One of my goals as a mom is to teach my daughter how to handle money well. In January, we started giving her an allowance, along with a special piggy bank. It has 4 slots: Save, Spend, Donate, Invest. I was raised in the traditional 3 point plan, so at first I wasn’t sure how to handle “Invest.” But then Husband and I had a breakthrough. We told her that she would earn interest every 6 months: If she leaves the money in there until her birthday in July, she’ll get an extra dollar, and a second dollar by Christmas.
How much? Four quarters a week, one for each slot. She doesn’t have a lot of buying power. At first I wasn’t even sure that would be enough to teach her about handling money. After all, what can you buy with a quarter? But 4 year olds have many small wants. There are kiddie rides at the mall play area that cost 50 cents per ride, and I NEVER pay for those. In addition, she already had a piggy bank with some cash thanks to generous grandparents, so I could take some of the money from there and let her buy a piece of candy or some such.
This week we had our first test. We were walking around the mall one evening and she went into the Lego store. Now, she doesn’t play with Legos. She never played with Duplo, and she has never shown interest in Legos. She has some other building toys and she rarely plays with those either. But one Lego set caught her eye, and she desperately wanted it. We let her look at it and then we left. After all, it cost $39! No way were we going to buy a $40 toy that we had no idea if she would play with.
The next morning, Husband casually mentioned to me that she probably had enough money to buy the set herself.
“What? She has $40?”
“Sure, from her grandparents.”
I went and checked the envelope of cash and sure enough, she had the money. But naturally, I wouldn’t let her buy it. I mean, you don’t just blow all your savings on a random toy! That’s not good stewardship!
Then I moved past my initial resistance. She hadn’t saved that money – it had come to her in big chunks. She had no idea of the value of it. And what if she bought the toy and didn’t like it? Well, no returns. And if she only played with it for a week? Well, still no returns. And what if she loved it and wanted to buy a second set? Well, at her current allowance rate she’d have to wait at least 20 weeks to earn $40, while not spending any of her Save or Spend allowance. She might even have to choose between keeping her Invest money to earn interest or taking it out and losing the interest. The more I thought about it, the more it seemed like a great chance for her to learn about the value of money.
And that’s how I ended up fighting the most insane traffic* ever at the mall on Saturday in order to let my daughter blow $40 on Legos. So far she has loved the toy. I look forward to watching her learn the value of money.
*Why was traffic so insane? Because the Stanley Cup was at the mall for people to take photographs with. This traffic was at least as bad as Christmas traffic! It took me 30 minutes just to find parking.