Monday, May 21, 2007

Teaching Children Responsibility: Money

Teaching Children Responsibility with MoneyWhen Grace was six she wanted a bike. We told her that she'd have to earn the money for it herself, which wasn't going to be easy as most of the good-paying management jobs tend to go to applicants who have completed the first grade. We don't believe in giving our children allowances for the simple reason that no one gives us allowances. The rule is: everyone contributes to our home without the expectation of monetary compensation (as soon as I get a paycheck for making the bed, then the kids can expect one).

We knew it would be tough for her to earn the money herself but she did. Washing the car and other chores that were beyond what she normally would do earned her fifty cents. If she worked hard, didn't complain and had completed all her regular chores she could earn money here and there but it was slow going because really now, having a six year-old wash your car isn't the way to get it clean, they can only reach half-way up the car so the job's only worth about fifty cents. It took almost the whole summer to earn $15, which wasn't nearly enough for a new bike.

We were wondering what to do, we didn't want her to have worked so hard and then be disappointed but then Andrew got a brilliant idea. Garage sales. They shopped the sales until they found a $1o pink girls bike that was perfect--she even had enough left over to buy a basket and horn.

We learned our lesson and have done the same thing with each of the kids. They earn what they can, we take them to garage sales and they get a bike that works. Not a glamorous brand-new bike but a bike that they earned themselves. And when a younger child, such as David, came along and wanted his own bike instead of us giving him Spencer's original bike Spencer was able to sell his bike to David so he could have enough to by a bigger bike for himself. It's capitalism at it's best I tell you.

Once Grace was old enough to babysit for other people I sat down with her and helped her to put together a flier advertising "Grace's House Help Service." She listed all the chores she was qualified to do, listed her hourly rates and as a "one-time introductory special" offered the first session for free. We printed the information on pretty pink paper, I gave her a list of all our acquaintances in the subdivision within bike-riding distance and she spent the afternoon visiting each person and distributing the fliers. By the time she got home she had two phone calls for jobs and it's been non-stop ever since.

Now that we've taught her to earn her own money all of her spending cash comes from the proceeds. We ask her to save at least half of her earnings for college but whatever is left is hers. If she wants to go to the movies with her friends, wants extra clothes beyond what I buy her at the start of the school year or wants an ipod Shuffle she either shells out her own cash or puts it on her wish list for Christmas. Spencer is learning the same thing and plans to start mowing lawns for his money starting this summer.

By now you get an idea of the attitude Andrew and I take towards our children and money but to be a little more specific, our Household Economic Theory can be condensed into three major goals:

Teach children the difference between Needs and Wants

The distinction between a necessity and a luxury disappeared with the invention of television and poverty in modern, industrialized nations isn't about how much food is in the cupboards but in how many gadgets are in the home.

Now someone is poor if they don't have cable or if they drive a beat-up car. Yes, there are many many people in America going to bed hungry but in general their sufferings can't compare with the extreme destitution of children orphaned by AIDS, of villages without potable water or refuges fleeing genocide.

We've come to think of too many things as necessities: sports gear, ipods, cell phones, SUVs, or bikes and the list is as endless as man's ability to invent. Teaching our children starts with teaching them what is necessary for survival, for education, for providing for their future families vs. what is merely fun, entertaining and convenient.

My job as a mother is to provide love, safety, food, shelter, clothing, medicine and access to education to the best of my ability--but beyond that the rules change. No where in the Parenting Handbook does it say that I have to provide video games, bicycles, soccer lessons, vacations, private bedrooms or a car. These things can be nice and may not be wrong to have them but the problems occur when I guilt myself into thinking I'm a bad mom or that my children are deprived if they don't have them. These things are just luxuries, life goes on without them just fine. Learning to be content with what one has is an important component of happiness and if you're always happy with what you have then you'll always be happy, right?

Learn to say "No"

If we want our children to be responsible with money we have to train them to be able to tell themselves "No" when they can't afford something and that begins by saying "No" to them first.

It may sound harsh but it's an important life lesson. The sooner a child learns that the world--or the family--has a finite number of resources and that those resources don't exist to fulfill their desires and longings the better. If you can't afford to give your child every whim of their heart great, you're teaching your kids this principle whether you want to or not. But if you can afford to provide your child with toys, trips and fun it will take a concerted effort to deny them things that they may want but shouldn't have--or, even more difficult, to deny them things that may be just fine for them to have but would lead them toward feelings of entitlement, ingratitude or laziness.

Teach children to work for the things they want

If your child wants something that isn't a necessity consider making them work for it. This will of course depend on age and maturity but a child who works for their wants will learn discipline, responsibility, gratitude, and how to work faster than the child to whom everything is given. I promise you.

