Father Sez

From and to parents - parental advice to our children on personal financial management and life.
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Posts Tagged ‘Savings’

So my younger children now save money, what next?

Monday, April 20th, 2009

I have written about our system of giving allowances to our three younger children (15,14 and 10). This has been going on for more than a year now. We started with weekly allowances in late 2007 and this year changed to monthly allowances for the elder 2.

Our youngest girl still gets a weekly allowance. In addition, they are supposed to keep accounts of their spending.  Here our youngest girl is the most disciplined. Daily she updates her accounts book with the amount she spent and the amount she put into her savings box. Our boy, the 15 year old seems to have absolutely no concern about his accounts. I have changed back his routine to a weekly allowance. I think I have to monitor and bug him a little more weekly. Nana, our 14 year old girl, writes the neatest accounts. However I suspect that some of her accounts are, well, a little fudged.  

There have been some adjustments made along the way. At the end of last year, it was found that the physical money in hand was much less than what was supposed to be as per their books! So now, I periodically sweep their accounts out and give them a signed IOU.  

However, one thing is clear. All the three save part of their allowances. I insist that they should save at least 10%, a sort of a paying themselves first, guideline. The children save more, something that I am pleased with. Now what should be the next issue that I should try to impart to them? 

I am not completely done with what I had planned to do, i.e. to discuss with them on what are salaries and wages, how do people spend their salaries, what happens when expenses are more than income and the concept of budgeting, living below our means and paying ourselves first.

Then there is the concept of charity, the giving of gifts and what Lynnae calls ‘Blow money”.

Their next school holidays start on the end of May for 2 weeks. I have made a note in my calendar and Insya’Allah will have the discussion with them then. I’ll keep you posted on their responses.  

Review of my younger children’s money habits

Wednesday, March 5th, 2008

boyandpiggybank.jpgIt’s been 4 months since we started giving the children a weekly allowance.  In November 07, Abang (14) and Nana (13) signed an agreement with their mother that:

a) They would keep weekly accounts of how they spend their allowances,

b) Save at least 10% of their allowances.

So far this exercise is going well. They show me their accounts book each week (the entries are neat and tidy) and I give them the next week’s allowance. The amount they note as having “transferred to piggy bank” is also noted in a separate page, so that it can be compared to their bank books later.

Bank savings accounts have been opened for all three younger children.

I have not explained to them the concept of “paying themselves first”. Though they save the money weekly, currently they are doing so just because I have told them to.

I have reviewed this process and now propose to tweak it as follows:

a) Based on advice from Lynnae in her installment of the free e-book Money Matters for all Ages, I am going to change this weekly allowance to a monthly one. Hence it becomes more like a salary. The kids will learn how to stretch this salary for a month and also learn to budget.

I am setting 1st June 08 as the target date for this.

b) They have to learn that just whining and complaining will not get them any extra money. They have to do additional chores in the house and negotiate additional payments for this. So far only Nana has earned extra money and that, too, only once.

c) They have to pay for their own special expenses like presents for their friends’ birthdays and stuff like that. I have to elaborate on the frugal ways that are available to come up with a present that is memorable and yet very light on their budget.

This Friday, their first term holidays start. It’s only for a week. Now that there is no cable TV in the house, they should have a little more time. I plan to take them out and have a chat with them on :-

- what are salaries and wages,

- how do people spend their salaries

- what happens when expenses is more than income,

- the concept of budgeting, living below our means and paying ourselves first.

d) I’ll ask the youngest girl, if she is ready for a weekly allowance. So far she has not asked for this. She still receives money daily from her mother for school.

Well, I certainly don’t expect my three musketeers to enthusiastically grasp this talk. I’ll have to take them out to a place they’ll enjoy, soften them up a bit and try. At least I get a chance to talk to them at an earlier stage in their lives than their two elder sisters.

I’ll keep you posted.

Note: The picture is from Google Images.

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