A dollar here, a dollar there, pretty soon it adds up to real money

We’re starting Douglas on an allowance. Jenny looked at a lot of advice online before we decided what to do, and I think we’re happy with this approach.

We’re hoping that he’ll learn about saving, the value of delayed gratification, and charity from this, but maybe that’s too much to expect of a four-year-old.

Douglas gets $4/week ($1 per year of age), independent of chores. He has four banks into which he puts his money:

  • 25% that he can spend any way he wants (it’ll probably be candy for a while).
  • 25% for charity (church tithe or Ethical Society contribution each week, or another charity)
  • 25% for short-term savings (he’ll be able to take money out once it’s been in for a month or so; this isn’t fully defined)
  • 25% for long-term savings (theoretically for college)

We saw some schemes in which parents gave the child choice on which bank to use and supplemented with matching funds when the child chose something other than spending money. I like the idea, but I think it’s too much for a four-year-old.

Does anyone have experience with these approaches? Other thoughts?

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About Lance Finney

Father of two boys, Java developer, Ethical Humanist, and world traveler (when I can sneak it in). Contributor to Grounded Parents.
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2 Responses to A dollar here, a dollar there, pretty soon it adds up to real money

  1. AnyEdge says:

    I think 25% for charity is too much. As he gets older, this will necessarily decrease, and he is going to have to understand why he is limiting his contribution for charity to spend more/save more for himself. I think it might be better to go the other way, put a very little bit, and then reward him for choosing to do more. Just a thought.

    • Lance Finney says:

      We thought of a few different combinations (one was 10% charity/40% spending/50% saving), but the simplicity of a dollar in each bank had a lot of appeal.

      We’ll probably reconsider when he turns five – will we split the new dollar or put it all in one of the existing banks?

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