If someone makes a gift of money or a store giftcard, can/should you track it here?

There's no one right way of handling things, but here's how we're personally doing it.

In our house, we have a GIFTS account for each child that is about "spending", not "receiving". Here are a few thoughts about both subjects:

Spending

There were 2 reasons we created a separate Gifts account for each child, instead of just adding that amount to their Recreation Account.

1. We wanted to give the kids an idea of what a personal budget might look like, while still keeping things relatively simple. This was an interesting way of fleshing in a mini-budget and helping them to understand they need to plan for certain future expenses.


2. equally importantly, we didn't want to create the conflict of whether they should spend GIFT money on their siblings or on themselves (perhaps we'll allow this when they're older - that's important learning too). By creating a separate GIFT account, it makes it easy for us to enforce this rule. If GIFT money isn't spent, it just accumulates, to be spent on gifts some time in the future.

Receiving

If the kids receive money from relatives as a gift (this often happens with relatives who live far away), we deposit the money according to the wishes of the relative. Usually, this means putting it into our children's RECREATION account, to be used as they choose.

One of the added benefits of putting an entry into their account is that the kids have a reminder of who gave them what whenever they look in their account. Before we created Active Allowance, the money would disappear quickly and the memory of the generosity of their relatives would fade even faster!

As for the "real" cheques, we just deposit those into a real bank account, to accumulate for their college savings.

One last thing - store cards can be a little more complicated, so it depends on the store and your situation. My 11 year old son just won a $50 gift card for winning a Squash tournament (yes - I'm bursting with pride). It's for goods at an electronics store. He reasoned that I'll need to buy something there one day, so he arranged a "trade". We're depositing $50 into his RECREATION account and I will use his gift card next time I need something from that store.

Seemed fair (and pretty entrepreneurial) to me. I suspect that this same arangement could be made for most gift cards.