We've found that if our children really want something, that is, if it's not just a passing fancy, they're willing to put in the time and effort it takes to earn it. They'll take better care of it, they'll be more grateful for it and they'll be careful what they ask for in the future. It really is a win-win situation.

"What about little things?" you're saying? Sure, all sorts of little things. Books, toys, pets, social activities, movie tickets, music, extra clothes, when they ask for those things it works to say to them "Wait until your birthday/Christmas" or "You'll need to find a way to earn it yourself."

"What about big things?" you say? Well, enough humans on the planet have worked to buy their own cars, homes and college educations without help from their parents so I see no limit to the principle. It's just a fact that if something is worth having it's worth working for and the more valuable it is, the more worthwhile your sweat and labor becomes. I see no reason why my retirement savings should go toward paying for my children's college classes and if they pay for their education themselves you can bet they'll skip classes less frequently and graduate faster. Besides, there isn't any reason that they can't pay for it themselves through summer jobs, working part-time during school, scholarships, good ol' fashioned PELL grants, reasonable student loans and attending a cheaper institution rather than an expensive, private school.

We've tried to stick by these principles and have had some success . . . generally. So far. We're not done yet so you might want to check back in twenty years but for now it's worked well. It's hard to teach them to think not in terms of "What stuff do I get?" but "How can I earn what I want?" A tough lesson but worth every ounce of effort if we can pull it off.

***

I've written about just one small aspect of this subject, using my custom search engine here are a few posts that have other ideas and advice:

* Teaching my Kids Financial Responsibility by The Scratching Post
* On College Tuition, Investment and Financial Responsibility by Touched by an Angel
* Poll Results by MotherLoad: The MomAdvice Blog
* Teach Your Kids to Work: Part One by GNM Parents
* Raising Entrepreneurs: Teach Your Own Kids Entrepreneurial Thinking with a Home Business by Homeschool Blogger
* Why I Don't Give My Kids Allowances: A Conversation by No Limits Ladies
* Allowances for Kids: Teaching Children the Value of Money by Get Rich Slowly
* Favorite Book about Kids and Money? Talk amongst Yourselves by Parenthacks

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33 comments:

G's Cottage said...

Having raised four (youngest turns 25 this summer) we were considered mean parents from time to time over the years. But we had a slightly different take on allowances because we're against children hiring out to work who cannot read or haven't any money management skills. We used an early child allowance as an education tool that expired at the end of sixth grade. But we did keep lists of paid chores and unlike most of our friends if we needed an older child to watch the younger one we set an appointment like their other clients. We gained a lot of insight watching friends ahead of us in the parenting cycle who treated their oldest child like slave labor. Not only did we have to stop hiring her because too often she had to cancel because her parent's would make plans without consulting her availability or honoring her previous commitments, but she started to resent being saddled with her siblings while her parents were out partying (a lot). All of our kids paid for their college education. None of them started driving until they were 17 because they had to pay for the mandatory class, have the insurance premiums in the bank and the deductible first. Sounds like you're on the right track.

AuthorMomWithDogs said...

Some great ideas. Thanks.

Code Yellow Mom said...

Our kids are still preschoolers, and their wants haven't extended too much beyond food and clothes and very occasionally a toy that they take a fancy to, which they usually get at Christmas or a birthday (or for completing potty training), but my husband have talked about this principle a LOT already. This post articulated it so well - it's exactly the kind of attitude and perspective that we would like to engender in our kids. We live right now in a very affluent area and see kids handed things without a thought, and there really is a negative effect in children who literally do not fathom that money doesn't grow on trees, and it potentially causes added stress to parents for whom it definitely does not. :) Thanks for writing this and sharing your real-life examples!

Julie Pippert said...

Absolutely!

We were not raised to undestand money, needs, wants, etc. So we have had to learn the hard way as adults.

It is essential to us to teach our kids about money. It is even more essential to teach our kids about wants versus needs, and what really is valuable in life.

I've seen some great sources for advice, and they all say the same thing as you.

I'm so glad you put up the reminder and linked to more sources.

Great post!

janet said...

I think the most important thing to teach are youngins is the danger of credit.

My folks allowed me a credit card back in the day (70's) but told me the first time I couldn't pay it off at the end of the month, it was gone.

I have lived my life by that simple principle. It has paid off, best lesson I could have learned from a financial stand point. A lot to be said for living within you means, what even that is.

Trixie said...

What an excellent post! It is so important for kids to learn the value of money. My parents did this for us and it is something that rewards us day in and day out:)

I too agree that so many people in this country think they are poor if they do not have what are truely luxuries: cable tv, cell phones or a computor. We did not have a tv for most of my childhood, except twice when people felt so sorry for us that they gave us an old one! How do you like that? We had more fun without a tv:)

Trixie

chelle said...

Fantastic!
You know I am so taking notes so I have some idea on what to do with these cute little being once they grow up a little more!

