One of my objectives of blogging is to figure out how to educate my kids about money. After reading a lot and listening to a lot of podcasts, I now am happy with the following model, based on needs and wants.
Teaching kids on how to deal with money is not straight forward. I do want them to have an allowance to mange so they understand there is limited supply of money in their lives. Thus, they need to be intentional on what they do with their money.
On the other hand, I do think they need to work for money. At the same time, chores around the house should be done, no matter what. I do not want to link the allowance to the chores.
While listening to a Meb Faber podcast, all the pieces just clicked together. And there is much much more in the podcast. Highly interesting like: how to avoid spoiled kids!
Here is the takeaway that shapes my view on allowances and chores and how I consider implementing this going forward. For the full details, listen to the podcast!
Chores around the house are a common task, everyone needs to contribute to this so that the house is clean and well maintained.
Parents should provide kids with the needs they have – in the opinion of the parents that is – and some reasonable wants. It is up to each family to decide if an iPhone is a need or a reasonable want or not.
Right now, our children have all the basic needs and some wants according to our definition. When they ask for something, we have a discussion to see if they get it or not. We do not give them everything they ask for. Even when that means a sad sad face… And we got a lot of those faces on holiday as we did not buy them an ice cream each time they asked.
Allowance is given to the children so they can manage money. A 3 bucket strategy is discussed: saving, spending and giving. The kid can use the money according to its own insight. When the child wants to use the allowance, it is in my opinion a good moment to discuss the reason behind the spending.
Not here yet… I like the idea. Right now, our oldest is spending most of here money on candy and drinks out of vending machines while on activities with friends. She shares what she buys. For now, we leave it at this.
What if the kids do not do their chores? Stopping the allowance is not the right thing to do. It is better to take away something they actually like to do. How about no screen time, no dancing,… Sounds great to me. This way, they feel that they have let the family down.
Given their age, the chores are limited – clean up every day the toys. When they do not do that, they disappear for a week. (inspired by Miss Montana Money Adventures)
Can they spend their money really on anything? Not really, their are house limits of items/experiences that are not in line with the values of the parents (there is an interesting example involving a hairdresser in the podcast).
So far, no issue. I am sure that will change in a year or 2.
What with bad behaviour?
We now try to reward good behaviour and have them invent a punishment when things go out of control.
example: We get on a taxi boat, and off course discuss who gets to sit where. When we get off, they start to discuss who gets to sit where on the return ride, about 5 hours from now! So, we told them that they can have a surprise when they do not nag until we are on the taxi boat. Otherwise, they get nothing. Amazingly, they did not mention the seating for 5 hours. And when the youngest tried to bring up the subject, the oldest reminded her of the potential reward.
example: not paying attention a the table and kicking over a glass of milk means you get to clean it up yourself. And depending on the how ( by accident or because of unneeded gesture while eating) they can invent an extra punishment.
Any other tips for us?