Clothing Allowance
December 17, 2010
As those of you who follow this blog know, my kids get credit cards at the age of twelve. Real credit cards. It’s important that kids learn how to use credit cards for six or so years before they head off to college or out of your household. Credit cards take lots of practice – they aren’t the simplest tools to use. But they can be incredibly handy tools when used correctly.
One motivation for having a credit card for my kids is that is how the kids gets his or her clothing allowance. By the time the kid gets to the age of twelve, I just don’t buy their clothes any more. The kid is in charge of buying his own clothes. This is how I teach my children how to budget and make sure that I don’t overspend on my kids’ clothing and make sure that I don’t buy too much more for one kid than I do for another. It’s easier for ME to keep track of what we are spending if THEY have to keep track of what THEY are spending.
So the kids have clothing allowance. I will throw out some numbers for you. I always hesitate to provide actual figures, because people want to argue about numbers. But I provide numbers just to give food for thought. For you to decide how you want to manage this in your family.
Hannah has a monthly clothing allowance of $110. Jonathan has a monthly clothing allowance of $60. Max doesn’t yet have a clothing allowance. I generally start my kids with a monthly allowance of $60, which is, what, $720 a year? I dunno, that number has just seems to work for us.
Jon is still at $60 and seems to be fine with it. Hannah outgrew $60 a long time ago so we raised her. She asked for a raise and we all negotiated and that is where she has been for a while, a couple of years. Jon hasn’t asked for a raise, but now that he is 15 years old, I am expecting a request soon.
More later.
Justine
Max, the eleven-year-old, goes shopping on eBay.
September 2, 2009
Hello everybody. We have a guest column from my younger son, Max, today….
Hi, I’m Max, Justine’s son.
I have an iPod nano 3G MP3 player. My sister Hannah has an iPod Touch. I have noticed how fun the iPod touch looks recently and I decided to buy one. But instead of buying one from the Apple store I decided to buy an under-priced one on eBay.
Since I can’t have an account because I don’t have a credit card I used my dad’s account. I spent a lot of time searching for a good deal and finally found a couple that were pretty cheap. I tried bidding on a couple of them but the bids all rose. So I tried to find a good deal on an iTouch that I could buy then and there.
After a lot of searching and a lot of figuring out things about eBay I found a brand new one for $200. The Apple store sells them for $239 dollars so I was very happy. When my dad got home from work that day I showed him the deal and he told to look and see what the person’s feedback was like and how many transactions the person has done. The person had done hundreds of transactions and had 100% feedback so we decided to buy from him. But when I went to get my money my dad found the same product for $195.
So my dad bought the iPod from his account and I paid him back with $175 dollars in cash that I had in my room and my $20 dollar allowance for next month.
I have learned that eBay is a great thing and I hope to get a credit card very soon so that I can get an account.
I have also recently bought cases for my sister’s pink razr phone that I got from her when she left for France. The main reason I got the cases was to hide the color.
Justine: “Pink. Nuf said.”
Max
Learning old math with the credit card – Part II
July 20, 2009
Two days ago I started telling you about this month’s adventure of watching Hannah pay her monthly credit card bill.
This month, I decided to step in during the process and see what else I could teach Hannah about credit cards.
Hannah added all the charges on her bill and they totaled $394. Hannah’s a smart girl. She goes to the guts of the statement to figure out what she owes.
But WHOA Hannah! Let’s step back and see what the credit card company thinks is going on.
I reminded Hannah to look at the top of the bill where the credit card company is obligated to tell its customer what the balance was last month, what payments were made since the last bill, what finance charges were charged to you, dear customer, and what the balance is this month on the bill.
I saw a problem right away:
Me: Hannah, why did you have a finance charge of $8 last month?
Hannah: I got a finance charge? Hm. I dunno….
Me: Hm, well, it would be good to figure that out.
So Hannah looks at the bill, but can’t figure it out.
With some swift sniffs, I see that the payment due for this month is $396, not $394. I point this out to Hannah. Then we have to figure out how that happened. With a little more work, we figure out that Hannah only paid $710 last month of her $712 bill. Why? Mathematical error and writing a number incorrectly on the check, we aren’t sure. We could go look at last month’s bill, but we knew right away what she did wrong.
The problem is, the credit card company made a mistake, too. In the column that said “Past Due,” the amount was zero. But Hannah and I knew that there was $2 past due, which is why she was charged $8 in finance charges.
Another expensive mistake to make. But not that expensive. And mistakes are among the best ways to learn.
The good news it that we looked at Hannah’s interest rate and it is back down to 17%. We don’t know why, and we don’t care.
Hannah will cancel this credit card in the next couple of weeks in her preparation to live in France as an exchange student this school year.
Why fight with the credit card company if you are just gonna fire them anyway?
