Do people still use these for their kids? At major banks, their savings will have lost value by the time they use it, with such low rates of return compared to inflation. I started a 529 with a roboadvisor for my daughter to stash people’s gifts for her, kicking the can down the road until she’s old enough to understand the concept of currency, then figuring out something else. Our emergency fund is in a money market account paying 1.85%, so I’m guessing we’ll do something like that rather than savings, for something for more liquid. I’m just surprised that the default still seems to be savings accounts.
FWIW We got our age x2 each month (25 years ago), and a quarter of that went to savings. Monetary gifts at holidays were split the same way. When we started working, I think something like that was imposed with paychecks until college started, too.
B14 - $50/mth. his primary responsibility is to cut the grass 2-3 times a month. We were paying yard service $150/mth so he is actually helping us save some money. I help him with the edging and weed-eating. He also walks dogs, takes out trash/recycling.
Twin G9's and B8 - $10/mth. Their chores are limited to taking out trash, walking dogs, setting table, picking up sticks in yard, etc.
60 spending, 30 savings, 10 sharing.
Sharing goes to charity at Christmastime.
Saving goes to a stock account with fractional share options. They can pick from a portfolio of kid-friendly stocks.
Spend goes to an online account where they can draw on it no-strings-attached, save parental vetoes due to safety (e.g. no guns or giant piles of gummy worms)
List of optional chores - cleaning stuff around the house mostly other than their rooms and play areas, plus some academic milestones - we generally pay market rates. We rarely penalize allowance unless there's just flat-out noncompliance on the "keep your own place clean" rule.
They're doing OK on the stocks front. Our 11-year-old has figured out compound returns and equity and voluntarily saves if he does not have a pressing need. 9-year-old still has cash burning a hole in pocket occasionally. The enforced savings percentage helps with the lessons we wish to impart.
You want it? Not your birthday? You buy it.
Saves a lot of parental arguments, teaches the right lessons.
G15 and be B11 get $15 and $11 a week respectively for allowance. There are no defined chores they are required to complete, rather they are simply expected to do whatever chores are asked of them each week and if they do not they know that they lose their allowance.
Each has a spending account and a savings account, spending account has a debit card associated with it. They are required to put at least 1/3 of their allowance into the savings account and 2/3 can go into the spending account (although both will increase the savings amount once their spending account reaches a certain level). The spending account is there to do whatever they want with, the savings account requires our permission to take any money out of. They definitely have seen the value of regular savings as my daughter has over $2000 and son almost $1500.
Age amount per week. However, it all goes into savings. The thinking is that they will use it to purchase their first vehicle. Oldest is 12 and he has about 2500 in savings now, placed in CDs. So they get to learn about investing as well.
Their spending money comes from birthday money etc.
Back in my day we would have been happy with that!
$5 goes to a "family tax" that gets saved up and we jointly decide what to do with every so often.
$5 goes to their personal savings.
$5 they have to donate in the church collection.
And the remaining $5 they get to keep and do whatever they want with.
We have a weekly chore chart they are supposed to complete (with varying results) but mostly like setting them up with the core concepts of (1) you are being paid for your labor and (2) you're only ever going to see a fraction of your paycheck in your pocket.
So if they have $100, they'll get $5 allowance + $5 interest.
The next week they'll have $110 and will earn $5 allowance + $5.50 interest.
If they blow all their money on something, then the next week they'll only get the $5 allowance.
Allowance gets reduced for not doing chores. Weekly interest sometimes gets revoked for disrespectful behavior.
I'm hoping to instill in them that the money they save is an asset that can help them earn even more money, and not just something that's waiting to be consumed.
they'll be millionaires in 3.65 years?
and they provide me a 15% cut of anything they get in trades with their friends. They need to understand the power of the "Man" as they get older. Also teaches them tax avoidance for the future...
Set up an excel spreadsheet that calculates it and the kids can access it online to see what they have or to see how long they will have to save to afford something. We can also easily add monetary gifts from family from their birthdays and Christmas. My 10 year old is a saver, with over $550 in hers, while her brother who is 13 can’t resist spending like a sailor. My 17 year old makes extra babysitting for us and others. Luckily our 3 year old doesn’t really understand money yet, but eventually, we’ll add her to the spreadsheet too.
I have a 4 year old who is starting to show in an interest in money ("Dad, can I have the change on your dresser?"). Do you think that's too early to start?
that things cost money and want things I think are garbage... haha! So 4 years old sounds just about right.
I think the 463rrd stuffed animal is a waste of money. But it's not my money.
saw this on saturday - didn't have yet - perhaps NDChavez has since he's beer man about Denver unparalleled
You were busy.
even LA guy is better at Denver than me these days...
We give him $5 a week. He saves it up to buy basketball cards or other things he wants. If he's going somewhere with a friend, we cover his entertainment costs.
We also use an app called Homey for his household responsibilities and to track his allowance. We setup daily and weekly responsibilities in the app. He's responsible for checking off his chores in the app (it makes him snap a pic for us to approve or reject if we choose). At the end of the week we can see the percentage of his chores that he successfully completed. We adjust his allowance accordingly. We can add money to his "wallet" on the app and clear it when we give him the cash. It helps to keep track since we aren't always great at remembering to give him the cash each week.
If there is something outside of his normal responsibilities, we can add it to the app set a $ amount for it. If he completes it, we pay him for it. If there is something he really wants but can't afford, he'll look for work on the list and go do it.
We're trying to encourage him to save money. I told him that I'd pay him $1 for every $10 he has at the end of each month. If he's saved up $49, I'd give him $4. If he's saved up $50, I'd give $5. Not giving partial amounts has encouraged him to stay away from the frivolous purchases. It doesn't seem like much, but once he realized that $100 could get him an extra $10 per month and that it would compound, he got pretty excited about saving money.