Fiscal Policy for 6-year-olds

You two turn 6 years old in just 10 days. So Mom and I are trying to figure out how to set you up on an allowance, and there’s just so many ways to structure one, that we’re not sure what to do yet.

You see, right now, you already know that if you want money, you work for it… most often, that means helping Mom pull weeds (you get $1 per bucket). Lucas, you already seem to have a grasp of what money is, how to get it, and that you need more if you want better toys. Anna, you appear to operate from simply not having enough, and have not yet integrated that one needs to work to get more.

But even that notion – work for reward – I know to be primitive. What really happens is that one creates or delivers value to others that is equal to or greater than what they give as a reward. A week or so back, you both got a cup, and wanted to sell me a glass of water for $1. Anna, you even wrote out a nice chart – 1 glass = $1; 2 glasses = $2. But when I said that I would not buy one, and that any time I wanted water, I could just fill my own glass, you were both disappointed. I did not want to squash your entrepreneurial spirit, but nor was I going to pay for something I already own or can get for free.

So I made a new game… I told you that I would pay you each $0.25 for a glass of water AND a nice drawing. I told you that the drawing is what made the water more valuable, and I would pay for the greater value of what you created. Next, you both wanted a piece of paper. I thought for a moment here, and decided that I would “sell” you a piece of paper for $0.05 each. You said that you did not have a nickel, so I told you I would loan it to you, and what that meant – that I was giving you something now, that you would have to pay for later. I think you only got part of the idea, but that was OK.

So then you both went to work on your drawings, and when complete, I paid you both 2 dimes and a nickel for the drawing and water. I gave the water to the plants who looked more thirsty than I was, and kept the drawings. Then I asked you about paying for the paper. You had forgotten, so I reminded you that you both bought something from me that you had not paid for, and the concept made slightly more sense then, as evidenced by neither of you fussing about having to now give-back part of what you earned. Then we put your dimes into your piggy-bank.

But now back to allowance – my concern is that if you see you start getting money “just because” that it might subtract from knowing that you work for money. Of course we can and will show you that work will supplement what you can gain, but I don’t want allowance to detract from work-ethic.

So here’s our current thinking:
You’ll each get $2/week.
From that, it will go into three “jars” – one for giving, one for saving, and one for spending.

  • Giving – this is money that you give for the benefit of others. The church. Food drives. Rice-bowls. Books for others, etc. The expectation here is that 10-15% go in here, or $0.25 from your $2/week allowance (it’s 12.5% just because the quarter is easy). Our goal hear is to present that from our earnings, we help those who are less fortunate than ourselves.
  • Savings – This is yours too. You can spend it, but only after it reaches $5, and we have to agree on what you spend it on. The point here is that for savings, you have to have a conversation first before dipping into it. These are conversations about learning and values. We don’t know what will and won’t be OK here yet… just that we talk first. On $2/week, $0.75/week goes into savings.
  • Spending – yours to spend on whatever you want, except contraband material (nothing that could produce real injury.)
    This is just an allowance – you get it every week just for being you. It is NOT tied to chores or homework. And you are also free to earn money in other ways, such as when you help Mom pull weeds, or make other arrangements for doing something that other people value. However, even for money that you earn, those go into these three “jars” too. So for just $1, that would be 0.10 in “giving”, 0.40 in savings, and 0.50 in spending.

Lastly, in the case of gifts that you receive, you can put those into whatever jar you choose.

So it occurs to me writing all this out that I’m doing two things. First is my own attempts to be crystal clear, and to write down what Mom and I both agree will work. Second is that we are laying the groundwork for your future fiscal policy with life.

After we put the above in place, I did a bit of searching online, and it turns out something like the above has some external grounding that we can draw upon.

cf.: Kid’s Allowances: Your’re Doing It All Wrong

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