25 answers

Problems with How Our 7-Year-old Son Wants to Spend His Money -- Junk & Webkinz

Our 7-year-old son earns $1 a week in allowance when he does a specific chore (which he chooses to skip at least a third of the time and thereby forfeit his allowance that week). Sometimes when he wants something I let him do extra chores for money. And on birthdays and holidays he really seems to pull in significant dollars from extended family and friends. He has a savings account in which he's already amassed more than $100 (which he doesn't even consider touching to buy things). For his birthday recently he received 5 gift cards, mostly to Target, totalling around $150. He could buy himself something pretty significant with that, but he's afraid that if he spends it all at once, he won't have any money left after that (even though he has $100 in the bank), and he'll have to wait a whole year before he gets another infusion of gift cards/cash. He doesn't seem to have a problem buying little things that are really junk that get lost or broken right away. He also seems to want to create an entire Webkinz empire (the Webkinz thing alone might be a whole nother topic...) We hate to see him blow his money on dumb stuff. We'd love to see him plan and save for something specific, put some aside for charity, etc, but he's not buying it (sorry about the pun!) It is his money, so I'm okay with him learning his own lessons about the value of a dollar, etc., but it bothers my partner much more. We both acknowledge that we learned our own lessons about money as kids, and that we want our children to mirror our values. So: a couple of specific questions: Any advice on this? How do you go about teaching your children about money? What's the going rate for allowances for kids? (Our 4-year-old seems uninterested in money and so we haven't started giving him an allowance yet.) And while we're at it, how much does the tooth fairy pay for a tooth at your house?

What can I do next?

So What Happened?™

Thanks for all the great advice about how to address my seven-year-old son's money management issues. I think we will try implementing the "three pot" method: some money for savings, some for spending, some for charity. We haven't worked out the percentages yet. I'll also check out the Dave Ramsey book. It was also good to hear that our tooth fairy is pretty typical. Thanks for taking the time to answer.

Featured Answers

my inlaws get my kids Bonds for every birthday and christmas. Those go right in the bank, and it's such a tradition that my kids look forward to it, They like knowing they are just like their older cooler cousins.
I think you have lots of great advice about the allowance and the tooth fairy. Just wanted to chime in on the gifts.

Make him pay you if he doesn't do his chores. The family depends on him to do certain chores and to make a contribution to the degree that he is able. As my kids got older, I gave them more and more complex chores, and I took on the role of management. I told them that I am teaching them how to manage their lives and their environment, at no charge, and providing them with a nice home etc. We did not give an allowance mainly because we had a hard time making ends meet on my husbands salary (with eight kids). But if an allowance is something you believe in, it makes perfect sense to me that he pays you when he doesn't make a contribution to the family by doing his chores. -:)
N

I can't help you with the webkinz question...we sadly have about 15 a kid here. I am hoping that the phase will end soon.

I do have a toothfairy idea for you :-) I do not like keeping up with the other toothfairies so i get the shiny gold dollar coins. They think it is so special. I only give one or two. I think they would much rather have that then paper money. Sadly i have have heard that some tooth fairies give 5 dollars!!

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The tooth fairy pays $1 a tooth at our house. We also have 3 different piggy banks for each child. 1 for saving, 1 for spending, 1 for charity. The rule is half of any money they get goes into saving, 40% for spending, and 10% for charity. I know you want them to learn about money through their own experiences, but you can always talk to him about money and explain why you split up money in this manner. If you talk to him about it he'll have a better understanding and he'll be more likely to mirror your behavior with money. My parents never taught me how to handle money or balance a checkbook, I had to learn on my own. Thank goodness I was able to figure it out and be responsible with money, but I just wish my parents would have taught me early on.

