It all started when she wanted to have a lemon aid and sell the juice at 5 cents a glass. I tried to explain to her it would cost me more than 5 cents to supply the glasses and lemon aid, “but if it’s too expensive, people won’t buy it, so we need to make it cheap’ she told me. I applauded my little entrepreneur’s spirit but realized it was about time we taught her the value of money. She was also coveting a Lalaloopsy doll which she was saving up for with her tooth fairy money – the time was right.
The book Money Smart Kids by Gail van Oxlade was recommended to me by a friend, I read it, liked the concept and decided to implement it with my daughter just as she was finishing grade 1. The premise is by giving kids money and a set of rules, they will develop lifelong habits on how to save and spend money, an important lesson that in today’s consumer society, kids often don’t understand. It also gives them the opportunity to make money mistakes, better now at age 6 than age 26.
My husband balked when I told him Samantha was going to get $6 allowance a week, 1 dollar per year. Yes, that seems like a lot, but here’s the catch, we no longer can dole out money. Consider how much money you spend on your kids, the treat at the grocery store, ice cream truck, school book fairs, pizza day, class trips – it adds up. No more dole (well, with only $6 a week sometimes you have to make an exception, i.e. she’ll have to pay for only half the class trip). Shouldn’t she be earning her allowance? According Vax-Oxlade, the purpose of this exercise is to, teach kids about money, not make them do chores or show your control over them – I have the money, I have the power kind of idea. Also, it’s for a lot more than just fun money, they’ll be making some real decisions on how the money will be spent. The $6 would be divided up – 10% long term savings, put towards University or a car, 5% charity, 45% planned spending (her Lalaloopsy doll or school trip) and the remaining %40 her ‘mad money’ to be spend on ice cream, food at Wonderland, book fair, Freezy Friday’s or whatever grabs her fancy.
The ice cream truck went by our house a few weeks ago, not a common occurrence for us and usually the kids are allowed to indulge on these special occasions. Samantha heard the truck, said, “Zacky, there’s the ice cream truck but I’m out of mad money so we can’t get one’ she didn’t even ask. We decided to go out for dinner as a family last week, Samantha studied the menu hard, then quietly asked me with a very concerned look on her face, “mommy, do I have to pay for my own dinner”.? At $6 a week, not yet baby, not yet but soon.
It has been amazing so far. Trips to the grocery store, toy store, even the candy store no longer have her begging for a treat, and she makes more of an effort to keep her room clean and help around the house, even though it’s not a requirement for the allowance. After spending all her mad money at Canada’s wonderland one week, she quietly watched as her baby brother got an ice cream cone a few days later and she didn’t, a friend we were with asked her why she wasn’t getting one and she calmly informed her that she was out of mad money, she didn’t even ask.
So not only is my daughter learning the value of money, but I’m actually being appreciated when I do buy her something, thank you Gail Vax-Oxlade.