Steal this Amish Blueprint for Managing Your Child’s Paycheck

Amish Blueprint: How to save money for kids by managing their paychecks. |

Learn how to save money for kids + how to manage your child’s paycheck with this Amish blueprint. The outcome is impressive!

The Amish provide an interesting case study when figuring out how to deal with your own child’s paycheck once they start bringing in the dough. Not only that, but how to save money for kids from that paycheck…even when your kiddo wants to spend, spend, spend.

Why is that?

Well, Amish kids start working + earning paychecks pretty early on in life. Like, in the 8th grade, after they graduate from school altogether.

The Amish are very aware that handing over an entire paycheck to a 13-14 year old child would be stupid. They’ve essentially had to come up with, then hone, a foolproof way to deal with their child’s paycheck from an early age.

We’ll get into much more detail about this in a bit, but first, let me introduce you to the Amish man who made this article possible.

Meet Leroy, My Father’s Primary Amish Taxi Client

I guess before I introduce Leroy, I should back up and explain my father’s job as an Amish Taxi driver. Most people stop me there, anyway.

My father has been a full-time Amish Taxi Driver in Lancaster, PA for 14 years.

The business is very much based on referrals and word-of-mouth from other, happy, Amish clients. At any given time your phone rings, an Amish person, who cannot own their own vehicle (or only in rare situations that likely revolve around their business, in which case they own a vehicle but hire a full-time driver) asks if you’re available at a certain time on a certain date to take them to wherever they’d like to go.

The pay is pretty good; one college summer I worked this job as a backup when my other job fell through and earned $3,000. That’s from making $0.60/mile + $10/hour waiting time (as they run their errands in stores, visit with friends and family, attend doctor’s appointments, etc.).

Leroy happens to be my father’s primary employer. This father of five, ranging in age from 3 to 21, owns a construction company. He hires my father to drive him around to in-state and out-of-state construction sites once a week to check up on his crews.

I say he’s my father’s primary employer, but really, he’s become a friend of our family.

One day several years ago I got the chance to ride around with he and my father for six hours and ask him all kinds of questions regarding handling his children’s paychecks and how to save money for kids. And a few days ago, I asked even more questions over my father’s phone to him to follow-up on a few things.

How the Amish Get Around Paying an Allowance

There is no allowance given to Amish children.

However, Leroy says that they do give their kids spending money for special occasions. Just not money given on a regular basis.

Instead, Amish kids generally go to school until the 8th grade, and then start making money of their own. Upon graduation they apprentice with someone or otherwise find employment. And employment can be for an Englishman (what the Amish call non-Amish in America), but only if they know and trust that Englishman (for example, one of Leroy’s eldest sons used to mow my father’s lawn during the summertime for extra cash, a job that came about because of my father’s special relationship with Leroy).

This paycheck that the kids start receiving around 8th grade is the source of their spending money. And it’s also the source of much, much more having to do with their future.

Psst: Curious if the Amish pay taxes?

Why Amish Children Do Not Get their Entire Paycheck to Spend as they Please

Amish children do not get to keep their entire paychecks to spend. Which is a good thing for three reasons:

  • Early Substantial Earnings: Amish kids start earning money at an early age, so probably wouldn’t have the know-how to deal with that kind of money. Leroy mentioned that if you were to hand over all their money to them, they’d spend it on stuff that doesn’t amount to anything. And he’s looking for how to save money for kids in order to satisfy the next two requirements.
  • Early Money Responsibility: The Amish are expected to be very self-sufficient at a pretty young age in regards to paying for things − such as coming up with a down payment for a home. For example, Leroy estimated that his son will purchase his first home between the ages of 18 and 19, with a $15,000 – $20,000 down payment. I’m not sure of too many Englishmen kids who could do the same! Leroy says the typical age to purchase a home for an Amish person is at the age of 21, so he’s expecting his son to be able to do so a bit early.
  • No Health Insurance: Amish do not have traditional health insurance, and so all Amish adults are expected to pay large sums of money towards their own children’s health needs + the needs of those in the community who come upon bills equaling hundreds of thousands of dollars. In essence, it’s a community-based health insurance plan.

