This morning I was reading this article on http://www.peakoilblues.com/ (yes, I have a bad habit of reading about peak oil too much), and it's a good one. "26 things You Can Do RIGHT NOW to Manage Your Anxiety". When I came to number 8, I thought of how we're teaching our kids about money...
Since we started homeschooling again this year, George and I talked about what is really necessary for us to teach the kids. Mostly, we're unschoolers meaning we let the kids follow their own interests much of the time and provide them with the resources (books, tools, instruments, classes, etc.) to do so. But there are some life lessons which we really need them to learn. And one of the top priorities is how to manage money. All parents, no matter the schooling, should help their kids with this, right? Of course! Also "of course", both George and I hope our kids will do better at money managing than we have (we're still learning...).
We were reading through the book Debt-Proof Your Kids by Mary Hunt. She has a lot of great tips, but the main one we picked out was to give your kids a fairly hefty allowance and let them be responsible for the majority of their spending. She tells parents to make lists of what the kids will pay for, and what the parents will pay for, with the kids' list getting longer each year as they get more money and more responsibility. We decided to try this, in a simplified version.
At age 9 and 11, they each get $25 every two weeks--$50 a month. Now, this is way more money than they've ever regularly had before. It's more than I have had in the recent past! Five dollars out of the $25 goes directly into a "savings" envelope, which for now we keep stashed in a safe place. It would be easy for me to just stick the $5 in their envelopes and hand them a $20, but I want them to be PHYSICALLY responsible for handling the both the saving and spending money themselves, so I give them the whole thing and they take their five dollar bills and stick them in the envelope. I think they need to be in this habit--lord knows most Americans need to be better at this!
When we first started this a few months ago, I had them draw pictures and make lists on their savings envelopes so they could dream about what large amounts of saved money could be for. Elijah drew Pokemon cards, Rose I think made a list of clothes, Littlest Pet Shop toys, etc. I just wanted them to realize that they were saving for a reason and that they could have dreams and hopes for their savings account money. I'm kind of glad they've never actually asked to spend their savings yet, though, as I do think it's good they learn to leave it be for a long time.
So far, they are thrilled with the $20 they get to spend twice a month. We are learning a lot about them as they learn to manage their money. Elijah tends to be the big dreamer, and he'll sit on his spending money with plans to "save up" till the next payday and then buy something bigger. However, he sometimes then spends that "saved up" money two days before the next payday (last time he bought this Robin Hood book at Barnes and Noble, choosing which version to buy very carefully) and then gets upset when it's payday again and he just spent the last money! Now he has to start "saving" again, so he can buy that $34 thing off the internet. Mainly he wants swords from http://www.rentoys.com/, or yo-yos from http://www.yomega.com/. I think for him that sometimes the dreaming is as important as the actual thing, though.
Rose, on the other hand, makes out a detailed budget on an index card right before or on payday. $5 goes toward the latest toy; $4 toward two Sundays' worth of ice cream treats from the truck that travels the neighborhood in summer; and the rest might be for a sundress, saving for a trip, etc. Every penny is accounted for, and she has a bit of a problem when an unplanned-for spending situation arises and she must decide whether to buy that trinket or not. We love to see her wrestling with these decisions already, as we know that that is real-life. We make a point, hard as it is, to not "rescue" them with a few bucks out of our wallets when these situations arise. Also, there's no lending them money till next payday.
Having some spending money has had the unanticipated benefit of making both kids more eager to work--for a little more money. Now that money is on their radar, and they know they can use it as a tool, they are happy to take on jobs that before might have meant little. Just this past week, they were hired by a neighbor to do pet-sitting. Now, we have seen Rose loves to help around the house but Elijah has been a lot more reluctant. But this time, with the promise of $10 to add to his $20, he was anxious to do the job and do it well. He was the first awake and ready to go feed the pets each morning!
We are very impressed so far and feel justified in declaring our allowance "experiment" a success. There are some issues about it that have bugged me, mainly the buying of unnecessary toys. I literally get sick to my stomach when the latest plastic crap is being lugged to the check-out counter at Target, as it goes against so many of my values. However, this "problem" has lessened quite a bit. Number one, I no longer drive them to Target or the Dollar Store after each payday (I did that a couple of times...). High gas prices are one good reason I make them wait until we just happen to be going by there anyway. This, in turn, has taught them to delay gratification and often it makes the "need" go away.
