One of the most difficult things to get kids to do with an allowance is to save it. If you give your kids their money in cash, it’s really easy for that cash to go in one pocket and out the other in the form of candy, movie tickets, and impulse items at any store checkout line.
Among the challenges, kids will encounter when they get a job and a checking account will be the distance between their money and themselves. Letting go of cash is one thing. You can see the money leaving your hand as you buy something or a service. When it’s swiping a plastic card, though, the distance between spender and money increases. It’s much easier to be impulsive in those instances, and kids without real-life skills in managing money can be quickly overwhelmed. This leads to overdraft fees and troubled credit scenarios.
There is a way to get them that experience while encouraging them to save and appreciate value. Why not become a “personal banker” yourself? Until you are ready to open a checking account with your child, your house will happily hold money earned for chores, birthdays and holiday gifts or other funds. You can decide whether or not you will offer interest!
Kids can make withdrawals for purchases when they need to, which also allows you to see how your kids manage their money.
Keeping track of their account balance should be largely their responsibility. The method can be as simple as a piece of paper on the refrigerator or as complex as an online spreadsheet. You could even get an actual checkbook and let your child track their monies that way!
Each entry should include amount, date and memo, just like a real checkbook. This practice can give them invaluable experience in balancing a checkbook.
Keeping track of their spending habits also gives you a common frame of reference when it comes to discussing budgeting with your child.
While they are keeping track of their funds in their chore checkbook, they can understand the value of getting paid for doing their chores. Give them a set payday of when they will receive their allowance and only give them their pay if they do the work to deserve it.
Doing chores and keeping a chores checkbook is an easy way to teach money management and responsibility without radically changing the way you and your kids relate to money. It’s a no-risk option to get on the same page with your child for financial matters.