Missy over at It's Almost Naptime!, one of my favorite blogs, asked the question about how families handle allowances.
Now this is not to say that we have it all figured out, but I mostly wanted to write about the banks that we use with our kids. It is called My Giving Bank and was developed by Larry Burkett. The bank is divided into three different parts with pictures of a bank, a church, and a store, making it easy for small children to see which bank they are putting their money into.
We pay our children an allowance because they are part of our family. They have chores to do for being part of our family, but they aren't tied to the allowance. The children can earn extra money for projects and chores outside of their normal chores, but only if it is spelled out beforehand. We don't pay them for all help with projects, either. My husband and I talk about what things we need done, and sometimes the kids just help with projects because they are part of our family and sometimes they have opportunities to earn extra money with projects.
We have found that if we pay them for chores, if we ask them to do anything extra, they will ask what they get paid to do it. We wanted our kids to help around the house simply because they were asked, not because we were paying them to help.
We start out using the Giving Banks when they are around 2 years old. They give 10% to the Lord first thing, save 25%, and the rest goes in their bank. We have also found that if you pay them too little, it takes them too long to have any money to learn to manage. And if you pay them too much, they have no desire to work extra and learn the value of earning something that they worked for. Every family will have to work out the amount for their individual circumstances.
We want to help our children to learn to give joyfully to the Lord, save for the future, and manage their money within their budget. And let them make mistakes, which can be hard on the parents. One of our teenage sons used to plow through his money as soon as he got it and was always broke. He has learned some hard lessons and is now our best at saving. He is saving for an expensive item that will take him almost 2 years to achieve, and he is forgoing all immediate purchases for the desired one in the future. This is not something we thought he would ever be able to do, but he has learned a little about the value of money and how he wants to spend his.
Larry Burkett also has some books that we have used. Money Matters for Teens and Money Matters for kids. These are great resources written by a very Godly man who is now in heaven. Crown Financial Ministries also has some great resources by Howard Dayton.