2011 July | FamilyMint

Lara M.

It’s a great way to keep track of allowances and eliminates the problems of not having the cash on hand each week and of allowance given “mysteriously disappearing!” It is also neat for kids to be able to set goals for things that they want. And makes it easy to say no to small purchases in the store by reminding them they can save for it!

Teaching kids about money management

By Bob Masterson

When, where and how is the best way to teach kids about money management? They know how to spend it. That’s not the problem. In fact from the earliest years, through internet and television advertising, kids are taught how to spend. We are now living through the effects of immediate gratification brought on over the past 20 years. Remember your father saying “money doesn’t grow on trees”. Well, for the longest time it did. Credit was plentiful and cheap.

We teach our children at an early age how to read and write. Isn’t it just as logical we teach them how to manage money? This by no means is instinctual.

“We need to figure out how to do this the right way,” says Lewis Mandell, a professor at the University of Washington who after 15 years of studying financial-literacy programs has come to the conclusion that current methods don’t work. A growing number of researchers and educators agree that a more radical approach is needed. They advocate starting financial education a lot earlier than high school, putting real money and spending decisions into kids’ hands and talking openly about the emotions and social influences tied to how we spend.

What are your thoughts?

“Practically everything we do as parents is motivated by a desire to see our children be happy. The good news is that there is much you can do to encourage them to discover true happiness for themselves. Every day, in each moment, you can offer essential encouragement through your loving presence, your own example and your steadfast support. As you encourage your children to be happy, you may notice that something else happens, which is that you become happier too.” — Dr. Robert Holden

The Envelope System Made Easy

By Jeff Eusebio

The Envelope System is a popular method of budgeting, and for good reason. The process is dead-simple. Create one envelope for each major category of spending, fill each envelop up with the budgeted amount of cash at the beginning of the month, and when the money is gone, it’s gone. No more spending is allowed in that category until the next month.

One variation on the “fill-er-up” part of the process is to allocate a portion of your paycheck to each envelope each time you are paid. Keep one envelope for long term savings and allocate perhaps 10% of your paycheck to it, and you’ll quickly fill up that rainy day fund for inevitable unforeseen emergencies.

This method works to eliminate debt and improve savings because you make your spending decisions ahead of time and you spend less than you make. By setting aside money before you spend, you are better able to plan, and look to the future. It’s simple, but the key to make it happen is discipline and habit.

With FamilyMint’s Savings Plan feature, your kids can start forming this simple habit from day one. In a nutshell, each goal account acts as an envelope, and each deposit made through the Savings Plan will automatically flow into the pre-selected goals. Then, each time your child spends money, he or she deducts it from the appropriate goal account. When it’s gone, it’s gone!

Savings Plan is just like the old envelope system, but it’s automatic and it’s visual. Savings Plan turns FamilyMint into spending management system for kids.

What’s your experience? Have you tried the envelope system? What do you think of the Savings Plan?

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Allowance Best Practices According to the Experts

By Jeff Eusebio

Your kids are bugging you for an allowance. Should you give one or not? You’ll see and hear some very strong opinions on both sides of the debate.

At FamilyMint, we believe there is no one, right answer. In fact, the appropriate answer depends on the parent, the child, and the particular circumstances you are both in. We have, however, seen allowance implemented as a relatively easy yet powerful part of financial formation. Done correctly, it really can help kids to appreciate money!

If you choose to give an allowance, FamilyMint makes it easy! You can set up automatic weekly or monthly allowance payments customized for each of your kids. This takes one more task off of your plate, you won’t be fumbling around for correct change, and the transaction history in FamilyMint will remind your kids where this money came from (you!).

What do the experts say?

An article by Michelle M. Haas-Dosher at the Credit Union National Association Inc. provides an excellent overview. She suggests the right time to start an allowance is as early as your kids start to understand the value of money (usually around age 6). She also addresses how much, how often, and for what allowance should be given.

What Experts Say About Allowances for Children

What do you think? Share your thoughts in the comments.

Heidi H.

Easy to use, forget-proof system of distributing allowance. Helps teach money management and planned spending with goal specific savings plans. Encourages generous giving while thinking ahead for long term savings. Easy for kids to review past purchases and see a tangible outline of how they might change spending habits. We love it!!!!

Budget their summer earnings for the school year

By Michael Grosvenor

It feels great when your kids earn their first paychecks in their coveted summer jobs. Their first instinct might be to rush out and spend away. But what happens when school starts? The money is long gone. The best way to make that money last through the year is to set up a budget. It’s an easy math problem you can teach your kids to solve.

If they work a job for 3 months and make $1,000 per month, they’ll earn a grand total of $3,000. To make the $3,000 last all year, simply divide this amount by 12 (the number of months in the year) and that leaves $250 to spend per month.

The most important lesson this teaches is how to live within their means. Teaching this early can avoid many problems down the road. It can be easy for young adults to get into credit card trouble with the “I’ll pay for it later” concept. If they fail to budget their money, they might spend too freely up front and not have it later to cover their expenses.

In the above example, they know that they have a limit of $250 a month to spend. If there is something else they want and don’t have the money, they will need to wait and save up until they are prepared to pay for it. If it means missing that Huey Lewis concert this month (don’t laugh, ‘cause I’m going) then that’s a lesson learned in refraining from spending money they don’t have.

How young were you when you started to budget your money? Share your story in our “leave a response” section.

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