This is where we differ... I think it
is pretty much the same thing in terms of the impact on the child's money psychology, because the child's not choosing to invest the money. If you gave them cash each year and encouraged them to invest it, but didn't insist, then they may learn a lesson about delayed gratification (if they invest - which most won't). If you're just investing it without the child being involved in that decision, then the child has no sense of having
sacrificed anything, because they didn't have the option of taking the cash as an alternative. They never think of it as "their" money, until they receive the huge lump sum - at which point, whether it was invested over the years, or dropped out of the sky as a gift, really makes no difference to their attitude to money. In both cases, without their contributing or sacrificing anything, they get a big bundle of cash.
Your experience supports the position I've heard several money/parenting educators take, that paying kids for participating in household work, actually devalues it in their eyes. The philosophy seems to be that
everybody should participate in the household work (in an age-appropriate fashion), not because they want to earn money, but because they want to be contributing members of a co-operative household unit. The sense of self that they gain by feeling that they're contributing is worth a lot more to them than money - even if they won't admit it, or aren't aware of it.
Just as Mum doesn't get paid for cooking dinner or washing clothes, kids don't get paid for cleaning up after themselves. Consider the care that somebody puts in when cooking a meal for their family or a date, as opposed to their attitude to the work when cooking meals in a fast food restaurant in exchange for money.
So how do you deal with the money, then? I've seen several advocate just giving the kids a fixed amount every week, much like (most) adults get a pay cheque. (If they're not contributing to the household, that's dealt with as a separate issue,
unrelated to money.) Then you agree which "normal" expenses they have to cover from that money. You start out with a small amount, to cover small items, so perhaps $2 per week for a toddler, to cover a ride at the supermarket, for example. Then in lower primary school, it might be $5 per week, and has to cover computer games and comics. In upper primary, maybe $10 per week, and has to cover all their leisure, eg movies, tenpin bowling, computer games, etc. By age 17, provided they're still in full-time education, it may be up to $50 per week, for covering all their leisure activities, mobile phone, and fashion. In this system, anything they want beyond the living standard that the family is willing to provide (ie if that money isn't enough), they have to work to pay for -
outside the home, ie get a job, or do odd jobs for other households.
I definitely don't have this all figured out, I must say, and the above is just some thoughts that I've absorbed from various educators, and which made sense to me, so I plan to take this approach, but I've been a bit slack about getting it put into practise so I'm purely a theoretician at this stage.
Cath, it sounds like you've instilled the right attitudes, but I guess what I'm uncertain about, is what motivates you to want to give your kids $10K? If they're equipped and motivated to work and earn their own money, what's the point in giving them any cash (in terms of a lump sum)?