YNAB You Need A Budget

[rollercoaster]

Has anyone here heard of, or used this with your kids for an allowance?

I want to start giving my kids allowances to buy their own gum, video games, etc. and make their money mistakes young! I'm trying to decide the best approach to take, such as just using straight cash, or using a "banking" system such as the one mentioned, or perhaps a hybrid of the two.

I think the 4 year old would probably benefit best with just cash at the moment as it is more concrete to have the money in hand, but perhaps the 7 year old is mature enough to deal with something a little more abstract like a "checking" account so she learns money management and online banking procedures.

I appreciate any thoughts and opinions.

[Mudie]

I've never heard of Zefty so I can't say anything good or bad about it but I would like to offer up one piece of advice involving kids and money. That is to run away from the word "Allowance" or more to the point any sort of plan/program that simply doles out money to your kids without taking the time to teach them that money is earned not just received.

The most powerful lesson you can convey to your children is that money isn't free and that in order to get some they must earn it. When they do so they will feel a greater respect for the money that they have and any lessons that you teach them about being responsible with it will stick better because they worked hard for it and will naturally want to be careful with it.

Age appropriate of course (the 4 year old earns a quarter for picking up the toys while the 7 year old earns a dollar for helping put away groceries) but still earned.

[malisab]

I don't have kids, but I'll still give my two cents. I'd start them both with cash and then determine when/if/how to move the 7yo to something more abstract.

[lang510]

There are two schools of thoughts...one, they should earn it, two, get an allowance just because they are part of the family. I've been doing the second since they have been five years old. I would start them in kindergarten as soon as they knew how to count money. First they would get 50 cents, then $1 for first grade, $2 for second, etc. However, because of the economy, we could not afford to keep up on these amounts. We sat down with them and told them that they would have to get a 50% pay cut. Both kids, who are now teenages, were very understanding and are fantastic with their money. We've tried to give them small raises when we can.

One one thing we did was never and I mean never buy anything (gum, candy or toys) outside of their birthday or Christmas. If they wanted it, they would have to use their own money. I would only require them to buy birthday gifts for each other and one father or mother's day gift, rotating between them each year.

My son wants me to keep the money and give it to him as he needs it so I track it in my budget. My daughter likes to get the cash right away. My son is going to college in a couple of years and I would expect that he will need YNAB to keep track of school and entertainment expenses. It is going to be an interesting task.

[maryea]

There are two schools of thoughts...one, they should earn it, two, get an allowance just because they are part of the family. I've been doing the second since they have been five years old. I would start them in kindergarten as soon as they knew how to count money. First they would get 50 cents, then $1 for first grade, $2 for second, etc. However, because of the economy, we could not afford to keep up on these amounts. We sat down with them and told them that they would have to get a 50% pay cut. Both kids, who are now teenages, were very understanding and are fantastic with their money. We've tried to give them small raises when we can.

One one thing we did was never and I mean never buy anything (gum, candy or toys) outside of their birthday or Christmas. If they wanted it, they would have to use their own money. I would only require them to buy birthday gifts for each other and one father or mother's day gift, rotating between them each year.

This what we did. edited to add: one difference though...we did not require them to buy gifts (unless they wanted to) out of their own money until they were mid teens as we gave them very small allowances. Then we gave them a set amount for gifts and if they wanted to spend more they had to save to do it.

[lang510]

I had them pay for the gifts to learn to live within their means and to be forced to save for something that had to be paid by a certain month. The gifts, however were of course very small when they were young. My younger one would spend about $2-$3 back then while my older one would spend $5. It didn't matter as they were thrilled to get any gift from their sibbling. The mother/father's day gifts didn't come until they were a little older, like 10 or so.

[Mudie]

However, because of the economy, we could not afford to keep up on these amounts.

Not to go off topic, or ask a stupid question, but was your personal economy impacted? All I mean by this is that if your household income remained near the same regardless of the "economy" then it shouldn't have required a 'pay cut'. If your income was reduced then certainly, as I said "stupid question".

My point though is simply that when I hear 'how bad the economy is' chanted day in and day out on every TV, radio station, as well as in casual conversation, it pains me to keep hearing the topic repeated (and thus strengthened) and if everyone could just get past dwelling on it then perhaps the economy would get better.

Regardless of that, and to get back on topic, I'm pleased to hear that you've taken an active roll in teaching your kids about money. All too often money talk is as taboo a subject in the home as sex talk and the negative effects of this default ignorance can lead to a life time of despair. Good for you!

[lang510]

No, my husband's income remained the same but expenses went up and so did our debt. I hadn't discovered YNAB yet but I knew we were in a bad place and started to look at ways to cut back. I don't remember what else we cut back on but this was definately not my first choice. One of our biggest expense we had and still have is supporting our kids in their athletic endevours. We didn't want to cut back in this area so other areas had to be looked at. I suppose I should start my own journal!

Since we've started YNAB, we've changed their allowances to a monthly payout and have slowly increased their allowances as their needs change. Although we are in a much better place now, staying within our budget is still a struggle. However, I am planning on giving both kids nice raises before next school year.