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Teaching Our Kids With Allowances

April 10, 2009

1024754_21413542 Preet over at Where Does All My Money Go posed a really great question this week about children and their allowances and these times that we live in.

It got me thinking about what I have been doing for my daughter Roo, and why I think it can work for anyone especially if they have a tween like me, or perhaps even with teens.

I have become the Bank of Mom. We made it a real bank, based much on The First National Bank of Dad book (by the way that was a great read for a parent wanting to teach their kids about money). Now my bank has no where near the interest rate suggested in the Bank of Dad and I think that is ok and gives Roo a more real picture of what the world of money is like.She does get a good rate of return though 10% per year.Now here is what I did to teach one Canadian kid about money.

1. The Bank of Mom was an offical Bank. Roo has her bank account on my computer, so hers is close at hand.

2. We use one Excel spread sheet. She has a running balance, deposits made, withdraw column, loan column, and RESP balance column. We have another page that shows her where she is spending her money. Right now the columns are: Savings, giving, piggy, toys,cell, music, club penguin, books, dollar store, other.

3. She has a set amount and it is delivered on the 20th of each month come rain or shine ( after all our pay days come regularly when employed right)

4. She has responsiblities with that money: cell bill, guinea pig supplies, savings, and the rest of hers is to do with as she chooses. Roo is a natural giver, so giving is not something I have made a must. For her it is a joy and she loves it.

5. We enrolled her in Futura Rewards. A way to add to savings for college and much more. This was to top up my input, she helps me clip the UPC codes and get the mail in ready and we shop at Coop here in Nova Scotia some of the time. She now knows the balances of her RESP, and we update that line quarterly.

6. She gets what I think is a reasonable amount for an 11 year old with responsiblities. She is responsible for $75.00 a month. I know not much but it is hers and with it, she is learning skills.

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