When I posted in April about our philosophy behind allowance for the kids, long-time reader Catherine left a comment that asked, "So, just curious, do you help them, and if so how, in deciding how to spend/save? And another biggie, is one son a saver and one a spender? How do you handle the two?"
First of all, I'm sure you really appreciate me answering your question from April in AUGUST, Catherine. I am nothing if not responsive. I hope you still actually need the answer to those questions.
We SORT OF help them in deciding how to spend and save. The current policy is that if they receive a nominal amount of cash for some reason ($3 of allowance, $5 in a card from a relative), they can choose what to do with it on their own. And 95 percent of the time, they want to go to Target five minutes later to spend it (although we don't do that, BUT NOT FOR THE LACK OF THEM ASKING).
If they receive a more substantial amount of money, such as $50 to $100 for a birthday or holiday from a relative, we take 50 percent of that and put it in their college savings account, and the other half can be spent or saved as they choose. Grayson has always been a saver, and I've always been a spender, so he always encourages them to save when they have a choice, and I always encourage them to do whatever they want with it. My philosophy is, if they're already saving half of it, they should feel free to do something fun with the other half if they want to.
Historically they've all been spenders, until fairly recently. For Nathaniel's 8th birthday, he decided he wanted to forgo a birthday party and put the money we would have spent on one toward a laptop of his own. Combined with allowance he'd already saved and money that other relatives put toward the cause, he was able to buy an inexpensive laptop during the Day after Christmas sales in 2010.
SO. For the last 18 months, it's been KILLING Nick that Nathaniel has a laptop and he does not. Forget the 22-month age difference ... it matters not to Nick. He is dying for a laptop, and he's been saving every penny that's come into his possession since the beginning of this year so that he can get one. He hopes to have enough saved by his birthday -- or at the latest, Christmas -- to buy his own. I think he has somewhere in the neighborhood of $150 right now, which is pretty impressive.
He keeps track of how much he's saved on an envelope that sits inside his piggy bank. The envelope holds all of the money he's saving for the laptop, and all the loose change sits outside it in the piggy bank itself. He writes each addition on the outside of the envelope each time he makes a "deposit."
As for "managing" the types of spenders/savers we have, I don't know that we do that well. The hardest part is listening to your spender complain constantly because they want something your saver was actually able to buy while your spender was camped out at Target's Dollar Spot every Saturday for a year. And I have no solution for that beyond earplugs.
I will say that we tried having Nathaniel keep a check register for his savings account, and it was a disaster. And by "disaster," I mean that it was far more work for the parents to try to keep him on top of it than it was worth. So maybe we'll try that again after he turns 10 this December. Nick is doing great with his envelope system, so I don't plan to change that until he's ready.
I think the most powerful tool in demonstrating the power of saving is to give your child an example of what they can buy if they were to save 50, 75 and 100 percent of what they typically earn or receive as gifts in a year. If they see that by saving 50 percent they could buy a Wii game, by saving 75 percent they could buy an iPod Shuffle, and by saving 100 percent they could by a used 3DS, it might make an impression.
Internet, do you have any tips to share with Catherine?
If you have a question for Take It or Leave It, send an email with that in the subject line to stainsofgrass (at) yahoo (dot) com.
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