Click on the screenshots to see it bigger.
Collin's chart (for today only, tomorrow's looks similar, but there are other jobs that may be different, depending on how I set it up)
Allie's chartSome of our extra chores:
What I like about this online thing is that I don't have to make all these cutesy paper stuff that my kids don't also care too much about, and if I need to add "extra chores" or one-day project deals where they can earn extra points, I can do it in less than a minute. This could really be helpful if you had say, 6 kids you're trying to do job charts for. You'll just have to go check out My Job Chart to see for yourself.So now that we have our job charts and points squared away, here comes the money-teaching part. I am using ideas from the Values Parenting site to do this part:
2. Open up savings/checking accounts for each child.
Need: a checkbook for each participating child (a real checkbook with the child's name imprinted and with a check register).
We are starting them off with a small amount in the bank. Every Saturday afternoon (end of the week for our job chart system) is payday. Here we get to hand out rewards. There are lots of rewards to be had in each of their stores (personally chosen goals), and one of them is $$ for every point earned. Should they choose the $$ reward, we will credit their account (they write it in their check register) and they can see their money grow. And just like our family store, they will set aside $$ for tithing and savings.
Important: Pay does not come in cash, but by a debit entry in the child's check register, initialed by a parent (we've got a sneaky kid).
Then here's what happens: The child can then take out as much as he wants by writing a check (or he can bring along his checkbook when he goes shopping with a parent, and write out checks for what he wants, always being sure to deduct it in his check register before writing the check.) The check goes to the parent, who then pays for what the child bought.
Some cautions (from Values Parenting also):
1. What you don't want is to create a disproportionate focus on money or to make your kids into little mercenaries who respond to every request with "how much will you pay me for that?"
Be careful to make it clear to the child that the family economy applies only to a limited number of things. It is just a little family economy to help share some of the tasks and to help kids have their own money to buy their own things.
2. Don't do too much reminding. The whole idea is to have a system that polices and motivates itself.
3. Don't "rescue" them all the time, or bail them out. The hardest thing is to let the system work. If they spend all their money on Saturday and don't have anything left when they want to go to a movie with their friends, just say you are sorry, that you have made the same kind of mistake yourself, and hope they do better budgeting next week. If they spend their money on a too-expensive name brand, let them figure it out themselves. If they ask for a loan, tell them it's not that kind of bank.
Really letting the economy unfold and develop is the key, and not expecting some kind of magical quick fix. Biting your tongue and letting them make decisions is hard, but remember that the whole idea is to learn from mistakes made now while the stakes are small. Give a little advice now and then, especially if they ask for it, but remind them that it is their money and their decision. (This does not mean, of course, that you can't have rules about things they cannot buy.)
This is in a nutshell is our family economy. :)
Resources to read: The Family Economy