Number two, I have learned to accept their toy-buying as a necessary part of their learning money management. Since this lesson seems to be going so well, and since most of their money is no longer going to large toy purchases (i.e. Rose only spends $5 of her twenty and not the whole deal anymore on Littlest Pet Shop and Eli's been buying books and wood to make swords...), the occassional plastic bit isn't so much of a bother.
Another issue is whether we can sustain giving them this much money each month. If I quit my job this fall to homeschool full-time (a possibility I'm wrestling with--I may just try to work one or two shifts a week instead of quitting altogether), then the $50 has to come out of the one income we live on. I'm not sure if we can do that. Each year they should really get a raise, too, and be more and more responsible for some of their needs as well as their wants. We still buy the socks and underwear, shoes and clothes, lessons and gear, but by the time they're teenagers we shouldn't be...It might turn out to be an important lesson for them, though, that as we cut back for lifestyle reasons and because of this staggering inflation lately, that they have to cut back too. As many of us adults learn at times, income doesn't always go up.
No matter what, we see the lesson of kids with cash to be too valuable to ever give up. As long as we have any at all, we'll make sure they have some and that they can make decisions about spending. Being involved in the family finances, at whatever level is appropriate for the age of the child, has got to be one of the best ways for them to learn about money and priorities and all sorts of life lessons.
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8. GET THE ENTIRE FAMILY INVOLVED in cutting back Tier “B” and “C”spending. If you’ve set a goal of reducing expenses by 20%, make that across theboard, and involve the kids. If this means cutting back on extra lessons,dances, mall trips, etc, give your children a say in which things are cut out orreduced. If you are sincere about your own cutbacks, your children will respectand adjust their expectations as well. If you say you are cutting back, but thenbuy something in the “C” category, you’ve lost your credibility and you’ll havea family mutiny on your hands. Discuss, as a family, all of your expenses basedon these categories, and try to reach agreement, so there are nosurprises.
Since we started homeschooling again this year, George and I talked about what is really necessary for us to teach the kids. Mostly, we're unschoolers meaning we let the kids follow their own interests much of the time and provide them with the resources (books, tools, instruments, classes, etc.) to do so. But there are some life lessons which we really need them to learn. And one of the top priorities is how to manage money. All parents, no matter the schooling, should help their kids with this, right? Of course! Also "of course", both George and I hope our kids will do better at money managing than we have (we're still learning...).
We were reading through the book Debt-Proof Your Kids by Mary Hunt. She has a lot of great tips, but the main one we picked out was to give your kids a fairly hefty allowance and let them be responsible for the majority of their spending. She tells parents to make lists of what the kids will pay for, and what the parents will pay for, with the kids' list getting longer each year as they get more money and more responsibility. We decided to try this, in a simplified version.
So, every two weeks when I get paid, the kids get paid. They don't have particular chores to do to "earn" the money, as we consider chores just part of being in a family and they do get more of those as they get older, too (though we're pretty relaxed about chores, no lists or charts or anything; I can't keep up with that stuff). We feel that the lessons they're learning from having their own money are worth it being a totally separate entity, an "allowance" as you will.
At age 9 and 11, they each get $25 every two weeks--$50 a month. Now, this is way more money than they've ever regularly had before. It's more than I have had in the recent past! Five dollars out of the $25 goes directly into a "savings" envelope, which for now we keep stashed in a safe place. It would be easy for me to just stick the $5 in their envelopes and hand them a $20, but I want them to be PHYSICALLY responsible for handling the both the saving and spending money themselves, so I give them the whole thing and they take their five dollar bills and stick them in the envelope. I think they need to be in this habit--lord knows most Americans need to be better at this!
When we first started this a few months ago, I had them draw pictures and make lists on their savings envelopes so they could dream about what large amounts of saved money could be for. Elijah drew Pokemon cards, Rose I think made a list of clothes, Littlest Pet Shop toys, etc. I just wanted them to realize that they were saving for a reason and that they could have dreams and hopes for their savings account money. I'm kind of glad they've never actually asked to spend their savings yet, though, as I do think it's good they learn to leave it be for a long time.
So far, they are thrilled with the $20 they get to spend twice a month. We are learning a lot about them as they learn to manage their money. Elijah tends to be the big dreamer, and he'll sit on his spending money with plans to "save up" till the next payday and then buy something bigger. However, he sometimes then spends that "saved up" money two days before the next payday (last time he bought this Robin Hood book at Barnes and Noble, choosing which version to buy very carefully) and then gets upset when it's payday again and he just spent the last money! Now he has to start "saving" again, so he can buy that $34 thing off the internet. Mainly he wants swords from http://www.rentoys.com/, or yo-yos from http://www.yomega.com/. I think for him that sometimes the dreaming is as important as the actual thing, though.
