RTW: How do I manage children’s money?
Today we got onto the topic of how to manage children’s finances. In other words, when your child earns money, how do you help them save for the future, such as for a mission or college?
I’m sure there are many effective ways to do this, and certainly the most effective way is whatever works for you! Some families use myjobchart.com as a resource. We have used that to chart jobs and points but haven’t actually used the banking part of it. I really thought my friend’s idea of a family bank was very practical, if you like doing things on paper instead of online.
My friend started their “family bank” back about 20 years ago. (She has 9 children, and her oldest is married now.) She got a simple notebook and has a section for each child. When her children earned money, they gave it to her and she wrote it down. You can see here how she keeps a running balance, AND she pays them interest every 3 months. Her rate was competitive with the banks, so her children weren’t missing out on earning interest. Then, when it is time for them to need money for college or their mission, she just writes a check and keeps the accounting. It works for them!
I have done things differently. We opened a bank account for each child after they were born, and we would deposit money whenever they saved up some. (We kept it in jam jars when they were young until we could get to the bank.) Sometimes we would try to motivate them by matching whatever they would save in a year.
Then things got complicated as our family size grew: it was hard to get to the bank, they would lose their money, or a sibling would take another sibling’s money. Or they would go spend their savings money on candy at the grocery store, or the money would get mixed up in another child’s. Or who knows what! So now they each spend from their own accounts. I help the younger children do that, but when they are 12, they are responsible to buy their own clothes from a clothing allowance they earn, so they learn to use online banking then.
So far having them begin managing their money at age 12 has been beneficial. They all know how to order things online. They are learning to avoid identify theft and scams. They know how to find a deal since their funds are very limited, unless they supplement them by earnings outside of the home. It’s definitely a learning experience for all of us, parents and children!
We encourage them to save 50% of all they earn to savings and pay 10% for tithing. The rest they can spend on whatever, pretty much. I wish I had done a better job of helping them save, but that’s how it goes. We teach them, and they have to learn what they can and will. It’s up to them. (Phew!)
What system works for you?