Tuesday, March 3, 2015

kids and money: how we're doing it

There's a lot of talk flying around the web in the wake of this Slate article about allowances. I only briefly skimmed the article, so I can't speak to it directly, but it got me to thinking about how we do kids and money, and why. So, I thought I'd share. (What a surprise!)

To be clear! Regarding all things finances, we do not have the upper hand. We bungle around. We make mistakes. We change tactics (sometimes wildly) when things aren't working. Teaching kids about money is a process, as much for the adults as for the kids.

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Ages 0-7 
No money except for the odd monetary gift from a grandparent or the Tooth Fairy. Or from picking potato bugs (a penny a bug).

Ages 8-11 
An allowance of 10 dollars per month. We don't put any parameters on the money (such as requiring division into categories for saving, giving, and spending), except for a general guideline that no more than a dollar or two can be spent on junk food and money should not be frittered. There are no noble reasons behind our laxity. Simply, I don't want one more thing to keep track of. 

We don't ever pay for household chores. Our general philosophy is a) we all live in this house so everyone has to pitch in, b) not a single one of us is a prince or princess, and c) hands are to be gotten dirty.

We strongly (and repeatedly) encourage the children to deposit their money into their savings accounts. If they want to make a big purchase—say, order a box of Legos from Amazon for 20 bucks—they have to think on it for a week or two. At the end of the prescribed wait time, we place the order.

Pro tip: giving kids free rein with money is often the same as tossing it in the trash. We make the allowance big enough that it's "worth it" and small enough that it's no skin off our teeth when the kids make stupid decisions.

Ages 12 and up
They're on their own for finding money. In other words, GET A JOB ALREADY. We do, however, put lots of energy into helping them find work. Our parenting focus accelerates in its continual shift from a) taking care of them to b) helping them take care of themselves.

As they start making more money, we push them to see the bigger picture. What are the rapidly-upcoming costs of living away from home, education, travel, transportation? Do they want to invest money? How can they get the best interest rate for their money? We help them set financial goals (my older son has loosely challenged himself to squirrel away a one or two thousand dollars annually), and they are expected to start chipping in for some of their activities. For example, we paid for my son's year of choir, but he has to foot the bill for his choir's optional summer trip to New Orleans. Also, depending on how much money we have in the budget, we sometimes ask the money-earning children to chip in for shoes, clothing, youth events like summer camp, and their own special interest projects, such as farm animals and pets, pimped out sound systems, tools, etc. Our oldest is only 15 (only! what am I saying? he's freaking 15 already, yikes!!!!), so we have lots of new territory yet to be discovered. But at this point, the kids know that if they want a car, they have to buy it themselves (and depending on how much our car insurance gets raised, they may need to help out with the difference), and college is on them.

We expect our teens to take a version of the money management class that changed our lives (beginning next month, we're facilitating another classsign up here!). My older son watched all the class videos with me and just finished taking the junior version of the class with his youth group.

We try to be transparent with our children about our own finances. They see us creating the budget (i.e. screaming at each other) and setting aside cash for groceries, household, entertainment, etc. They are fully aware that money doesn't grow on trees and that there is a limited supply. Interestingly enough, rather than resenting the limits, this makes them endearingly appreciative of any little extravagance.

***

Having money is fun and interesting, and allowances give kids some independence, but I don't think an allowance is something children need. Now that the kids are older, I'm seeing (in retrospect, of course, always in retrospect) that the learning experience kids get from an allowance is totally different, and much more superficial, than the learning experience they get when they actually have to work for it. Come to think of it, perhaps children aren't learning any more about economic responsibility through getting an allowance than they are learning to feed themselves by putting plastic strawberries in a tiny cart in the grocery section of the children's museum.

In other words, allowances are nice, but they're not really the solution to anything, either. At least not the way we're doing them. We've made our boldest money-teaching strides through the agonizing process of improving our own money management habits, demonstrating the value (and it's not monetary!) of hard work, and trying to actively weaning our children off our pocketbooks. The whole process is complicated and awkward and not at all tidy-neat and formulaic, but this tends to be our approach to Life In General so it's not that terrible.

But maybe we're making the whole kids-and-money thing harder than it needs to be?

This same time, years previous: the quotidian (3.3.14), grocery shopping, a monument to childhood, and soda crackers.

10 comments:

  1. Who are the "our" and "we" of the last paragraph?

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    1. Yeah, I see the problem. I think I fixed it now. (?)

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  2. I used to feel the same way about allowances, until someone pointed out to me that it is hard to teach teens to manage a regular income if they don't have any (babysitting, etc, tends to be sporadic). Also, the money we give them (shh, don't tell!) is money we would have spent on them anyway (birthday present for a friend, a bowling night with the church youth group), only now it is in their hands and they have to decide whether or not those particular expenditures are worth it. Sometimes (as you point out) we don't like their choices.

    So, from age 11 up, they do get an allowance, but they become responsible for all their entertainment expenses, sibling/parent gifts, etc. Also, 10% has to go into savings, 10% goes into the charity jar (both of their allowances AND of any money they earn). It works well. Under 11? Well, my 9-year-old has managed to win $5 from me playing cribbage. So there's that.

    And, no, we never pay for chores. Not unless they are willing to pay me!

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    1. There are so many ways to teach money, I think. I know a good number of families who are super-intentional and really make the allowance thing work (like you are)---their kids learn a lot from the whole thing. We'd probably be wise to heed your example.

      And that last line? PERFECT.

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    2. Brilliant: And, no, we never pay for chores. Not unless they are willing to pay me! Love that.

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  3. I'd love it if you ever did an online class! We live in Oregon, a bit far to travel for them :)

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    1. Classes are held all over the country! Just go to the website (http://www.daveramsey.com/home/) and click on "classes" and then search under "find a class."

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  4. Our approach to allowance money (for good or ill) is that everyone in the family gets some every month, including the adults, to spend or save as they wish, no strings attached. We try to be responsible with all the other money - the general fund, as we call it - while allowances are for each person's discretionary spending. Some of us (me included) use it quickly on small pleasures, others save it for larger projects. It allows the adults to have a bit of money for which we don't need to give an accounting to each other, which has been useful more than once when we haven't agreed on certain purchases.

    - Kris

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  5. Such a helpful post! Allowances never really made sense to me, but I do want my kids to get some experience making decisions with money. So far, no allowance. We only pay for extra chores that the child initiates because the child wants money - usually their dedication fizzles when they hear how little money they will make for the work. G has been doing a little babysitting, so it's VERY instructive to her when she wants to spend $5 on a piece of crap and I remind her how many hours of babysitting went into that $5. And nothing makes me madder than when the kids mistreat something and don't care that it costs money to replace it; I mean, I'm perfectly fine with ripped jeans from hard outdoor play, or used-up tape from craft projects, but I want them to gain an understanding of the cost of THINGS with the attendant desire to take care of things (this is the end goal - it's a process - but I love how you are shifting some financial costs to your kids as they get older).

    I think I want to adopt your approach almost entirely. So glad you decided to share :)

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  6. Well, I'm late to the party as usual. But, we pay allowances based on the grade they are in. I realize this can be tricky when you homeschool, but since (so far) we eventually put them all in school I try to keep their school work where they would be if they were in traditional school. Anyway, we pay $1 a week per grade. 1st graders get $1, 2nd graders $2 and so on. This has worked well for us.

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