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Note: A version of this post was originally posted on Randy Hewlett’s “technology, entrepreneurship, family blog before he joined the Tiller team. Randy led the development of the Tiller Budget and Simple Business Template.

When it comes to handling money, Bison (9) and Dora (11) couldn’t be more different.

Dora is perpetually, in her words, “saving for college”, while Bison spends to his very last penny. The boy cannot resist an impulse buy and, frankly, Dora would do well to treat herself now and then.

€40 of Venetian tchotchkes

A recent splurge catalyzed our parental need to intervene…

In December, Bison came into a €40 windfall. We traveled to Venice days later where Bison perfectly calibrated his tourist-shop haul— a €26 Murano glass penguin and a €14 voice-chipped Ferrari— to zero out this newfound “savings”. (The zero-balance halted a desperate, final acquisition target: a 4″ plastic halberd.)

Bison’s short-sighted spree came days before fútbol-card season, the January-to-June window when he spends €100+ to complete a baseball-card-like album of La Liga stars. His Venetian trinkets, which he hasn’t touched since, would have netted 240 cards— nearly half the La Liga album.

We tell the children their choices for their “spending money” are their prerogative, but Bison’s compulsive wastefulness in Venice was too much to bear.

We felt compelled to create a better system that encouraged behavior in line with our values.

A Better System: Our Goals

Teaching charity- Dora raised money for two organizations

Before delving into problems, I find it helpful to write down specific goals.

  • Encourage and support saving
  • Encourage, support and reward charity
  • Help Dora & Bison manage (track, administer, not lose, etc) their money
  • Shift responsibility for “spending money” to the kids
  • Empower spending-money autonomy for small purchases (i.e. less “will you buy that toy for me?”)

For years, we’ve been fans of the Moonjar approach. The Seattle startup encourages children to divide their income equally into three buckets: SaveShare and Spend. But, in practice, we’ve struggled with this approach. For our kids, the incentives to save and share were inadequate, the savings and share bins were pillaged opportunistically, and the system lacked definition about when to tap savings.

We chose to up the ante by chartering the McCotter-Hulett Virtual Bank. Here are the key features:

  • Allowance— paid weekly— is fed directly into a virtual ledger (by Sage & me)
  • The ledger disburses Save and Share allocations (the kids get an extra 25¢ if they can calculate the proportions correctly)
  • Spending money is paid in cash and managed by Dora and Bison
  • Interest is added monthly (details below)
  • Balances are always available online

 

The virtual bank’s ledger distributes funds according to family values

 

Leveraging Google Sheets

Income allocations

Income allocations
Income allocations

We recognized Google Sheets as the perfect platform for these virtual bank accounts. Here are some key features:

  • A table-based ledger for new entries and account history
  • In-line calculations to distribute and tabulate balances
  • Charts to visualize growth
  • Permission controls for the parents (we’re building a “bank” after all…)
  • Scripting capabilities for monthly interest calculation
  • Shareable dashboard links for real-time balances

The implementation took just an hour to build. It’s quite simple really. The one exception to overall simplicity is a script that runs on a “time-driven trigger” to add interest payments to the ledger on the first of the month.

Sweetening the Deal

Account summary dashboard
Account summary dashboard

For the past year, Dora and Bison have earned €5/week to keep up with a 15-line chore chart. The tasks include daily showers, making their beds, being ready for school on time, practicing their instruments, etc. Each missed task counted -€0.25 against the week’s allowance.

Especially for Bison, we knew a renewed commitment to saving would be a bitter pill to swallow as he watched his allowance disappear into an intangible computer balance. We realized we would have to sweeten the deal if the kids were going to buy in. We came up with three ideas:

  1. Doubling weekly allowance. Bumping the weekly allowance base to €10 preserved most of their usual spending money while also allowing them feel the early success of seeing their Save and Share balances grow.
  2. Matching sharing. To make charitable giving feel more significant, we committed to matching anything they contribute.
  3. Generous interest rate. We promised a generous interest rate to demonstrate the value of saving. We started with 2% monthly, but quickly realized Bison would only see a meager 8¢ in January… so, we bumped the rate to 5% monthly. It’s crazy, yes, but it if motivates the kids to save, it will be a worthwhile investment. In January, we paid out €2.44 in interest.

Dora immediately recognized the potential in the outsize interest rate. She scraped together every Euro she could find and asked us to deposit it virtually immediately.

Thus far, the response to our virtual bank has been very positive. The kids are saving, they’re excited about the bank, and there are no complaints about the modest reduction in their spending money.

So, What’s Next?

The major problem we’ve yet to solve is a lack of clarity on what justifies a Savings withdrawal. As the savings account grows and compelling spending opportunities arise, we will need to develop a definition and a process for this as a family.

Addendum: Another Hobby Project

Google Sheets has also inspired a homework tracker that I wrote for the kids. The tool helps Dora and Bison track assignments and plan steady progress against longer-term deliverables. It’s also great for parents as it monitors workload, progress, and proclivity to procrastinate.

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Randy Hulett
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