I posted earlier this month wondering about giving Emma an allowance and I thought I would write a follow-up post.  I was reminded about this by an interesting post about their Family Bank over at ThadenPierce School (which in turn also reminded me about a bank I tried to start up with my sister when I was about eleven or so and she was around seven, but that’s another story…  suffice to say it didn’t prove particularly successful because she didn’t find even my rather generous interest terms enough of an enticement to give me her money - I guess she couldn’t quite see the beauty of compounding interest at that age.  *grin*) in which they lay out their plan for handling money with their children.  I really like what they have set up, and I’ll have to keep that in mind for future reference.  

We, however, have decided to skip an allowance for now though.  We are doing a cash for jobs scheme, where half of the money is for short-term savings/spending, a quarter for charity, and a quarter for long-term savings.  The long-term savings would go into her Ing Direct account (where some portion of her cash presents have been going since she was born) and would be for her use later in life.  Matt and I have come up with a list of jobs she could do over at the property but so far she’s decided playing is more interesting than trying to earn money.  She talks about it occasionally, but as she told me last week, “Christmas isn’t that far away, and if I don’t get that Playmobil set I want then, or for my birthday, then maybe I’ll try to earn some money to get it.”  Granted, I think her sense of time is a little off (as evidenced in the last post as well) but all in all I think she’s not a particularly motivated child in this direction.  And really, that’s fine.  Essentially, she wants the new Playmobil set if someone else will pay for it, but not if she has to earn it, and she’s accepted this and isn’t complaining about the situation.  It perhaps isn’t ideal from the whole teaching your child about money perspective, but at least there seems to be some connection between not earning the money and not getting what you want.     

There’s obviously a lot more to money management than this point, but this seems to be a good start.  I think holding off on a passive income is a good idea in her case, and we’ll just have to keep re-evaluating the situation occasionally as she gets older.