1 mom found this helpful

C.,

The best thing to do is to have him decide what to do with his money. We have a chore chart, as you do, for our three children aged 7, 7, and 10. We started a couple years ago with the Dave Ramsey books for kids which tell them about saving, borrowing, etc. They each have three envelopes in which to put their allowance money. Save, spend and give. Each week when they get their allowance, they need to put some money in their give envelope. We generally have them give around 10% give or take based on their "take home pay." Our money usually goes to church offering or Sunday School, but it could go to buy a toy for a Christmas drive, buy books for a local kids reading program, or any other community project to help people who are less fortunate (and if you have Webkinz, there likely are some) than your son is. The second envelope is spend. This is usually a small percentage of their pay to get things they want like gum, a small thing the saw at the store, etc. The third is "saving" envelope. This is to save for something big that they really want. At times this can be a Webkin for my younger s, but generally they go big. One bought a bike, one wants a Wii fit and my son a $40 video game. The s sometimes also like to buy clothes. When we get big influxes of cash, they can spend a bit, but the rest will go in their bank account. It is still "their money" but that doesn't mean they need to spend it all. They don't see their bank money, but kind of know they could spend it on something big if they wanted. The important lesson we wanted was delayed gratification. This will come in handy when they want to buy a car, a house, or anything you need to save for. It seems kind of structured, but it will help in the long run. I know webkinz can be a bore but if you break up the money, it can help. When you get too many gift at once cards you can pay him for his cards. My kids sometimes think gift cards are only for toys, but if I give them cash for the cards after they have spent a bit of it for something they want, they save more. I just take the wal-mart or target card and buy groceries or household items, and they usually put the rest of the money in their bank account or savings envelope.

The Dave Ramsey books can be found here: http://www.daveramsey.com/shop/6_Kid_8217_s_Books_-_Boxed...

They also have a website with games here: http://kids.daveramsey.com/

I'd check ebay for the books before you buy--no reason you should overspend!

P.S. $1 for teeth. You have veto power on purchases. My girls are 7, make their beds, clean their room, unload the dishwasher, clear the table, put away their laundry (sometimes fold) and have room check once a week. So does my son, but it's a little harder with him.

First I want to say, our tooth fairy gives our children golden dollars. This is a nice way of giving a nice gift, without getting too carried away. I tell them they MUST contact me before spending ANY golden dollars or 2 dollar bills. I promise I will buy them out so to speak. I am very excited about your question, because we have had some of the same issues.... I need to sleep now, but please look for my response in the next couple of days, because I have been there and done the webkins Junk thing. talk again soon!

THis is what we do. Every allowance day, the kids split their money up three ways. Some goes to church offering, some goes into their bank acount and some goes to their wallet for spending.

When they get special money for birthdays and Christmas, we divide it up the same way.

They have a goal that they are saving for in their bank accounts. I write it down and remind them of it each week.
One might be wanting to save $100 for a bike. Another might be saving $50 for a book store splurge.

My oldest dd did this and has saved enough money to buy herself a new bike, an American girl doll for herself and one for a friend's birthday, an IPOD, and several other large purchases.

Another daughter saved up and bought her self a portable DVD player, and an American Girl Doll.

They also can go and buy cheap little things with their pocket money, which satisfies the urge to spend now, and they get to buy really nice stuff that they have saved for.

Make him pay you if he doesn't do his chores. The family depends on him to do certain chores and to make a contribution to the degree that he is able. As my kids got older, I gave them more and more complex chores, and I took on the role of management. I told them that I am teaching them how to manage their lives and their environment, at no charge, and providing them with a nice home etc. We did not give an allowance mainly because we had a hard time making ends meet on my husbands salary (with eight kids). But if an allowance is something you believe in, it makes perfect sense to me that he pays you when he doesn't make a contribution to the family by doing his chores. -:)
N

