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The Envelope System Works: Even on a 10 Year Old

I’ve talked quite a bit about my frustration with my daughter and her lack of concern when it comes to money.  She wouldn’t save money to save her life.  If she gets 50 cents she will bring it to school and buy a pencil from the school store.  Money just burns a hole in her pocket.

I’ve encouraged her for years to set a goal and save for it.  But she’s the very definition of an impulse shopper.  I think that’s part of why she doesn’t get a kick out of saving.  She doesn’t focus on one want long enough to save for it.  She wanted to buy a Hedwig doll forever. You know Hedwig, the owl from Harry Potter.  I encouraged her to save up for it.  But by the time she would have had enough saved she had moved on to ten other burning desires.

The other day as I was walking out the door to go to a meeting my daughter asked me to get her some envelopes.  I was annoyed that she would ask me to do something for her when I literally had one foot out the door but I stopped and asked her why she needed envelopes.

“Because I want to put money in them.  One for saving for a car.  One for saving for college.  One for saving for a house.  And one for spending.”

WHAT?!!?!  I was stunned.  My daughter wants to put herself on the envelope system.

I congratulated her and said I would get them for her when I got home, which I did.

A few days later she said she was going to bring $5 to school because they were having a book fair and she saw a book she wanted to buy.  I thought “Oh here we go again.  They sold her something.”  I talked to her about her goals and told her about impulse shopping.  I told her it was up to her but she said she wanted to save for college, and a car, and house.  “Do you have $5 in your spending envelope?”  She didn’t.

She went upstairs and got her $5 but she was feeling very conflicted about it.  She realized she had to take away from her other goals in order to buy this book.  I could see the struggle on her face.

She came home from school with her $5!!  No book!  The envelope system worked.

Note: Before anyone gets on my case about how a book is a great thing for a kid to want to buy I want to point out that we could start our own children’s library.  My step-dad’s late wife was a school teacher and when he married my mom she sent us boxes and boxes and boxes of children’s books.  Our kids also have Kindle Fires where we put every free kid’s book Amazon Prime has to offer.  So our kids have books.  More books than they could ever read.  My daughter needs a lesson in saving more than she needs another book.  

5 thoughts on “The Envelope System Works: Even on a 10 Year Old”

  1. Travis @debtchronicles

    Yay! That must have been a very proud moment for you, Ashley! It’s so encouraging to see something so important “click” in our children – what a great story…and lesson!

  2. What a great post, Ashley! I think your daughter’s lightbulb moment will stay with her forever because she choose to do that on her own and wasn’t forced to do it. I have my kids on the envelope system, but they don’t have a choice. I’ll have to work more on getting them to decide to do savings. They love taking the long-term savings money and “depositing” it into their ING Direct accounts. Someday they will have a lot of money in there to buy a car with, I hope.
    Keep up the good work.
    Shay

  3. Marianne @ Preserving Pennies

    My sister taught me to use the envelope system when I was quite young- 7 or 8 I think. I still use it today!

  4. Jessica, The Debt Princess

    That’s great!! She totally got it. My kids have three piggy banks (from DR’s site) and they separate their money but they don’t really actively save. They don’t have a plan for what they are saving their money for. They just save it up and when the time comes they hope to have the money. It would probably also help if their father didn’t give them every little thing they ask for BUT I can’t change that.

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