Category Archives: Saving Money

How This Nine Year Old Kid Deals With Money

So what happens when you give a nine year old total control of “his” money?

Since we introduced our new approach to allowances, it’s been interesting seeing the impact on my son, T’s behavior.

When we made the switch, T was in the middle of saving for a Nintendo DS. He kept on dedicating all of his allowance to this so he could reach his goal faster. He also paid close attention to when interest was paid and how that would impact on the timeline to his goal.

Even better, offering him the chance to earn money beyond his allowance really revved up his entrepreneurial spirit. Suddenly, we had an eager beaver volunteering to fold laundry, cut the grass and put the garbage and recycling out for collection.  He was a boy on a mission.

That’s not to say that, like someone on a diet, he didn’t indulge occasionally with a splurge on treats at the baseball game. But he did so calculating the impact on how soon he could get his hands on that grand prize.

Finally, some six months after he had first started, his accumulation of allowance, birthday money, Christmas money and earning from additional chores paid off. He handed over $198.00 and received his Nintendo DS console, first game and limited edition Pokemon case.

As parents, we felt incredibly proud to see him be so self disciplined and motivated to make a goal. We loved the financial lessons that were being taught by the whole experience.

Things went downhill a little after that.

With no major goal in mind, T spent money indiscriminately for a couple of weeks.  My handy helper around the house disappeared entirely. To use the dieter analogy again, he was enjoying the freedom of consuming what he wanted (out of rather limited funds as he only gets $6.00 per week) when he wanted. Without the motivation of a big ticket prize, he lost his entrepreneurial drive. I felt a bit worried that our allowance system wasn’t working.

But then he refocused.

He figured out that he has $24.00 per month in allowance. He announced that he would allocate it like this:

  • Spend $6.00 per month for Club Penguin membership
  • Save $6.00 per month for college
  • Save $6.00 per month for a car
  • Save $3.00 per month for his next Savings Goal (another Nintendo DS game)
  • Have $3.00 per month available for Spending

I pointed out that the annual cost of Club Penguin would equal $72.00 and asked him to think about what else he could buy with this. He still thought this was good value. (Note: we’re on a monthly payment system right now as we’ll be traveling in the summer. In the Fall, I’ll see if he wants to buy six months upfront and save a little on the monthly fee.)

I was slightly stunned that he would decide by himself to save for college and a car. The college idea comes from the fact that he really wants to go to college and I’ve let him know that, while Z and I are saving for it, we likely won’t have enough to pay for the whole thing. I’m amazed that he is prepared to dedicate savings for this already. It’s delayed gratification at its best.

Meanwhile, what are my lessons out of this?

  • I shouldn’t expect my children to be doing the right thing all the time – there’s a time for learning and there’s a time for playing
  • It’s an ongoing process. Clearly, T is getting the savings bug when he has specific goals in mind. The lesson about paying yourself first just to have savings with no particular purpose will be one for further along the road.
  • Sit back and enjoy the ride as my kids take control of their finances. Be ready to ask questions to help them analyze their decisions and offer advice, but let go of the final outcome.

Easier said than done, but parenting is one of those on-the-job training roles and I’ve got as many things to learn as my boys do.

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