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.

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