Tuesday, February 27, 2007


The kids have been getting allowances for a few years. We consider an allowance to be a tool for learning financial skills. For a while we did the piggy bank thing, encouraging them to divide their coins between "spend", "save" and "give" banks. It didn't work very well. First, they played with their coins, and they all got mixed up, not only between "spend," "save" and "give", but between children. I'm not sure if there was ever any deliberate theft, but I could see that underhanded redistribution of funds was going to be very tempting. As would theft from the "laundry findings," the "change pot" and mom and dad's wallets. Secondly, we would forget to distribute the allowance, and would lose track of how much they were owed. They would go weeks and months without thinking about allowance, and so would we. I loved that they were not waiting with bated breath for a weekly bequest and collecting and hoarding it with single-minded focus, but it was very difficult to keep track of what was owed. Thirdly, they would never have their money with them when they wanted to purchase something, or they'd want to make an internet purchase, so I'd end up using my plastic and if I remembered to pay myself back later from their piggy banks, I would end up with hundreds of coins. And I'm pretty bad about getting to the bank.

Our allowance is not contingent on chores or behaviour. Partly because I don't believe in behavioural manipulators anyway, and partly because to me, contributing collaboratively to family work is just part of what it is to be a family. I cook vacuum and do laundry (I do, really ... just not always as often as I should) not so that Chuck will give me money for an occasional latté, but just because. And I want the kids to contribute "just because" too.

Besides, when Erin was 7 she busked with her violin at the Garlic Festival for 20 minutes and made $75, and I realized right then and there that a smart kid (and I have a few of those) would figure out that busking at a market every few months was going to be far easier and more lucrative than putting away dishes, washing bathroom floors and folding laundry day after day and week after week. If I turned chores into an economy, my kids would find better ways to earn money -- and I would have no recourse.

So we do the allowance thing. But because the piggy bank approach was chaotic, we turned to a ledger system. Each child has a ledger into which we enter their credits and debits. At first I worried that because they weren't seeing their money in concrete coinage, it would all be too abstract to them. But it has proved an excellent tool. All money is abstract anyway. Coins and bills are tokens, not things with inherent value. And so much of today's society (especially where we live, far from corner stores and malls) is cashless. Unlike a good portion of the last couple of generations, maybe my kids won't grow up feeling that credit card spending "doesn't quite count". When I forget to enter their allowance, the last date is listed in the ledger, and we can easily play catch-up. When someone is wondering why they never seem to have very much money, they can look back and review their spending patterns and realize that a large bag of chips every two weeks and a Runescape membership fee a month almost equals their monthly income. They can see at a glance that they did have rather a lot of money until they spent a fair bit on two purchases that right now don't seem like they were the most sensible investments. They can review their saving and spending habits and learn from the choices they made in the past. And when they're in Nelson or purchasing on-line they never have trouble accessing "their" money, since it resides in the Bank of Mom, and mom and mom's wallet and credit cards are always close at hand.

We are really happy with the ledger system. It works well for all of us.


  1. Miranda, what a timely blog entry for me! Alex and I had a long discussion this morning about spending and saving money. He’s been saving for a long term goal and he’s beginning to get frustrated with his lack of progress. We’ve had different (and, clearly, ineffective) methods of tracking spending, but they all went by the wayside.

    I sat down at my computer this morning to try and figure out a system that would work for both of my kids and would help them to learn money some solid money management skills. I routinely check my favorite blogs in the morning, and it was a lucky thing because here is your blog outlining a wonderful money management plan!

    I’m going to harvest your idea and call a family meeting this evening. I also love your ledgers, complete with great photos of your kids!

    Thanks for posting that!

  2. This is utterly awesome. I think I'm going to stick with "coins are for the kiddo" until age 4 or so, but after that, definitely going with this method.

    The ledger method also vastly improves Monopoly, by the way. Much much faster and less table space needed.

    Come to think of it, while I think your ledgers are really cute, we'll probably do something on the computer.


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