Teens, chores, and allowance

[hamchan]

Eagle, she does have a savings account. I think she currently has around $500 in it. She makes jewelry as a hobby and I recently started helping her to sell it online. All the money she makes from that goes into her savings. Also anytime her dad has reimbursed me for any expenses in the last year he has deposited the money to her savings account, and I've just been leaving the money there. She may save other money in there as well, but I don't keep tabs.

I don't know anything about investing besides retirement accounts though.

[snafu]

I think it's brilliant to have her open a teen account with Vanguard, you can learn about investment together. Good idea to have DD do pet care. Pets are totally reliant on their peeps for care. I wonder if there are tasks you can do together like meal planning or one dusts while other vacuums/swiffers. How much will she earn for her efforts?

[hamchan]

Snafu, she really likes to cook and often helps me or observes when I cook dinner, and I tell her what I'm doing and why. I teach her proper cooking methods, good knife cut skills, basic recipes, etc. The nights she makes dinner on her own are... interesting... but I want her to get practice and have some good basic cooking skills, so I'm willing to eat a few weird dinners for a good cause. (DH is barely even allowed in the kitchen and I will not eat his cooking.) I had horrible cooking skills when I left home and it sucked having to figure all of that out. She also helps with laundry and grocery shopping sometimes but she tends to whine about it a little.

I haven't figured out how much allowance will be quite yet. It depends on whether we decide to have her in charge of all of her normal expenses. I was thinking maybe $40 a month if it's just spending money, or $80 a month if she also buys her clothes and school supplies. I don't know if that's enough or not though.

I would also totally be willing to pay her more for other chores like washing windows, cleaning out the fridge, stripping off the bed linens and laundering them, running to the grocery store for me, do a water change in the fish tank, etc. if she wants to earn extra.

I'll look at teen accounts on Vanguard. Thanks for that tip.

[Eagle]

Eagle, she does have a savings account. I think she currently has around $500 in it. She makes jewelry as a hobby and I recently started helping her to sell it online. All the money she makes from that goes into her savings. Also anytime her dad has reimbursed me for any expenses in the last year he has deposited the money to her savings account, and I've just been leaving the money there. She may save other money in there as well, but I don't keep tabs.

I don't know anything about investing besides retirement accounts though.

I agree with Snafu good opportunity to learn together.

What I look at when I consider investments is:
1) What does it take for me to buy in?
2) What is the projected risk?
3) What are the fees or costs associated with the account and how can I get them waived?
4) How easy is it to invest further in the account?
5) How easy is it to get out of the invesment?

Here's what I found doing a little digging on the internet:

Minor Accounts
Typically a person is a minor if they are under a certain age – varies by state but is typically between 18 and 21. I believe the legal age of majority in the State of Washington is 18. Might want to double check that. This means that you’ll be the responsible party until your child turns 18.

Minimum Investments:
Some mutual funds let you start with as little as $50 while others may require $1,000 or more. From the Vanguard Star site there is a minimum investment of $1000. Additional investments are in increments of $100.

Types of Investments:
You can open up a General account, IRA, or education account. All these have a minimum $1000 investment through Vanguard Star.

Fees:
Also from the Vanguard Star site... No purchase fee. No redemption fee. There is a yearly $20 annual service fee for each account that has less than 10k in it. From their website: “This fee doesn’t apply if you sign up for account access on Vanguard.com and choose electronic delivery of statements, confirmations, and Vanguard fund reports and prospectuses.”

Hope this gets the creative juices flowing.

Here’s the number to call them: 800-962-5167

I think I’m going to look into that myself. We have a little over $1000 we’ve saved up for each of our kids (we have 2) and we were wanting to invest this year for them in mutual fund. I'll let you know what I found out.

[hamchan]

Since she is only four years from graduating high school at this point, I am wondering how much risk is appropriate? I mean, it would be great if she didn't have to use any of that money in her post secondary schooling, but what if she needs it?

[Eagle]

Since she is only four years from graduating high school at this point, I am wondering how much risk is appropriate? I mean, it would be great if she didn't have to use any of that money in her post secondary schooling, but what if she needs it?

I guess that depends on how much you guys have saved up for her education (college, et)? How much can you save between now and then for her education if you don't really have anything saved up?

Mutual funds are generally a long-term investment (5+ years or more preferably).

Might look into another form of investment if you are thinking she'll need the funds in the next few years. Perhaps a CD?

[hamchan]

Other than a few hundred dollars I put in a 529 about six years ago, we have nothing. With my husband facing a kidney transplant in the next couple of years, and I myself am just two years post bankruptcy for medical bills, right now the vast majority of our resources have to go to keeping our debt load as low as possible, paying current medical bills, and saving whatever we can.

I pay for the jewelry supplies so she doesn't have to reinvest her profits, and I most of the work involved in selling it online, but we can't really contribute much more than that at this time. And since her dad's current plan is to make it big in the film industry, I can't really rely on getting any help from him.

[Eagle]

Sounds like you guys have gone through some tough times. I'm sorry about that.

Keep encouraging her with her jewlry business then. Just trying to help.

In order not to derail your thread I started a new thread about http://www.savingadvice.com/forums/p...tml#post385446.

[hamchan]

Thanks, I will be watching that thread too.

[LivingAlmostLarge]

I guess I might be out of the norm but my 4 year old asked for an allowance to start saving for things she wants. We already have an incentive plan in place for sleeping, earning stamps for toys. Works out to something like 50 cents a stamp. Anyway it took us by surprise since this was in the last two weeks and we're traveling now, so my DH and I are contemplating how to do this fairly and use it as a teachable moment. We want her to get used to saving, donating, and spending. And we do expect her to understand check books, will have a credit card early, etc.

Both my DH and I were taught early the value of working/money, investing/credit cards/checking, and are pretty close value wise financially. And I think we've been pretty successful financially.

I think we're leaning towards having her get a set amount probably $2/week or 50% of age, and she has to save long term (college), short term if she chooses, and charity.

She already does chores and no payment for it. Helps make bed, clears her dish/put milk away, clears sister's plate, helps unload dish washer, and put away dirty laundry and helps with clean laundry, helps feed dog, pick up toys.

Nothing excessive nor difficult. I just got 3 piggy banks for saving, spending, and charity.

[vaughan]

I never got an allowance growing up

I think it's important for the value of contributing to the family for that reason alone.

They should learn that family is something different then a job or work. Otherwise will always interpret helping out at home, helping their grandma, helping hand as work they should be compensated for. I really don't think this is something you want to be instilling.

Just my two cents.

[falboe]

I think it would be best if you gave your daughter fairly large sums of money, but expected her to cover most everything she buys. That way she could truly begin to learn the value of a dollar, how to save, etc.

[jackmiller]

A small"commission" for weekly chores is more than acceptable.