Because of this unique money situation, the Amish have come up with a pretty interesting blueprint for not only managing their children’s paychecks, but to solve the puzzle of how to save money for kids so that they can achieve significant financial feats at a very young age.

The Amish Blueprint for Managing Your Child’s Paychecks

Growing up on the edge of the Amish community, I had heard the type of rumor a hard-working teenager never wants to hear: Amish kids were given 25% of their paychecks to spend as they please, but had to hand over the other 75% to their parents.

Honestly, I thought that was absurd as a teenager. I mean, wasn’t it unfair that I was doing the work − mucking horse stalls and babysitting − but I had to fork over my paycheck for my parents to control?

But why they do this and how it ends up playing out is a pretty darn good blueprint (I can say that now, as an adult. Your own child may feel differently).

Amish Blueprint:

  • Spending Money: It turns out that the 25% rumor was incorrect. It’s even less than that (at least to begin with!). All of Leroy’s children’s needs are paid for by Leroy and his wife. Leroy then gives his eldest son, who at the time of this interview was earning $120 at a market on Saturdays + working in one of Leroy’s construction crews four days per week, 10% of his paycheck to spend as he pleases. Leroy says that the more “liberal” Amish will give their children up to 50% to spend as they please. But he adds that 10% is the normal amount. As the kids get older and they need more money, this gets bumped up.
  • Investment Money: Leroy invests 10% of his son’s paycheck for his son’s future. Each year the amount Leroy invests towards his son’s future increases by 10% (so 10% the first year of work, then 20% the second year, and so on). Leroy says the Amish aren’t big on the stock market. Instead, they invest in what’s called Amish Helping Hands. This group then helps other Amish in the community in the form of low-interest loans (currently 3.25% for mortgages and 3.50% for farmers) to Amish farmers and first-time homeowners. Interest is paid on investments twice a year or reinvested, and the expense ratio is 0.25%. It’s a solid investment model, because Amish have an excellent track record of paying any debts owed.
  • Household Money: The rest of the money goes towards Leroy’s household.

But wait, there’s more.

Rental Income is Added In

Since the initial interview was several years ago, I took the opportunity to call my Dad while he was driving Leroy and ask him a few more follow-up questions on the phone about how to save money for kids + manage their paychecks.

It turns out, Leroy’s eldest son did end up buying that house at the age of 18. It’s a two-unit rental property, and he’s got a 10-year mortgage on it. So he earns almost enough from it to pay for the mortgage and upkeep, then will have the property paid off before he turns 30. Impressive!

At the age of 21, which his eldest son will reach in just a few months, he will no longer hand over any of his paycheck money to his father. Instead, he gets to keep it while also living at home rent-free + earning the rental income.

When he does eventually get married and move out of the house? He’ll likely keep this property as a rental property, and buy a new home for him and his wife to move into.

Sounds like a budding real estate mogul to me! Except that Leroy says this is pretty typical in their community − to buy a rental property, live at home until you’re married, and invest/save a good bit of your paycheck from the age of 13 or 14 onwards.

What You Can Take Away from this Blueprint

While it’s not likely your own child will have saved up enough money by the age of 18 to buy a rental property − after all, you’ll hopefully discourage them from dropping out of school in the 8th grade to work full-time − you can still glean lots of ideas from this blueprint on how to save money for kids + manage your child’s paycheck at an early age that will help them achieve some fantastic financial maneuvers.

Your own blueprint can look like this:

  • Your teen gets a job.
  • You both sit down after the first paycheck is earned, and figure out what percentage is appropriate for them to spend, and what percentage is appropriate for them to save. Leroy used a 10/10/80 rule, with 10% for spending, 10% for investing, and 80% to his household, with built-in investment + spending increases + a decreases in the household amount as each year passed. Note: Percentages are best, as their paycheck will likely fluctuate with increased earnings, or from being paid hourly.
  • You open up a custodial savings account with them (find out how to score a bonus $25 for doing so).
  • You open up a custodial checking account for them, or funnel their paycheck through your own checking account.
  • They have their paychecks automatically deposited into the checking account you’ll be using.
  • You set up automatic withdrawals into their savings account from the checking account, proportionate to the amount you both agreed on to save.
  • At the age of “majority” (18 or 21, depending on the state you live in) the account gets turned over to them.

