How to Fiscally Manage Breaking and Losing Possessions?

We started with establishing an automatic savings plan for each child at ING Direct, but you could use any on-line banking service.  We liked ING Direct because it is free, with no transfer fees or account minimums- perfect for kids.  The savings plans are connected directly to our checking account, which we already manage on-line with another bank.  Each week a nominal fee is transfer from our account to each child’s account.  When I say nominal I mean it- only $2 a week.- a happy meal at McDonald’s is more expensive.  The amount can vary depending on your personal budget.  As kids take on greater responsibility and can make bigger mistakes- like wrecking the family car, $2 maybe much too low, adjust the amount to what you can afford.  Remember even if the cash in the accounts doesn’t cover all of the expenses, having some is better than none!
When household items are broken or lost, money comes out of these accounts for repairs and replacements. If one child overspends their repair budget, then they are required to do home chores to help cover the cost.  Older kids have babysat, mowed lawns, and raked leaves (jobs we would have paid others to do).  Younger kids have helped with laundry, dusted with swiffers, and vacuumed the kitchen floor- while it did not earn money that was not already in our house, it did defray mom and dad’s emotional costs, by helping the family.

It is important that kids understand that this their disaster account- give them vocabulary for the account that they can take into adulthood.  This is a habit you want them to carry with them, a method of managing the baggage of ADHD.  Log in to the account frequently and let them see how their money is growing.  You want them excited about saving!

The kids have been told that any money they do not spend on repairs will be theirs when they leave the house as a young adult.  Keep in mind, I plan to have some of this repair budget cash waiting in the wings when they begin using credit cards and writing checks- so we can repair credit damage or pay overdraft fees.   Though I will discourage the use of credit, occasional use of a credit card is necessary and an overspending cushion should exist behind every credit card and checking account.

One Response to “How to Fiscally Manage Breaking and Losing Possessions?”

1. Sarah says:

   April 2, 2010 at 11:01 am

   Thank you for this article. This is a constant issue that we talk about a lot with our now 6 year old daughter. It is a good reminder that not only when she swings from her blinds is she being impulsive, but lecturing her about the cost is not effective. I love your plan and am going to put this in effect.
   ~Sarah
   http://tumbling-sanity.blogspot.com