Forming Good Money Habits

My daughter has just started a part-time job.  In church a few Sundays ago when they were taking up the offering she said to me “Will I put 10% of the money from my job into the offering?”  Ever since we have given our children pocket piggy-bank-970340__180money they have put 10% into the offering, saved 50% and been able to spend 40%.  My daughter is planning to do this with her wages.

Why have we done this with pocket money?  My husband got this idea from someone he worked with.  This is what they did with their family and he thought it was a good way to teach about saving, so we have done the same.  10% into the church offering because we believe everything we have is God’s so we are just giving some back to God.  People who aren’t regular church goers might have their children give an amount to a charity of their choice, it is simply teaching about giving.  My daughter whose love language is gifts once gave money to Jesus for Christmas. On Christmas morning she had $1 under the Christmas tree for Jesus which went into the Christmas offering at church.  50% for saving to teach the value of saving.  Our kids have always banked their saving money along with birthday money from Grandma (for that purpose).  We have usually banked their pocket money about once a term and have always had them help count it, write out the deposit slip & take it to the bank so that they were part of the process.  They will probably get this money when they are 18 and will have a substantial amount saved by then.  They can spend the other 40% however they wish.  Often they have saved that 40% to buy something a little bigger.  We have always given them the pocket money so that it could be easily divided which has meant always having lots of coins to use.  Pocket money has never been tied to their chores.  We expect them to do chores as they are part of our family & live in our house.

Our children both started getting pocket money when they started school.  In grade 1 they got $1 so 10 cents went into the offering at church, 50 cents was saved and they could spend the other 40 cents.  This amount increased by a $1 per year to match their grade until grade 8 and then they have had slightly bigger increases in grade 8, 10 & 12.  Compared to some of their friends they don’t get much pocket money but it is enough as they are not expected to pay for much. Often if my children want something when we are at the shops we will say “if you want it you can buy it for yourself”.  This also lets us see how much they really want the item. As my daughter earns more money through her part-time job she will be expected to pay for more things for herself, firstly starting with going out with her friends to see a movie or when they have lunch at the shops.

What else have we done to help our children develop good money habits?  When my daughter started middle school it seemed that she was forever asking for money as someone was selling something to raise money for something or it was the business market day or similar.  At the end of her first year at middle school we decided to give her a certain amount per term.  She could then choose to spend this at tuckshop or the business market day or on whatever else was being sold.  We also did this with my son when he started middle school.  He quickly learnt to only take a small amount of his money to school at a time!

Also we don’t usually lend our kids money if they want something and they don’t quite have enough for it.  We usually make them save their spending money until they have enough to buy whatever it is they want.  Hopefully we are teaching them you can’t spend what you don’t have.

Here are some other pocket money systems I’ve heard of:

There are variations of the percentage system but just split a different way or for more things.  Such as the 10-10-10-70 plan which is 10% tithing, 10% saving and investment, 10% giving (to those in need) & 70% used at their discretion.  This article talks about spending, saving, donating, investing.  Similar to our method but just adds a 4th area when children are ready.

I’ve heard a Focus on the Family Broadcast where the couple interviewed shared about quite an elaborate envelope system.  The envelopes included spending, saving, clothes, gifts & tithing.  For the clothes they had worked out approximately how much the child would need over a 12 month period and then gave a fortnightly or monthly amount to cover this. With this system the children were very much learning budgeting and for example, what happens if you’ve spent all your clothes allowance but need a new pair of sports shoes!

Families choose different pocket money methods for different reasons.  There is no right or wrong way.  Do your children get pocket money?  If so how does it work in your family?

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