Now it’s your turn. Have you figured out how to save money for kids from their paycheck? How do you manage your child’s paycheck, or how do you want to manage it moving forward? I’d love to hear your thoughts on this in the comments below.

4 Unique Ways to Fund Savings Account for Kids

Savings accounts for kids need money, and I've got 4 unique ways to fund them (living paycheck to paycheck? Then #1 and #4 are just for you!). |

Savings accounts for kids don’t have to be hard to fund, even if you’re living paycheck to paycheck

You’ve set up a savings account for kids in your family (wait, you haven’t yet? No worries. Here’s exactly what you need to do + how to score your child a $25 opening bonus).

And while there’s plenty of activities for your kid to do with their account instead of letting it collect dust, chances are, you + your kiddo want to see it grow.

I mean, if they watch it grow (cue big eyes each time they log in to see its climbing value), then they’ll be more apt to funnel even more money into it, right?

The best way to see savings account for kids grow is by having your child fund it with part of their allowance. The second best way is for you to fund it yourself.

But instead of offering you the same old tips about how to teach kids to save through incentives such as matching their savings, I’ve got 4 unique ways to increase their saving accounts’ bottom line.

Psst: Already stretched thin and don’t have extra funds to add to a savings account for kids? Then ideas #1 and #4 are specifically for you.

#1: Grocery Store Coupon Savings they Clip + Use

Have you enlisted your child to help you at the grocery store yet, like I detailed in 4 Unique Grocery Store Games for Kids?

One of the ways I outlined in there to get your kid involved with helping you was to give them your grocery list ahead of time so that they can clip/print out coupons that align with things you’re going to buy anyway. Then as a bonus incentive, I suggested that you supplement their allowance with any savings they reaped you.

Instead of supplementing their allowance, take the savings they reap you through specific coupons used and deposit it into savings account for kids.

You’ll need your grocery list already written out, plus a Sunday paper. Don’t usually get the Sunday paper chocked full of coupons? Then have your child scour the following online coupon sites:

Mama Bear Action: Retain each of your grocery store receipts for the month. At the end of each month, sit down with your child and have them add up all of the coupon savings from each receipt. Be sure they add up just actual coupon savings, not overall store savings! Then either write them a check to deposit together into their savings account, or transfer the money over from your checking to their savings.

#2: Double their Interest Earnings

Through the Compound Interest Detective Activity, your child learns a bit about interest and how it can compound to really grow their savings.

If your child hasn’t gone through that activity, then just sit down with them and find the interest rate.

Offer to double that interest rate, explaining to them that the more money they put into savings, the more money they will earn from your special bonus you’re giving.

Mama Bear Action: Each month (or quarter, depending on when interest hits their account) have your child log into their saving account. Look at the amount of interest earned, then have them watch you put that same amount into their account either by writing them a check (you could name it “savings bonus” in the notes section), or transferring from your checking account.

#3: Give Bonuses through

Have you ever heard of This is an amazing free savings tool that analyzes your checking account for bills + spending + income, and then automatically withdraws amounts between $5-$50 every few days into a savings account based on what you can afford.

It’s pretty epic.

I wrote an entire post about my experience with “finding” $509.97 in about two months thanks to this tool when we were in need of money for Christmas. What a lifesaver!

So why not set this cool tool up, then use the money siphoned off from your checking to occasionally fund your savings account for kids? You could call these savings bonuses, getting your kids even more excited.

Reasons for Savings Bonuses could include:

  • Stellar performance
  • Extra work around the house
  • Going above and beyond to help someone out (without prompting)
  • Just because!

