A couple of clients have asked for my opinion on pocket money so I thought I’d share our strategy here.
We give our girls $10 a week, They get to put $5 in their purses for spending on toys and junk, while we put the other $5 into their Acorns investment portfolio.
This portfolio has been given the title, Financial Security Fund, so they know what it’s for.
When they turn 18, half of this fund will be deposited to Superannuation and the other half will go towards buying their first property.
They each give the Salvo man some change when we see him on a Saturday morning to share with people less fortunate and they help us choose who to lend money to via Kiva each fortnight.
They get to keep half of any windfalls (gifts) for spending money and the other half goes into their investment portfolio. They used to own Westfield and ANZ shares but the Acorns portfolio’s are so much easier to manage.
Kids will be kids and pushing the limits is expected but disrespect shown to parents, extended family or friends etc earns a 10% fine. We also want our girls to learn the value of exceptional effort and performance. So, they can also earn discretionary bonuses however the bonuses go straight into the investment portfolios for future benefit.
If they want something that costs a bit more than their pocket money allows then they have two choices, they can either wait until they have saved the money for it or they can borrow the excess from us. The downside for them is that they can only borrow up to half of next weeks money and it must be paid back from next weeks allowance.
We also teach our girls that earning interest is better than paying it by occasionally asking them to pay for lunch and we pay them back at 10% interest.
These are just strategies we developed based on the values and lessons we want to share with our kids.
What are yours?
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