I created a simple spreadsheet with a column for each child. Every time a child earned money I would write the amount with a “+” symbol in black ink in their column. Every time they borrowed or owed money I wrote the amount with a “-” symbol in red ink. At any point, we could do the math in their column and decide if I owed them money, or if they owed me money!
Our children even used it with each other. For example, if our son borrowed $5 from his sister, then we’d put a “-5.00” in his column and a “+5.00” in her column. Thus, the transaction would be accounted for so that our son got the money he needed and his sister was sure to be paid back.
In retrospect I wish I done two things differently:
#1: I wish I had an actual safe box where I kept a certain amount of money to use for our family bank. That way I didn’t have to use my regular budget cash for the kids chart money.
#2: I wish I had put a borrowing limit on the chart. Some children borrowed and borrowed but never seemed to pay it back. I wish I had put a limit on the amount they were able to go “under”. Their borrowing limit might be based on age and their history of good money management.
I am so glad our family used this money system. It helped us keep track of money for 5 children and helped us teach our children financial responsibility in a way they could see and understand. Money has never really been a problem between us. We can talk about it openly, share, and ask to be repaid with no problem. There is a clear sense of financial responsibility. Although my children are all grown now, I can see that our mini-bank and loan system helped to train them for financial independence.