Canadian Personal Finance Blog

Archive for November 27th, 2006

So in an article from last May, I outlined how I allocate my 3 daughters their weekly allowances. The simple explanation is that I have taken advantage of the free transfers between accounts that I have signing authority to transfer the money directly to their accounts. What I have learned now from running this experiment for about 3 years is:

Advantages:

1. I don’t forget to give them their allowances, which was the major problem I had.
2. The girls learn how direct withdrawal works
3. Some fiscal concepts like saving become obvious, which is good. I can also transfer baby sitting payments to my oldest, easily as well.
4. They are using their money to buy things like gifts for friends and their own clothes, which was not the plan, but I applaud every time they do it.

Disadvantages

1. Kids don’t see the money, so forget that they have it.
2. They have not picked up the “checking your monthly balance statements” the way I hoped, they rely on me telling them how much money they have.
3. Money seems to be invisible to at least one of the children.
4. The cafeteria at the high school takes direct withdrawal, so they use their allowances to buy lunch a little too often (IMHO).

All in all, I think the experiment is working. I think I need to sit down with the girls and discuss a few of the finer points I’d like to see, but I think it is working.

I am now in search of any other interesting experiments like this to teach my kids more about money. No, I am not giving them access to their RESPs, that is not going to happen until they need it! –C8j