Mama Bear Action: Figure out why you would like to give savings bonuses in your own household, and whether or not you want to share this with your kids. Sign up for a account, and start accumulating money to fund these bonuses.

#4: Through Your Internet Searches

I’ve been a heavy user of Swagbucks search engine for several years now. Actually, I’m so into it, that I looked up my stats:

  • Joined: March 14, 2009 (what a glorious day)
  • Swagbucks Earned: 205,255
  • Points Cashed in for Actual Cash: $2027.79

Did you see where I said “cashed in for actual cash”? The cool thing about this is you can actually cash in your reward points as Paypal money, with no extra penalties for doing so. So whether you use those points for gift cards, merchandise, or pure cash, they’re worth the same.

Mama Bear Action: Instead of using Google as your search engine, switch to Swagbucks. With the reward points you earn, cash them in through Paypal and fund your savings account for kids. Seven years from now and $X,XXX dollars richer, you’ll be happy you did.

What are special ways you like to fund your kids’ savings accounts that are different from the norm?

Teach Children to Save with this Compound Interest Detective Money Activity

Teach children to save by helping them discover the insane-coolness of compound interest with this money activity |

Teach children to save by helping them discover the insane-coolness of compound interest with this money activity

Compound interest − a phenomenon that you want to get cozy with − can be an abstract concept for your child.

Heck, it can be an abstract concept for us Mama Bears!

But it works whether anyone understands it or not. How cool is that?

Still, we want your child to get into the über-awesome habit of saving gobs of money for the rest of their lives, so we need them to discover the coolness of money earning its own money.

Here’s a trick for how to teach children to save: let them discover their own money earning its own money. Which of course, then, becomes part of their money.

Pssst: pay attention to how often your child’s savings account compounds; if you’re just setting up bank account for baby, then you’ll want to find one that compounds monthly or even daily for the most amount of earnings.

Money Activity to Teach Children to Save: Play Compound Interest Detective*

Detective Step #1: Gather two consecutive statements representing two compounding periods from your child’s savings account. So if the account is compounded monthly, gather two months’ worth of statements. And if your child’s account is compounded quarterly? You’ll need two quarter’s statements. Annually (yikes, you’re missing out on compound interest earnings over the long haul with this kind of setup)? Get two annual statements.

While seeing their statement online is cool, printouts are even better. Print it out if you can find it online, or call the bank and ask them to send you one by mail/email.

Detective Step #2: Have your child dig into the two statements for a few nuggets of information. They want to find and then highlight both the starting balance + the ending balance (after interest was added) on each statement.

At the bottom of each statement, if it’s not a line item somewhere, have them write down how much interest was earned (by subtracting the ending balance from the starting balance).

For example, let’s say they have $250 in their account at the beginning of the first statement’s month, compounding monthly, at 0.75% APY. It would have earned $1.56 in that first month, bringing the ending balance to $251.56. Then in the next month, the interest is calculated on $251.56 − not just the $250 − so it will have earned $1.57 instead of $1.56. Which then, of course, gets added onto the principal to become $253.13 for the following month.

Detective Step #3: Ask your child why their money earned less during the first month’s statement and why it earned more during the second month’s statement (so in the example above, why did it earn $1.56 in month 1, but $1.57 in month 2?).

They likely won’t know the answer. Cue your “compound interest” discussion.

Mama Bear Cliff Notes: Teaching your child about Compound Interest giving you a headache? Skip the sit-down and have your child watch Camp Millionaire’s video on Compound Interest instead (9:02 minutes).

Detective Step #4: Have your child do some further detective work and find out how often their account’s interest is compounded. If you can’t find the information in the teensy-weensy font at the bottom of your bank’s page, then just make a phone call and ask someone.

Bonus points that you show your child how to be proactive with finances by getting an answer!

Detective Step #5: Have your child input their savings information into this calculator to figure out which is a more advantageous way to earn money: compounded daily, monthly, quarterly, or annually?


