Financial Literacy for Kiddies

As mentioned earlier, we have had the signal loud and clear that it is time to start teaching Miss Oh Waily some of the basic financial skills that she will need throughout her life.  It is not the first time that the idea of what to do and how to teach our children about money has come up, but it is now clear that this is time to start taking action.

A few posts have inspired our ideas on what to do, the first was a guest post at one of my favourite personal finance blogs, Get Rich Slowly.  This led to reading that author’s first and subsequent posts about how they approached allowances for their children.

From that reading and our own thoughts about what we want to teach the children about their money we have come to the following end result.

The children’s pocket money, or allowance, will not be linked to any form of regular household jobs they are asked to do.  These jobs will be considered to be their contribution to the family and household.  Unusual jobs or going above and beyond any regular work will be considered for extra payments.  I don’t see that becoming an issue for another year or so at the moment.  They are not yet of an age where I think I need to be encouraging their entrepreneurial spirit.  There is plenty of time to do that.

There will be rules around the spending of the pocket money.  Mr Oh Waily and I both agree that the basic idea of allocations that Nickel describes in his updated allowance post is the best for our purposes.  So the Oh Waily children will have the following allocation rules to follow – 50% spending, 40% saving, 10% charity/donation.

Now we come to the nitty-gritty.  Just how much is enough.  Just how much is too much.  This is probably the hardest part.  I also see that in the early days there may need to be some guidance* on what is appropriate to spend the “spending” portion of money on.

We think that the idea of $3 per month, per year of age will work well too.  This means Miss Oh Waily will receive $12 per month.  Master Oh Waily will need to wait a bit longer before he can join the Oh Waily pocket-money plan.  At least until he can count well enough.

As this is a considerable jump from having no money, I can see that I will need to be careful over the first few months with regards to guidance and help to make decisions.  This does not mean I plan to spend her money by proxy, simply that the sheer novelty of having money could sour when she tries to have an almighty spend-up in one go and then gets left with nothing.  While self-control is a lesson that needs to be learned regarding money, I think it is a little harsh to expect a four year old to possess it instantly on contact with their own cash in hand.

So Miss Oh Waily’s introduction to monetary self-determinism will involve three jars, labelled appropriately, and a small purse**.  She will be entitled to $12 per month until her next birthday, of which $6 is hers to spend as she pleases, $4.80 is to go into savings and $1.20 is to be set aside for a charity of her choice.

I will report back on the mechanics of this once we have it in full swing.  I think that December might be a good month to start this off.

* probably in the form of “no, you cannot spend all of your money on junk food”.
** that no doubt will turn up in my bag on a semi-permanent basis.

Today in history: 1925 – June Whitfield was born. (British comedienne)

The three ages of man: youth, middle age and ‘my word you do look well’.
– June Whitfield

6 thoughts on “Financial Literacy for Kiddies

  1. I’ll be watching your progress with this with interest. With a bean-counter as a father Charlotte will need to be as savvy as possible with regards to finance…and at the moment the limit of her “savvy-ness” is claiming any coins that she claps eyes on and shoving them in her piggy bank before anyone can rescue them. Me thinks we’ll be following your lead in a few months’ time!!


    1. Yes, we have a swiper of coins in this household too. She has been using my old money bank, but sadly her brother dropped it a couple of months ago. It’s made of that really old, sturdy plastic so the body didn’t shatter, but the base did shed shards (try saying that fast). So she will have something of a headstart in the change for putting in the saving jar.
      I’m actually still thinking about what to use for storage. I’d like something see-through so she can see the contents growing at a glance. But clearly it can’t shatter with relatively heavy metal content.
      Must also remember to break the money down into smaller coins so it seems like “lots”.
      So much to think about. 😀


  2. I really like the idea of them giving a percentage to a charity, and having to save a portion as well. I’m sure this will be a great way of teaching your kids the value of money, as well as the values of spending, saving and sharing.


    1. Yes, being thoughtful of others is important too. Many of us can spare a few pennies to those charities that most touch us. In this very fast, disconnected and sometimes anonymous world I think it’s important to remember to be a part of your community and give where you can. It is also a great way to help instil gratitude for what you do actually have rather than focus on what you don’t.

      Being an employer I have been able to see many variations on the theme of “want it now, must have it, will go into debt up to my eyeballs to get” amongst people. I don’t want that sort of lifestyle for my kids. I guess I’m old fashioned. I think it’s important to develop patience, live within your means and not expect others to fish you out of your own financial stuff-ups. The sooner those lessons are learned, hopefully, the stronger the life skills are before any marketers get their ears (or peer pressure starts to bite).
      Too much philosophy? Probably. 😀


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