MoneyStuffed

You may remember back in November when I introduced our proposed allowance system to my step-daughter.  We were giving her $1 for every year of age, or $15, per a recommendation from Raising Money Smart Kids by Janet Bodner.  We all signed an allowance contract I created outlining everyone’s responsibilities.

So far, so good.  I think it’s been a big success.  She’s paying for more things herself and her one big savings goal at the moment, a Nintendo DS, she has more than enough saved for yet she still keeps saving.  She has surpassed her expected savings goal and I’m really proud of how she has adjusted to living on a fixed income, rather than the handouts of parents.

Well, the contract is up!  I set it to expire on June 30th, figuring that this would be a good time to adjust it with summer vacation looming ahead of her providing lots of opportunities to spend money have a little fun.

What does this year’s contract look like?  The big adjustment was that I went from $15 weekly to $32 every other week.  This brings her weekly amount up to $16, matching her soon-to-be-age, but changes her pay schedule to every other week.  My goal is to teach her to plan for the long period between allowances and see how she handles it.  Next year, I plan to go to bi-monthly and finally, her senior year of high school, I will do a monthly allowance. 

Anyway, if you’re interested, below is the contract.  Can I just say that I love this stuff?  The whole lesson behind the allowance is well worth the cost of the allowance any day.

 Allowance Contract

Parties to the Contract:
1. Step Daughter (herein referred to as “You”)
2. Dad (herein referred to as “We”)
3. Step Mom (herein referred to as “We”)
4. Mom (herein referred to as “Your Mother”)

Valid until 06/30/2008

Purpose

This contract is to help define your allowance system, how you will receive money, how much money, and what everyone’s responsibilities are in relation to the allowance system.

The purpose of an allowance is to help you learn the basics of good money management and the value of money.

Our Responsibilities To You

·         We maintain a PNC Bank account with you.  Since any accounts in your name will affect your future college financial aid, this account will remain in our names for now.  Once the impact is determined, then we can decide together when to transition this account into your name.

·         You will receive $32 every two weeks.  The amount will be re-evaluated upon the end of the contract terms.

·         We will deposit your allowance into your bank account via electronic transfer every two weeks.  This change from weekly to every other week is to help you practice budgeting and plan out your expenditures accordingly.

Your Responsibilities To You and To Us

·         $10 of your allowance must be saved towards a goal (Christmas presents, birthday presents, school trip, etc).  You must declare to all parties involved in the contract when you plan to withdraw your savings and your planned goal.

·         $22 can be used for miscellaneous expenses (movie tickets, snacks, jewelry, etc).

·         You must keep track of the balance in your account.

·         Your balance must never reach $0 without prior approval.

·         You must not share your ATM PIN number with anyone.

·         You must be responsible for the money in your account and the money you withdraw.  If you lose any cash, it is gone and will not be reimbursed.

Conditions

·         In case of our financial hardship, the terms of your allowance may change.   We will inform you of any need for changes due to financial hardship.  Examples of a financial hardship include job loss and wage decrease.

·         Your allowance is independent and not contingent upon grades or chores.  These activities are expected of you regardless of your allowance status.  Your mother does, however, have the right to temporarily suspend your ATM privileges for any number of reasons including, but not limited to, neglecting household and school responsibilities.

·         While we will not ask for a detailed accounting of every single thing you have purchased to see if we approve, if we learn that your allowance is spent on Twinkies and chocolate, this contract may be revised to specifically exclude purchases that will drive your mother crazy.

You agree to the terms of this contract and will do your best to honor them.  You will not try to find loopholes or in any way to dishonor the good intentions of our agreement.