  • Open up the calculator. Fill in the current amount you have in savings for the “initial investment” amount. Then $0 for the “Contribute” amount, and then fill in the number of years left that they have until they take over the account (typically at age 18 or 21, depending on the state you live in) in Step #2. For Step #3, fill in their current savings account APY, but leave the “Range of interest rates” field blank. Finally, have them pick “Annually”  for Step #4. Click “Calculate”.
  • Record the amount that your money will have earned.
  • Repeat the above steps three more times, only replacing Step #4 each time to “semi-annually”, “monthly”, and “daily”, then clicking “Calculate”.

So for the example above ($250 initial investment, earning 0.75% APY, with 10 years to go), here’s how it plays out with the different compounding methods:

  • Annually: $269.40
  • Semiannually: $269.43
  • Monthly: $269.46
  • Daily: $269.47

Detective Step #6: Ask your child which is the best way to have money compounded (and by “best” I mean have them choose the compounding method that will earn their money the most amount of money).

Mama Bear Note: you really want to play up the fact that this is without your child adding one extra cent to this account. The savings just grows on its own!

Optional Detective Step #7: If your child is not entirely impressed with their approximate $19.40-$19.47 interest earnings (or whatever theirs comes out to be), have them fill in whatever amount they would like as the initial investment amount…sky is the limit. And of course the greater (or in this case, “larger”) their imagination, the more compound interest will come through.

I’d love to hear about any “aha” moments your child has as well as questions in the comments below!

Setting Up Bank Account for Baby? Here’s a Few Considerations

Is it time for setting up bank account for baby? We tackle this task and give you several considerations (plus the bank that we chose) in this post. |

Setting up bank account for baby? Let me walk  you through the considerations to make so you can get this off your to-do list and onto your ta-da list

I’ve made it through cloth diapering, 2:00 a.m. feedings, and car seat installations. Now, I’m totally in the mode for setting up bank account for baby!

Our little one made his debut over a year ago. Being the financial nerd that I am − plus a darn good planner − I thought it would be awesome for me to set up a bank account for him now while he’s still in diapers to catch all of the generous birthday + holiday cash gifts throughout his childhood.

I mean, can you imagine the possibilities of how much that account could earn for him over the next 18 years?

That was 13 months + about 1,000 diaper changes ago. *womp, womp*

But you know what? There’s no better time than today for me to do this, or for you to do this (even if your “baby” now sports braces).

Here’s what to consider when setting up bank account for baby.

Pssst: Before we start, I wanted to let you know that we chose the Capital One Kids Savings Account for our baby. There are no minimums and no fees. Also, your child gets to have their own sign in information, even while YOU retain all the control. I think they’ll really like being involved with the banking!

Capital One’s Kids Savings Accounts do not offer a bonus. However, I called them and they told me how to get a $25 bonus in a roundabout way. Use this link to open a regular Capital One Savings Account with an initial deposit of $250. You will want to add your child as a joint account holder. Then once the bonus of $25 posts to the account (that’s an 10% return on your baby’s money already!), open a Capital One Kids Savings Account and transfer the money into it. Close the first account.  

You + Your Child Will Need Documentation (or at least Some Digits)

Kids under the age of 18 cannot open up a bank account on their own. So you’ll be opening a custodial bank account (here’s some of the in’s and outs of a custodial bank account). This means you will be part-owner to this account.

If you open a savings account at a brick-and-mortar bank, you’ll need your documentation as well as your child’s documentation in order to do so.

Both of you will need your social security cards or just the numbers (not sure where your child’s social security card is, or perhaps you haven’t applied for one yet? Here’s more info on how to get your child a social security number).

For the Capital One Kids Savings Account, I simply needed my son’s Social Security Number, birth date, and other information but I did not have to provide the actual documents. 

When Setting Up Bank Account for Baby, Choose the Type of Account You Want

Unless your child has a business and needs to write checks for it, your best bet is to choose a savings account. The reason is because the money is more difficult to access than if you had a checking account tied to an ATM machine.