Rose, on the other hand, makes out a detailed budget on an index card right before or on payday. $5 goes toward the latest toy; $4 toward two Sundays' worth of ice cream treats from the truck that travels the neighborhood in summer; and the rest might be for a sundress, saving for a trip, etc. Every penny is accounted for, and she has a bit of a problem when an unplanned-for spending situation arises and she must decide whether to buy that trinket or not. We love to see her wrestling with these decisions already, as we know that that is real-life. We make a point, hard as it is, to not "rescue" them with a few bucks out of our wallets when these situations arise. Also, there's no lending them money till next payday.
Having some spending money has had the unanticipated benefit of making both kids more eager to work--for a little more money. Now that money is on their radar, and they know they can use it as a tool, they are happy to take on jobs that before might have meant little. Just this past week, they were hired by a neighbor to do pet-sitting. Now, we have seen Rose loves to help around the house but Elijah has been a lot more reluctant. But this time, with the promise of $10 to add to his $20, he was anxious to do the job and do it well. He was the first awake and ready to go feed the pets each morning!
We are very impressed so far and feel justified in declaring our allowance "experiment" a success. There are some issues about it that have bugged me, mainly the buying of unnecessary toys. I literally get sick to my stomach when the latest plastic crap is being lugged to the check-out counter at Target, as it goes against so many of my values. However, this "problem" has lessened quite a bit. Number one, I no longer drive them to Target or the Dollar Store after each payday (I did that a couple of times...). High gas prices are one good reason I make them wait until we just happen to be going by there anyway. This, in turn, has taught them to delay gratification and often it makes the "need" go away.
Number two, I have learned to accept their toy-buying as a necessary part of their learning money management. Since this lesson seems to be going so well, and since most of their money is no longer going to large toy purchases (i.e. Rose only spends $5 of her twenty and not the whole deal anymore on Littlest Pet Shop and Eli's been buying books and wood to make swords...), the occassional plastic bit isn't so much of a bother.
Another issue is whether we can sustain giving them this much money each month. If I quit my job this fall to homeschool full-time (a possibility I'm wrestling with--I may just try to work one or two shifts a week instead of quitting altogether), then the $50 has to come out of the one income we live on. I'm not sure if we can do that. Each year they should really get a raise, too, and be more and more responsible for some of their needs as well as their wants. We still buy the socks and underwear, shoes and clothes, lessons and gear, but by the time they're teenagers we shouldn't be...It might turn out to be an important lesson for them, though, that as we cut back for lifestyle reasons and because of this staggering inflation lately, that they have to cut back too. As many of us adults learn at times, income doesn't always go up.
No matter what, we see the lesson of kids with cash to be too valuable to ever give up. As long as we have any at all, we'll make sure they have some and that they can make decisions about spending. Being involved in the family finances, at whatever level is appropriate for the age of the child, has got to be one of the best ways for them to learn about money and priorities and all sorts of life lessons.
i
Comments
He gets $1 per year old. 8 years old = $8 a week. So he gets a $1 raise on his birthdays. We haven't started a scheduled savings plan (although his money gets transferred from our acct into a his savings acct so he's not spending it as quickly and he's getting some acct balancing experience - not sure how much longer this will work since his "debit" card can't actually be used anywhere). We're seeing what he does with it for now, but savings is a habit I'd like to instill.
As an unschooler, I believe close mentoring with money handling is important. I don't see money handling and budgeting coming naturally to most people, so hands-on experience with lots of interaction from mom and dad is crucial IMO.
We let our kids see more of the household finances than many parents would. We let them hear real discussions about how to allot money to competing needs. And see our own disappointment at not getting to do something we wanted to do - lest they think they were the only ones that had to deal with "Sorry, we can't afford to do that." I am not hesitant to say, "We will be doing X if I make enough money this week, so let me get back to work." Or, "I spent too much at that store, and now we will not be able to get a haircut."
We also established a pattern of supplementing their larger purchases. "If you save enough to buy the MP3 player, I will buy you a music subscription." Or helping them bump up to a better model of something, if they have done a good job of saving.
At 11 and 15, I think mine have a good sense of what their time is worth, and how to achieve a balance between needs and wants. Both are willing to work for what they want - which was my hope. I see so many kids with a sense of entitlement about having their parents buy them over-priced stuff.