My very first post on this blog was about kids allowances and chores – you can read it here if you wish:
Now, a very important part that comes after the doing of chores & paying of allowance is the cash in hand part.
I will occasionally transfer money into the boys bank accounts if they are saving for something special. If that is happening, I show them when I transfer and their balance so that they can remember how much they have saved towards their goal.
If they aren’t saving for something specific, I will give them cash in their hands. I find that this is much more concrete than a debit card, or me paying for their items. I keep their wallets in my purse so that they don’t get lost.
The beauty of kids with cash is multi-faceted. They can’t go slightly over budget with cash. They have to account for GST with cash. If both of my boys want to buy a more expensive item, like a hockey net, they have to figure out the cost and split it between them in cash. Now, each lesson build on the last as they get older, and they become much more financially responsible. They also learn the value of that dollar in their hand since they had to work to earn it, and then by physically holding it and handing it over to the cashier, they feel the loss of it. They further learn that if they aren’t cautious with their cash, and they lose it somewhere, it’s gone for good.
I encourage you to start a chore program with your kids in your house, or continue it, and pay the babies in cash to help them learn those important early financial lessons.