Dear C.,
I guess I would first ask whether or not your son has any responsibilities that are a "must"? It sounds like he has chores & can earn an allowance if he chooses to, but that he's not necessarily required to do them. For me, that would be the first place to start. Make a list of chores for the week that are his responsibility as part of the family (they're expected to be done, but they're NOT paid). Then, if he does those well, he can earn extra money.
In answer to your questions ~ you teach your kids about money, the same way you teach them about other things ~ explain, give examples & then give them opportunities to show that they've learned what you taught. BTW, the New Testament (in the Bible) has a GREAT parable on this one ~ an employer going out of town entrusted the employees with $ while he was gone. He gave one $10, another $5, and the third $1. When he returned, he asked what they'd done with it. The employee with $10 had invested it & gave the employer $20 back. The second employee also invested his $ and gave the employer $10 back. However, the third employee had taken the $ & buried it in his back yard & gave the employer $1 back. The employer took the $1 and gave it to the employee to whom he'd originally given $10, b/c he'd wisely invested the first $ he'd been given.
As for teaching about money, my thought would be to put the cash in his bank account & let him spend the gift cards this time around. However, I'd require him to use a portion (5%?) of the gift card to get something for someone else ~ perhaps a toy that he can take to a local shelter, etc. Again, from a Bible reference, teach that the bulk should be saved (he's only 7), but that he gets some to spend for himself, and some to give to charity. My son is five, and we are teaching the Biblical principal of tithing. This means, that 10% of his earnings go back to God, before anything else gets done with the money. (We do this with our household $, and have been VERY blessed as a result.)
I'm not sure what the going rate for allowance is, but my thought on that would be, that it would depend on what you're able to afford, more than what everyone else is doing. As for the tooth fairy, again, I'm not there quite yet, but I like the gold coin idea. This past year, I decided to give my son 5 gold $ for his birthday in a small jewelry pouch. He's five, & he LOVED it! Good luck & God bless!

I dind't receive an allowance as a kid but my parents gave us quarters to put in our banks on occassion. The banks locked as soon as money was put in and didn't open until we reached $10.00. We would then roll the money (had tons of fun with that) and put it in the bank. We were not allowed to touch that money until we were older to put towards college and cars.

My kids are 3 and 4 and we haven't discussed much if we are going to do allowances. However, I always envisioned doing similar to what Lori suggested. There would be 4 envelopes - bank (for college - not allowed to touch), charity (for church, etc), spending (for day to day purchases), savings (for special toys, clothes, etc).

My husband and I have recently been talking about money more in front of out children. Our 4 year old is inquisitive and has also been requesting that we buy him things when we are shopping. So we have been having discussions about budgeting and spending and saving. When I make out the grocery list, I talk about looking for the best price. I often say things like, "Wow. This store has potatoes for $1.00 less than the other store. I'm glad a took the time to find the better deal." Hopefully it is sinking in.

We haven't had to deal with the tooth fairy yet, but I'm not one for big payouts for losing teeth. I think I got $2 for my first tooth then $1 thereafter.

You have already received some solid advice about tithing saving and using the rest as needed.
Here is a great article that is very specific about the subject of children and finances.
http://www.crown.org/LIBRARY/ViewArticle.aspx?ArticleId=342
This website had great info for people of all ages as well!
Good luck and God Bless!
M.

could have him give a gift card to the local school or church to give to a family. Many schools have food and clothing drives for families in the school who don't have.

Wow, I love Lisa G.'s ideas! We have a six year old and struggle with the same things. I notice that he does listen when I tell him he is making a bad choice, like he doesn't need more Pokemon cards and when was the last time he fed his current Webkinz???? Surely he doesn't need another! If he doesn't listen, I do let him make the bad choice. Then when he wants something else, I tell him no because he spent his money on silly stuff. It seems to be working. This is such a hard lesson for a little kid to learn!! It also helps, to say wow! Look at that lava lamp. I wonder if you could save for that. Show your son what he could have that would be worth having!

I have a friend who does something great, although I don't think my son is ready for it. She pays her kids in a check online when she pays her bills. They do chores for allowance and are paid accordingly. Their check comes in the mail! They actually have to go to the bank, deposit some into savings and then they get to take some for spending. I think it is an AWESOME idea. I love Lisa G's idea for giving away too.

I agree with one dollar for teeth too! I give 2 bucks a week for allowance, and Sam cleans his room, makes his bed, puts away his laundry and clears the table. Good luck and let me know what works for you!!!!

Hi C.!

In my opinion, a lot of parents tie chores and allowance together, and I think they should be separate things for young children. Sure, adults get paid in exchange for work, but there are many years ahead to teach that lesson.

