Kids: their own budget or allowance category?
Do your kids manage their own budgets in ynab or do you put their allowance in a category of your budget?
My son is 7 and his allowance is in a category in our budget, along with the “fun money” categories for me and my husband. My son checks his category at target or whatever to see if he has enough to buy something he sees, so it’s working ok.
The problem is that he often says he is going to save for some toy (robotics kit, recently) or save up until he has $100 because he earns interest in the money he saves up. Then he spontaneously decides to buy some junk instead. I know that’s what allowance is for and over time he is going to see the benefit of saving, but I cringe anyway.
I wonder if he would do better with savings and goals if he had his own budget in ynab so he could set categories and funding goals. Maybe this would work better for an older kid? Also his money isn’t in an account of his own or even in cash, it is coming from my account.
To the point: what’s the best way to use ynab with an elementary schooler to help him take a long view on his money?
This is a great question! I have an 8-year-old, too, and have the same problem. We don't need any more stuffed animals, and it makes me cringe to bring home yet more of them!
It has helped (a little) to set up Betterment accounts for my kids. They can choose how much to send to Betterment from their allowance each month, for longterm savings. The 8-year-old chose to send half, and likes to see that build up over time. It's not immediately accessible, which helps with spending.
I'm curious to see what other folks do for the elementary-age set.
I have two girls and recently decided to start giving them an allowance to teach them to be responsible with money. What I did is create a budget line in my budget for each of their allowances. Their money stays in my account until they want to buy something. I created a separate budget for each of them, I created a manual account called Allowance in their budgets. They get their money to budget every two weeks when I get paid. So I budget the money in my budget, then I go into their budget and inflow the money, they have their own categories set up and can decide what they want their dollars to do. When they spend their money I create a transaction in their budget and in my budget.
I wrote more on this in another comment in a different thread but basically I made them each their own budget and started them a spend save and give categories. In the spend gets the every day purchases , the save is like a wish farm where they save for something big and the give they chose a charity to donate to like the animal shelter and children's hospital that we will cash out and deliver when they hit $50 goals.
Up until recently, we've given our kids cash, which they've kept in their wallets. After recent helpful thoughts from others from the other allowance thread, we've decided to switch and give them categories in YNAB. At the moment we're just putting them in our budget rather than give them their own separate one, we'll see how it goes. But aside from the problem of them remembering their dang wallets and/or losing them in the house somewhere, we kinda recognized that they're going to have to learn how to manage their money digitally as well as physically.
When giving them cash, we had them put quarters in a giving and saving jar. Now we're just going to have those be automatically budgeted sub-categories. I think that will make it a bit more visible, as they can see the numbers going up, and hopefully they will be incentivized to make their own categories to save for.
I think at age 7, cash might mean a little more, go old school envelope system... give, save & spend. Save in this case being for a large purchase or goal they can reach in a few months, so basically saving for a 7 year old is really just deferred spending. Spontaneous junk purchases can only be made from the spend envelope.
Hey Tan Zebra . Great question. There's a whole chapter in the upcoming book on exactly this, with a couple of vigenttes that are similar. So...you're not alone. 😉
A few un-ordered observations from budgeting with my own kids (who are now 10, 12, and 14):
Then he spontaneously decides to buy some junk instead.
In my opionion, this is going to happen and it's a good thing. He's not going to learn that maybe he shouldn't have bought the junk instead, until he tries buying the junk.
I wonder if he would do better with savings and goals if he had his own budget in ynab
My kids have their own budgets. They can customize categories, just like you and I do, and set goals that are meaningful to them. The single category in your budget probably makes that more challenging. You can always make it part of the deal something like, You get two goals and I get two goals. That way you can "enforce" a savings goal that feels right for your family, but he can still have the kind of choice that he needs to learn for himself.
Either way, he's a lucky boy to have budgeting parents!
As a kid, my dad opened a bank account for me at a local bank with no minimum balance requirement. I got my weekly allowance in cash (all $1 of it), and then could choose whether I wanted to keep it in my piggy bank or put it in the real bank for longer-term savings. Same with Christmas or Birthday money. Then I had a notebook that I used to keep track of my balance, spending, wishlist items, etc.
If you want him to be using YNAB, then I would either recommend a separate budget for him, or his own category group.