Justine
Learning old math with the credit card – Part I
July 18, 2009
Hannah paid her monthly credit card bill again today.
Hannah’s really good at running through the math on the credit card – quickly. Maybe a little too quickly.
I am so glad that I am teaching my kids to use credit cards while they still live with me because they make the silliest mistakes! I had no idea that these kids could make such silly errors. I am still always so surprised. But then again, I think I’ve made every one of those errors in my financial lifetime. I just don’t remember until I see them again, through more mature eyes, when committed by my children.
But as you know, I’d rather have my kids learning about their mistakes now, under my watchful eye, rather than later when they are in college or young adults.
I am glad they are learning about their mistakes now, because I find that sometimes the kids don’t realize they’ve made mistakes with their finances. And I know that is how many adults get into financial trouble – because they didn’t know they were making mistakes.
Hannah reviewed her credit card bill today and reported that we owed $394 on the bill. All of the payment was mine, either because she had acted as my agent in purchases she made for me, or because the monthly clothing allowance that she receives covered the purchases that she had made.
You all know that Hannah has had some problems with her credit card over the past couple of months. Because of this, and because Hannah sailed through her credit card calculations so quickly, I thought I should take a closer look at the bill to make sure there weren’t any problems.
So I asked Hannah to look at the bill with me.
The credit card company has changed the format of Hannah’s bill. I think it is more confusing now than it was before. It is now on three pages. It has a bunch of colors. Goodness, if I get confused, and I have a masters degree in finance, what are these bills like for the rest of our nation?
More tomorrow….
Justine
My friend and colleague, Eric Gelb, has written a guest column telling us about how he teaches his daughters to manage money and know the value of a dollar. Thank you, Eric!
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Money Smarts: Teaching Your Kids How to Manage Money!
In today’s consumer-happy society, kids are bombarded with ad messages and want “IT” and Now.
But, there’s a solution that works and what’s more teaches children how to manage their money – an important lesson for a lifetime.
Almost 9 years ago, my daughter Ilana, then 7, wanted an American Girl Doll – $84, an arm and a leg. Ouch.
At the same time, Ilana claimed I owed her $1,000 because I failed to give her, her $1/week allowance. And whenever we went to the supermarket she “needed” a Barbie or new videotape. Enough.
I bought her and her younger sister, Sara, Ledger Books. I tracked their money, deposited their allowance and other sums for gifts and odd jobs. I serve as the bank and even pay interest.
Within a couple of months, both my girls learned the value of a dollar! When they would ask me for a gift, sometimes I’d buy, but often I’d say, “I’ll pay half” or “I’m saving money this month/money is a little tight…” “BUT you can use your ledger book money.”
Interestingly enough, more often than not they decided Not to buy that supposedly much-needed item.
After 9 years, my now 16-year old and 13-year old each has almost $1,600 in their book. Nice start for college spending money.
More important, they take pride knowing that they have some money, have saved a healthy sum of money, and they know how to make financial choices and budget their money.
A true winner!
Eric Gelb
This is not a dime.
June 2, 2009
I paid allowance today. It is June 2nd, so I am doing a pretty good job, IMHO, by actually paying on the second of the month.
Allowance gets paid in our family on the first of each month. It is the kids’ job to collect their allowance. They invoice and collect, just like a proprietor does of a small business. Their chores are their business and they need to invoice and collect from me each month.
The boys have been verbalizing the need for me to pay allowance as well as to collect on some recent lawn mowing jobs for the past eight days. So I was a dutiful mom today and I stopped by the ATM machine and picked up a good amount of cash so I could pay allowance within a decent amount of time of the due date. Allowance is due the first of the month in our family. I should try to pay my vendors on time and teach my kids by good example.
I came home from work this afternoon and said, “I am ready to pay allowance.” The boys gathered around the kitchen table with me. I asked them what they were due.
Max said he was owed $15. Max mowed half of the lawn over the weekend, so that amount was correct in my mind. Max also knows that he is not getting allowance in June, because of a financial dispute that we are having. (If you want to know more about that, let me know and I will tell you.)
Jon said that I owed him $45, for allowance as well as a few other chores he had completed.
“Jon, what about the half of the lawn you mowed over Memorial Day weekend?”
“Oh,” he said.
Doggone it. Why can’t my kids collect what they are due? That is another important thing I am trying to teach these kids of mine! Get what is yours, people!
So Jon determined that I owed him $63. I had lots of twenties. I was able to pay him $60 easily. But finding the other three dollars was a bit more complicated.
I dug through my change purse and counted out quarters, dimes, nickels, in fifty cent increments.
“Hey, this is not a dime!” Jon retorted.
For some reason, I had a five pence piece from the United Kingdom in my coin purse. I tried to foist it off on Jon as a dime. He caught me.
Another good skill to teach your kids. Make sure the money is good and in a currency you can really use. Teach them a few times. Then try to foist your unusable change on them and see if they catch on. 