In our family, chores are done because we all need to pitch in together to make our family run smoothly. To me, that value is really important. After all, my husband and I do our chores out of love for the family (nobody is paying me to do laundry!) and I want our sons to see that it is right for them to work for the family too.

We give allowances only because we want to teach our kids how to manage money. Like others, we stress saving, giving, and spending. They get some freedom of choice within those categories, but giving and saving are not optional. If they feel they need extra money, they can work for others--walking dogs, raking leaves, etc--but they still need to save and give some of that money. You might consider talking to your family members about not giving cash for birthdays. Having a lot of money, in my opinion, is too big a temptation for a young child to handle. Easy gifts might be something like tickets to a ball game, museum or zoo memberships, a date with Granddad to visit a cavern--something besides money to spend.

Hi C.,

I have an 8 year old that basically is the same way, except that he saves all his money until his birthday and then blows most of it in one day (mostly on PS2 games). We just reinstated his daily chores list in which he can earn extra money depending on how many chores he does (up to a dollar a day), so I am hoping to "train" him better with his first chore money payment. He already has ideas of what he wants to save his money for and most of what he mentioned is stuff he won't really play with.

As far as tooth fairy money, I usually give $.50 per tooth. His very first tooth we did give a little more.

L.

My daughter is a big fan of the Webkinz as well. When she gets money for holiday or birthday I make her put half in the bank and then let her spend the other half. I have also learned the buying junk lesson. So what I have done is when I know my daughter is going to get money I ask her one thing she wants that is a little expensive. I then tell her to save her money and she will be able to get it. She wants a new bed set, she is getting to be a big girl so she wants a big girl room. We are having a yard sale on Saturday and most of the stuff is brand new toys of hers...ugh...anyway I told her to keep the money and she will use it to buy a new bed set. That way I know it is going to something useful.

Hi Clare... We have the same problem with my boys 6,8 and 10. I don't think I can share any advice on that one, they too want to blow their money on wekinz.... As far as allowance, we gave our kids 1$ a week until about a year ago. And then we did increase the rate, but also increased the chores around the house. They now receive 1/2 their age, and only get a 'raise' every other year. We don't do coins. I do think it motivates them to do more around the house. But I wish I could help you on how to teach the value of money...

As far as the tooth fairy, the first tooth gets a 2$ bill and all the others get 1$

First of all, please remember that what may seem like "dumb junk" to you is a treasure to your 7-yr. old! I don't know many children that age who aren't into Webkinz or Pokemon or some other fad! It is unreasonable to expect that the material values of an adult will be the same as those of a child. It's great that you allow him to spend his money on the things that are important to him. I would suggest upping his allowance a bit - maybe to $2 a week. Then, use the envelope system: Create 3 envelopes (or whateve number suits your and his needs), marking each one according to its' use. He then takes a portion of each weeks allowance and divides between the emvelopes in a manner that you both agree to. For instance, one envelope would be for "savings" (so that he can add to his $100 on a regular basis), one would be for "church" (if you go to church it would be a good idea to get him in the habit of making a small donation each week. If you don't go, just don't create that envelope), and one would be for "spending" (he is allowed to spend the money in this envelope on whatever items he wants, like Webkinz). You could add a fourth envelope for some big item that he is saving for, like a Nintendo DS or a bike. The money in that envelope does NOT go into his savings account. He needs to be clear that he may not remove the money from any of the envelopes for any other purpose that what it has been designated for, and he should not "borrow" from any envelope at this stage. You may agree that he divides his money equally between the envelopes, or you may come to an agreement on a percentage, but eiher way, he is taking the first steps toward learning the value of a dollar and learning how to save! It is excellent that you are taking these steps with him now - I wish I had done so sooner! Please trust me, the older your children get the harder it is to make them understand that money doesn't grow on trees, and if you have a system like this (or something else that works for you), that lesson will be ingrained at an early age! Good luck.. Oh, one last thing, in my house there's no going rate for the tooth fairy! She pays whatever she can afford when the tooth falls out, usually between $1 and $5 (my kids are older and don't get an allowance right now) as long as my kids haven't lost a bunch of teeth at once!

