Family Bank (updated with picture.)
Monday, May 26th, 2008I snitched an idea from another blog for an allowance binder and we’ve officially set up the Thaden Pierce Family Bank (The bank idea was inspired by the “Parenting Breakthrough” book.) Here are the tentative guidelines we decided on for our family, we’re writing them up and putting them in a 3 ring binder. Each kid gets a zippered pouch and a deposit/withdrawal sheet. The first Monday of the month we hand out allowance to the kids that are 5 years and up, $1 per year of age per month (so for now we’re only shelling out $5 for Mo and $6 for C.) 10% goes into tithing, marked on their little deposit sheet and kept in pouch until they fill out their tithing form and mark it as a withdrawal to take to church. 40% goes into long term savings and when that hits $20 we’ll transfer it to their USAA savings accounts, set aside for mission/college type expenses when they are older. Obviously that’s not going to add up super fast at $2 a month or so but my parents deposit the kids’ birthday money into that account so that helps. 
Then they get 50% to play with, and do with however they please. They’ll also keep it in the pouch until they withdraw it and they have to write down what they are spending it on so they can see their spending habits from a VERY EARLY AGE.
With the spending money we’re giving them the option of marking it as short term savings (vs. the long term savings of 40% that’s not negotiable until they’re old enough to try and negotiate with us.) If they want to save some of their spending money, we will pay them 10% interest for the first two months – 2 months because they are little and I don’t think they’re going to want to save for longer than that. If they set a specific “savings goal” like I want to save $10 for this toy then when they reach the goal we’ll give them a 10% bonus interest. We’re hoping that motivates them to write down and save towards specific goals. They can draw a picture or cut out a picture of the item they are saving up for. We’ll make some little savings goal sheet they can color in to show their progress, in addition to the deposit/withdrawal sheet. We want to make saving money fun! So when they reach the goal we’ll probably do a little celebration, too, and make a big deal out of it.
Besides allowance, we’re writing up a list of “money chores” they can do and get paid right away that can go towards spending or short term savings. Their regular allowance is not tied to chores, I’m not giving them the option of declining allowance and refusing to do chores. We want allowance to teach them responsible money management and we’re not making it a lot so they are motivated to earn money in other ways. Once they are much older we’ll be doing the clothing allowance but for spending money, we really want them to be inspired (desperate? ) to get creative in how they earn money. We don’t want to pay them a lot of allowance that’s just something they take for granted, but I will happily have an on-going list of money chores they can do around the house.
We’re pulling out in $1 bills the rest of the allowance for the year for both kids (I think it’s only $84 or so) and some extra money for money chores. We’ll keep it and a lot of change in a pouch in the bank binder. This will let them have a tangible lesson in the amount they are getting, then how they are dividing it for savings/tithing/spending. Once we transfer their long term savings to the actual bank accounts then we’ll just rotate that money back into the main cash pouch for more money chores.
Keeping the tithing, savings, and spending money all in one pouch will require them (and us!) to be on top of the deposit/withdrawal sheets. But that’s the point, we want them to learn NOW how to manage and track their money, when it’s small amounts and easier for them to literally see where it’s going.
Down the line we’ll also add in the credit option – they can withdraw loans/advances from us but at a very steep interest rate. So if they are feeling desperate to make a purchase RIGHT NOW we can let them take the money out, tease them about the crazy amount of interest they are paying us since they didn’t want to wait and save up (and earn interest!) Hopefully we will make the lesson painful enough that long before they leave home they will have a clear understanding of how credit works and when it’s appropriate to use and how to avoid the danger of debt and impulse shopping.
Because really with all of this the lesson we’re trying to instill in them is wise planning, self control & delayed gratification. Self mastery is the goal, right? And money is simply another way we can exercise our agency to make good choices or we can allow ourselves to become trapped. This is a tangible way to teach them a crucial lesson while they are young and the stakes are not so high.
Update: We’ve assembled the family bank binder, the bank thought we were nuts for asking for $100 in $1 bills (for allowance for rest of year.) But that’s why it looks like we have so much cash on hand. We did a special lesson on tithing and allowance and saving. This morning Christopher and I had a great talk reviewing interest, debt, saving, what the prophets have said about avoiding debt, etc. Which somehow got us onto home mortgages and “worthy” debts which lead to foreclosures. Interesting talk! But he seems to grasp the concepts and he’s excited by the idea of earning interest.
This is Christopher’s blue pocket, the green pocket has the allowance stash for the rest of the year, the page protector with paper has our list of family rules for the bank and how it will all work. They cannot take out or add anything to their pocket without writing it down in the little ledger. We’ll see how this goes!
(And cool, because we know speech development has been a long and hard battle for some of our other kids and we are so very grateful that Emy will be our first baby to not need speech therapy. Hooray!) 
