Ma, I need $5 for lunch tomorrow! This coming from a twelve-year old boy who is not earning a salary. As a working adult, even I don't have a $5 lunch - well, not everyday, just a couple of times in a month. It was time, my 12 year old learnt how to manage his weekly finances, WISELY.
W
Waste not. If he decides to waste his money buying drinks and stationery items that he really does not need, he will find that there is not enough money for him to fill his stomach with food.
I
Interest. At the end of the week, if he has any left over pocket allowance, he can deposit it in the "financial house". The financial minister (me) will give a 10% interest rate (most generous interest rate around town) on deposit given. Withdrawal can only be made the week after the initial deposit to earn the 10% interest rate.
S
Savings. If there is an expensive toy that he intends to get on his own, he has to save up for it. How he saves up for it is left entirely up to him. He can always choose to eat a less expensive meal in school and when he comes home, there is a hot meal always ready for him. So seriously, he will not be deprived of food or starved!
E
Expenditure. If he is unable to curb his instinct for buying things in excess or purchasing unnecessary items, he will soon find that he is always broke and hungry.
L
Loans. The financial house will allow loans, but will take a 20% cut from the following week's pocket allowance. So for the next 5 weeks, he will not be able to get his full pocket allowance. Maximum loan allowed is an extra week's pocket allowance. Next loan will be made available only after the first loan has been paid in full.
Y
Years to come. As my 12 year-old grows up, he must learn to manage his weekly finances, then his monthly salary. Soon his younger siblings will also be joining in this financial learning journey.
He is still learning to manage his weekly finances, but I think that he is coping very well. His first week having financial control of his one week allowance, was a little lean at the end of the week, because he admitted that he was too happy to have so much money at the beginning of the week that he forgot about having to stretch the allowance for 5 days instead of 2 days.
At the end of the week, when he comes to deposit his savings, we have a little discussion on how he's spending his money and what he is saving up for. After 10 weeks of managing his weekly allowance, and if he is managing fine, I will introduce the next level - managing 2 weeks' allowance. Eventually, I hope to let him have the whole month's allowance for him to balance for himself. As a parent, I am very proud of how he is managing his finances. I hope that this little lesson will stand him in good stead in his future.
My next child, is watching and learning all that is going on. She can't wait until it's her turn to start managing her finances. In fact, negotiations are now on for her to start. She's only 10 years old.
Great ideas!