My boys (8 & 6)also earn allowance and receive (lots of!) money for holidays. I follow this general budget rule: 60% goes in savings, 10% goes to church (or charity) and the remaining 30% is their spending money. This way, they build a savings, understand the value of helping others, and still get to enjoy the fruits of their labor by buying something they want. If they want something that costs more than they have in their "spending account," we sit down and figure out when they will have earned enough money to buy it. I have not yet found a reason to dip into their savings. To me, that's like using a credit card, and I do NOT want to teach them about that just yet! I do monitor what they buy, but I also realize that they have worked for most of their money, so to spend it on what is important to them at the time (even if I think it is junk!) is okay.

I treat gift cards as just that: gifts. I allow them to spend the whole thing on something they want. Hope this helps!

At this age, saving for future and charity isn't going to appeal to him on his own, but it's a good sign he doesn't want to blow it all at once-which may be why he likes the cheap junk-at least he gets to buy SOMETHING.

I know a family who helps their kids budget their money like this: The kids give 1/4 to savings, 1/4 to taxes(not lying, they have the kids pout aside tax money for the "government" which they don't know they'll really get back one day), 1/4 to the church (not kidding either) and 1/4 they get to spend on themselves any way they want(even on webkinz).

They sit and divide it all up together every week, and the parents take away the savings and tax money and put in in real bank accounts, and they all take their church money and give it on Sunday themselves. Put it this way, these kids do A LOT of chores, it's never an option to skip them, and they never would, because they already realize that if they miss out on any money, they have nothing left after deductions. GOOD LESSON! He may need more than 1$ per week, but you could try a system like this! Good luck!

I can't help you with the webkinz question...we sadly have about 15 a kid here. I am hoping that the phase will end soon.

I do have a toothfairy idea for you :-) I do not like keeping up with the other toothfairies so i get the shiny gold dollar coins. They think it is so special. I only give one or two. I think they would much rather have that then paper money. Sadly i have have heard that some tooth fairies give 5 dollars!!

First of all you are the parent and should get final say on what he spends his money on. He is 7 years old! If he wants to buy something and you think it is a waste of money then tell him no and to choose something else. Steer him towards more appropriate things. Secondly as for the allowance you can teach him about saving by taking half his allowance each week and putting it in the savings account which should never be touched. It can be for college or a car. The point is it is for something needed in the far future.

I have an 8 year old, 5 yr old, 4 yr old and 12 month old. The three oldest do chores. Sometimes I take them to the craft store and we buy something for a $1 or less. I figure this way it is easy for them to deal with smaller numbers and learn about how much things cost.
We don't do this all the time just sometimes. Other times we go to the library or a special place that they like that doesn't cost anything. I figure my kids need to learn to appreciate that things can be good even if they aren't monetary.
Sometimes I make them do chores for no reward at all just so they can learn to serve without getting anything. We call these love chores! Chores aren't just for teaching about how money and work are related but also for teaching the joy of work and service.
I think for your son, spending a $100 for him would be like deciding what to do with $10,000 for you. Most people would blow it on little things unless they were very mature and had lots of financial wisdom and self control.
Maybe you could get online with his gift cards and make a plan to decorate his room in a theme or get craft supplies to make a craft drawer or set of drawers. Something that take planning that he is excited about. If you manage to do it and save some money he can feel the joy of that too!
Incidentally my children get 25 cents from the tooth fairy.

I think it's important to teach kids that there are three things to do with money: save some, spend some and give some. Since he has gift cards, he really can't donate that to a charity or your church but he could choose a toy for Toys For Tots for the upcoming holiday season. Dave Ramsey has some good kids money managing materials and you can check it out at www.totalmoneymakeover.com. I think a dollar for the first tooth and .50 for ea. additional is a good amount. My son does not get an allowance but always seems to have cash from grandparents, etc. I usually let him spend his own money as he wishes. It's usually ANOTHER Hot Wheel or Nascar.

my inlaws get my kids Bonds for every birthday and christmas. Those go right in the bank, and it's such a tradition that my kids look forward to it, They like knowing they are just like their older cooler cousins.
I think you have lots of great advice about the allowance and the tooth fairy. Just wanted to chime in on the gifts.

