Wednesday, January 26, 2011

The Envelope System (For Kids) 101

Well, because of the doom that hovered over our house the entire week last week, we are just going to re-do the whole week.

I can do that can't I?  Why yes I can, because I'm the mom and I said so:)

Areyna did get two days of reading in, surprisingly.  It's the rest of the week that suffered.

We're going to work on the same Luganda words, work on the same memory verses and chapter readings and well, every other clever thing I had up my sleeve that didn't get accomplished.

So instead of all my normal homeschool and language updates I thought I'd take the time to answer a question that several of you had.

After my "Money Matters" post I've gotten several inquiries about what exactly the "envelope system" really is.

Here is my kid-friendly version.  Now, I'm sure Dave Ramsey has a much more eloquent way of describing it, but this is what I remember from when my parents taught it to me when I was young.

1 - We use the cash only system (yeah, can you imagine my kids with a debit or credit card, ha!)

2 - I sat down together with our kids and talked about the most important things our money should go toward.  We decided on these categories:  TITHE, SAVINGS, GIFTS, SPENDING.
I'm sure we will be tweaking this as they get older with more categories such as gas and clothing.

3 - We went to Wal-Mart and picked out a file box to use as their bank.

4 - We got small envelopes and drew pictures to describe which envelopes are for which category.

5 - Every "payday" we give them their $1 in dimes.  We sit down together and count it out.  We are trying to teach our kids Dave Ramsey's principal to Tithe 10%, Save 10%, and live off of 80%.  So, 1 dime goes in Tithe, 1 dime in Savings, 1 dime in gifts and the rest in spending.

It's not about the amount right now, it is about teaching the discipline of where our money goes.

What's the benefit?  Do they even know what they are doing?

One benefit for us as adults is that you know EXACTLY where each penny goes and you can see how to set your spending pace between paydays.

One benefit for doing this with kids is that when you are at a store with them and they begin whining about buying something all you have to say is, "Well, you can certainly buy that.  You'll just need to save your own money for it."

Another benefit is that our kids are realizing that they have a choice to make.  When they get extra money or find money laying around they get to choose where that money goes.  It is such an awesome to thing to watch them choose to put all their tooth fairy money in their tithe envelope or to put it in their spending or gift envelopes on their own initiative.

So, yes they are young, and they don't totally grasp the whole concept, but this is where it begins.  They are old enough to understand that our money is God's money and that He has given us a choice as to where it goes.

Let me know if you have any other questions and I'll answer them in the comment section:)


Memoirs of Me & Mine said...

Love that! I'm considering starting my kids on it too. Excellent.

Jennifer said...

that is great Tasha! As an adult I had to put a lot of effort into making good financial decisions because I WASN'T taught at an early age. I think that is an awesome thing to teach your children!

Mrs. W said...

your "money matters" link sends you to the wrong post (i think).

The Via Colony said...

Audrey, you're awesome! Thanks:)

Kim Daley said...

I love to read about parents encouraging the use of the envelope system for kids. You are correct that having the kids divide their money into different categories helps to eliminate whining and gives kids a sense of the value of money. I have recently developed a system for kids which expands the basic envelope system and includes a workbook. It is designed for kids 5-12 years old. I am a stay-at-home mom and have used this system with five children. It has proven very successful!

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