Also, their money can earn interest. And if your child is not particularly excited about holing their money up in a bank, have them do this money-growth experiment using their new account.

Yes, checking accounts with interest earnings exist. However, your child’s earnings will be less if you use one of them.

Choose an Account with the Best Earnings Potential

You know how the best outcomes come when you plan with the end in sight? Well, your endgame when setting up bank account for baby is to get your child’s money to earn as much as possible over the next decade or however long they have until you turn the account over to them.

You can do that by making the right choices from the beginning. For example, you want an account that:

  • Compounds Daily or Monthly: The more frequently your savings account compounds interest, the more money it will make. Trust me on this one. And time is on your child’s side (especially if they’re still in Stage 4 diapers!). FYI: Capital One’s Kids Savings Account compounds monthly.
  • Has No Fees: Just like fees can eat away from your retirement account over the years, monthly account fees can eat away at your child’s growing savings. You need to find a savings account that does not charge a fee for low balances. And you don’t want to pay for other account fees either.

Make Sure You Can Meet the Required Initial Deposit

For me, it’s important that our child’s money and our own money doesn’t mix because then it might just get eaten up by our checking account’s gremlin (wait, YOUR checking account has a gremlin eating all your cash as well?).

I’ve been keeping a mental ledger of what should go into this account. We’ve received $110 in cash gifts so far from his baptism + first birthday party, so that will be our seed money.

If you don’t have money sitting around to get this started, then make sure you look for savings accounts with no minimum opening requirements. That way you can still get it set into place, waiting for when that first influx of cash comes through!

Weigh High Interest Rates Versus Lessons of an In-Person Bank

Online banks will offer higher interest rates than a brick-and-mortar bank. For example, while I’m writing this Capital One’s Savings Accounts offer 0.75% APY while a savings account at Chase offers only a 0.01% APY…*womp, womp*.

However, with the brick-and-mortar bank, your child will see more of the actual banking industry and how things work.

My advice? Take the convenience + much higher earnings from an online savings account, and still reap some of the brick-and-mortar lessons by considering some of these options below:

  • High Interest Rate + Teachable Money Moments: Choose an online bank with a higher interest rate, then when your child is old enough to get a job, open a checking account and show them the in’s and out’s of bank accounts then. You can still take them along with you for some in-person banking at your own checking account.
  • Online Banking + Paper Statements: For the Capital One Kids Savings Account, it automatically signs your child up for paperless statements. I think it’s more likely your child will keep up with their savings account if they receive quarterly paper statements instead of logging in and staring at a screen, plus receiving mail as a child is just oh-so-cool. So if I were you, I’d opt for the statements to come in the mail. If there isn’t an option for this, then you can periodically print them out and go over them with your child.
  • Show Them How Money is Deposited into their Savings Account: Even with an online savings account, you have to get the money there somehow. You can allow them to see the money trail by taking them with you to deposit the money into your checking account, then showing or explaining how you will then take that money and transfer it over to their savings account.

Figure Out How the Money is going to Get Deposited into their Account

Money’s got to get to this new account somehow, and you’ll likely want to make this step as convenient as possible so that you will go through with it − I mean, we’ve all got enough errands to run anyway, amiright?

A few ways to make this as convenient as possible:

  • Link Your Account with their Account: When setting up bank account for baby, link your own checking account to theirs. Then funnel the money to their account through your own (be careful that this doesn’t become a two-way street and their savings slowly dwindles down over the years due to unforeseen expenses; custodial accounts are like black holes, and the money is meant to become the child’s when they turn of age). So you deposit any amount they receive that is theirs, then transfer from your account to their account with a few clicks.
  • Choose a Bank that Allows ATM Deposits: Some online banks now offer deposits through local ATMs, upping the convenience for you.

As you can see, there’s a few considerations to make when setting up bank account for baby (or toddler, or 10-year old). But once it’s in place, you’ll have a great catch-all for the cash money gifts your child receives over the years.

Of course the longer that those money gifts have to earn interest, the more money there will be for your child, so it’s best to get going on this one, Mama Bear!