When our children receive money there are 3 things we are teaching them to do with it. 10% goes to church or charity if you don't go to church, 20% goes to savings and 70% goes towards spending. Our 11yo dd is pretty good with saving her spending money and thinks before she wants something. Our 9yo ds tends to just want to spend it on anything. We try to talk to him and ask him if this is something he really wants, think about saving it for something that you are really wanting, like a DS cartridge. If you spend it now on something that really won't last or something you want to buy just to spend your money you won't have it for something that you really, really want. Sometimes he thinks about it other times he just spends it. It is his money to spend. Sometimes he regrets it and wishes he had waited other times he's fine with it. 4 year olds really don't have much concept of money so at that age they really aren't concerned with getting an allowance or having money to spend. As for the tooth fairy, we are not big on giving our kids huge amounts of money for their teeth. The first tooth may have been $2 and from there it is usually anything under a dollar. If it was a tough tooth to come out we would give 75 cents if not it could be a quarter or 50 cents. We're not cheap we just think that they really don't need to get lots of money for a tooth. If you give them a lot of money for a tooth, they are going to think that they should get lots of money for everything. They need to learn how to earn money as that is what they will eventually do in the real world when they have a job. I have heard that some people will give $5 for a tooth which we think it just way too much. These are life skills that they are learning at an early age. It is teaching them how to do something with a pay check rather than just spend, spend, spend, as is the American way. We need to teach our kids how to give back as well as save their money for their future. Yes, I know this seems like something they will need to learn when they get a job, but they need to learn it now so when they have a job it is easy and natural to give, save, & spend.

Good Luck, M.

hi C.!

There are as many ideas about kids and money as there are parents, I think. The biggest way to teach your kids about money is to handle it well yourselves, and to talk about it at the table, so they HEAR what you do. If you make a habit of giving to charity, and they KNOW about it, they will learn to do the same. If you give your child money for church offerings, they will learn to put money in the plate. Or if you give to the Salvation Army, or the city Mission, or goodwill, then have the kids help you collect or deliver the stuff. They'll figure it out.

Another idea is to collect soda cans, sell them for the metal and give away the proceeds. It's a way they can help people, and they can help choose the charity.

When we did allowances (which didn't work well for us, because i never had one as a kid), we required a certain amount of work -- like the bed made every day, and something else .. . we gave 5.00, telling the kids that 1.00 had to go into the bank, and 50 cents had to go into the church offering. We were teaching them to save money and to put 10% in the offering plate, because giving a healthy portion to God is important to us.

One kid got it, and the other? Well, I just don't know. The thing is that when you give a kid money, and it is THEIRS, it is THEIRS to spend. You can talk about how to spend money, and what toys last and what toys don't, but it is THEIR money and they get to make the choices. Obviously not an X rated PS2 game or anything, but it IS his money.

Some people require chores to earn money, and the kids have to buy their own clothes with their allowance money. It DOES help them learn to bargain shop, and it actually costs mom and dad less money, than having the kids ask mom and dad for huge expensive wardrobes and stuff. and if they can't deficit spend by getting loans from Mom and Dad, then they learn they have to save to buy stuff -- which is a much better plan than using credit cards to their demise later in life.

But whatever you do, you have to do what is best for you. You will get tons of ideas today, and you will have to sort through them and see what you think will work and what won't, in your family. when you try something, remember you are trying it. Give it a fair shake, but don't be so committed to the idea that you hang onto it when it clearly doesn't work for your family.

If you give an allowance, you have to plan ahead and decide and communicate what you expect your child to use his money for. Does he buy his own school backpack (which will require thinking ahead), his own clothing at a certain time, etc.? I have a friend who agrees to buy 1 school lunch a week, and she funds it in september. The kids pack their own lunches, and if they want to buy 2 lunches a week, they have to earn the extra money, or realize that they will be packing lunches Every day some other week.

In the end, you tailor it to your family, to what you are good at doing, and what seems to work for your kids. Good luck ! The money decisions are always challenging ones.

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