Justine
Why we should pay our kids allowance.
March 26, 2009
I know a few people who don’t pay their kids allowance.
I ask them why.
Generally, they tell me that they don’t pay allowance because the kids are members of the family and everyone needs to pitch in and help. These parents usually continue by saying, “No one pays ME to empty the dishwasher.”
Then I counter. I certainly agree with what the parent says. But I ask that parent how their child will learn how to handle money if they don’t have any. And if the parent doesn’t give them allowance, how will they access money so that they can learn how to manage money?
The family has money. The kids are members of the family. In theory, they should get some access to the money, particularly if we want them to learn how to manage money. Why do the parents have to make ALL of the family money decisions, particularly the ones that affect the kids? How will the kids learn to make money decisions if not within their family?
That usually causes people to stop and think. Then many of them move on, thinking that it is not important to teach their children how to manage money.
I beg to differ. I think that is one reasons our economy is in such a shambles. Too many people don’t know enough about managing personal finances.
So let’s teach our kids.
Justine
Max reviews Tobin family allowance – Part Two
March 24, 2009
This is Max’s second half of his first contribution to our blog. The first half was posted yesterday. I hope you enjoy it!
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“Hi, it’s Max again. I’m back to talk more about allowance. My older sister, Hannah, does not do that many chores around the house so she only gets to buy clothes with her allowance. What I think is unfair about my sister’s allowance is that she doesn’t do that many chores, yet she still gets $120 per month for her allowance. That is 6 times as much as I get for summer allowance. She gets the same amount of clothing allowance all year round. My brother also gets paid the same amount, $25, all year round. But in the winter and fall, I get paid $10, and in the spring and summer, I get paid $20 because of the harder chores like watering the plants around the house and yard work. Sometimes, if we have been behaving well and our parents are in a good mood, they might give us an extra 5 dollars to reward us for being good.
“The thing is though; the kids have to remember to ask the parents to pay them by the 5th of that month or else they won’t get paid at all. Also sometimes the parents don’t have money with them so they have to make an “I-owe-you”. An “I-owe-you” is a sheet of paper that has two people’s signatures on it. It states that one of the people who signed it owes the other person who signed it a certain amount of money. My parents have had to make these very often.
“Anyways, I think that the idea of getting a monthly allowance is great and that it is a very good thing to have.”
Thanks Max!
Justine
Max reviews Tobin family allowance – Part One
March 23, 2009
This week, Max write for us twice, for today and tomorrow. Max asked me if he had to have a credit card before he could write for my blog. Aren’t kids cute? I told him that, of course, I would welcome any contribution he could make to our blog. I love listening to the kids’ perspectives regarding money and finances in the house. So here we go.
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“Hi, my name is Max. I’m Justine’s son. Every month in our house, each child gets allowance that they can do anything they want with. The amount of money they get depends on the age of the child, the amount of work they do around the house, and how hard the work is. The older kids get paid more because they need it more to save up for college and they also get a little bonus to go out with their friends more. Also, each child does chores around the house. Depending on how many chores you do around the house the more the allowance-giver will give you for allowance.
“In my house, most of the chores are done by my older brother, Jon. He is in charge of feeding the dogs, taking the trash out, emptying the dishwasher, and doing laundry. I am in charge of a couple household things, but mostly, I am just back-up. Whenever Hannah or Jon go on a scout trip or something like that, I take over their chores and do them until they get back from wherever they went. My sister, Hannah, is in charge of doing everything for the cat. That includes taking him inside and out, feeding him, and cleaning his litter box. That is all I can say for today, but tomorrow I will be back with some more stuff about allowance in our house.”
Calling the banks for Hannah’s overseas exchange trip.
March 18, 2009
Hannah’s trip to France for spring break is coming together.
Hannah called her credit card company to let it know that she was going to be in France for two weeks. Hannah didn’t want her use of her card restricted while she was there. And that can happen if the credit card company sees activity in France that it didn’t know might occur.
So Hannah managed that potential outcome by calling Citicards, her credit card company. The agent let Hannah manage that call and those tasks on her own, without my help.
Then Hannah called her bank that holds her checking account and debit card. That didn’t go as well. Hannah banks with a mid-sized community bank. The bank can be very nice, but it isn’t as sophisticated as the larger banks. So when Hannah called to tell them that she would be traveling to France and using her debit card while in France, they wouldn’t talk to her. They had to talk to me.
That’s too bad. Kids need to be able to manage their own checking accounts and debit cards.
It’s funny that I have some friends who let their teens have a debit card but not a credit card. And then we see that, for Hannah, having the credit card is more of an exercise in being able to manage her own affairs independently than having a debit card. That strikes me as odd.
But Hannah made the calls and she is ready, financially, for her trip. Well, almost. More later….
Justine