Scribbit said...

Thanks for your comments, and especially to you, G's Cottage, for bringing up good points I missed.

It's such a huge topic it's hard to cover it adequately in a book let alone a post.

Plus, everyone has different techniques for teaching this principle that have worked and I like hearing what others have experienced.

Babette said...

You are right on the money. 5 of our 11 are out of home now and they all are hardworking and frugal. You will be rewarded in a way that tops the biggest allowance before you know it. Keep up the good work (ethic)!

Bethany said...

Thanks so much for your insightful thoughts on this. As a mom of two young boys, I struggle with how much to give them. My parents denied us things because they couldn't afford them, which I think was good for us in the long run. Now that I can afford to buy my kids a lot, I struggle to say "no." One thing that we do is to have a marble jar. In a ziploc we have about 50 marbles. When they do a chore or something without asking, they earn a marble and get to put it in the jar. When the ziploc is empty, they have each earned a toy to pick out. If they haven't earned all their marbles yet, and we take a trip to a toy store, I can just say, "You can look for something to buy later with your marbles." They have to earn it and learn the joy of anticipation. Can't wait until they can start earning real money like your kids!

My Ice Cream Diary said...

A very well written post! I love the advertising you did with your daughter. Thanks for validating my pricing system for kids. I have had dirty looks from neighbors when I've told them how much I pay my children for certain jobs. I've told my children that when they get to the point where they can do the job as good or better than I can, then they will be able to make the big bucks.

Ginger said...

I enjoyed this post and when time want to look at the other references you listed. I am interested to know about grandparents. My children have 3 sets and they usually are quite indulgent. How do you curb this spending or is it a problem for you?

Marie N. said...

How about that! Our daughter has a business called "(her name)'s household Help". She is not old enough to babysit yet so her earnings are a little slim. They pick up in the summers though.

All this will start becomming important to our little one in the next year or so too.

wayabetty said...

I'm bowing down to you Michelle for doing a really great job in teaching all your children the value of money! We too believe in the "no allowance" rule in our house and that Mommy and Daddy are not a bank.

We see so many parents spoiling their kids in excess. My hubbie's nieces have been given all the gadgets/toys that "mankind has invented" as a reward for doing great in school since they were young, I think that's so wrong.

My 6 y/o has been asking for a DS game but we told him that he doesn't need it and he's fine with using the computer to play games.

I'm definitely using your approach about the kids earning their own money if they want something "extra" for themselves.

Again, you and Andrew are definitely model parents that other parents should learn from. Your children will be so well rounded, successful human beings to society once they go out into the world. Kudos to you both!!

The Lazy Organizer said...

Thanks for linking to my article. I can't wait to read all the other links you have listed.

Our biggest problem is also with a certain set of grandparents. It seems like they undo our teaching with the kids faster than we can teach it. All they seem to care about is stuff! I just hope our example makes an impact in the long run.

I like to tell my kids, "We can buy (almost)anything we want but we can't buy everything we want."

Amy W said...

This is a great post, one that I will definitely be saving to use on Ashley. She tends to "want" a lot of stuff she doesn't "need". Especially stuff from Target. In the toy aisle.

Patois said...

A great post with some really good ideas (and links). I've also liked a lot of the additional ideas mentioned. The marble jar sounds grand -- the kids' teachers do something similar. Sounds better than the point chart I try to use.

K T Cat said...

Thanks for the link! I loved your post, as always. You're very talented.

An Ordinary Mom said...

Amen!

Jenny McB said...

There are some things that we do for our convenience. Since we live in a rural area, it's to our advantage to have our kids driving, however they respect that it's our car. They don't go out "cruising" and hanging out, they use it for school and sports.

Whenever we ask them to do something around the house, they do it. We work on the principle that we are a family, in it together. Money is earned for those extra chores that take time and skill, mowing the lawn is a paid chore in our house.

Our first just came home from his freshman year of college. We never sent an allowance and he paid for his day to day stuff, books and 2/3 of his tuition. I am so proud that during the year, he even put some of his savings in a CD! I would say that's better than another college freshman I know whose parents sent them $50/week and the kid came home with a tattoo. I think we are doing okay!

Michelle, good idea on the bikes. We go on the pass down theory here and it works for the most part.

G's Cottage said...

Just to clarify, I don't think your coverage was inadequate at all. I think for your stage you are right on the mark. And you will appreciate the groundwork you are laying down now in the future when the best friend's parents buy a new car to go with the new license. I had only meant to highlight that we studied lots of flavors of parenting in regards to money skills as we staggered our way through. We came from different backgrounds completely so the early rounds were a bit tense. But we are very pleased and proud of how well they manage their lives and finances. They are way ahead of us at their ages. I think you can look forward to the same pleasure.

Jordan said...

Your advice sounds excellent! We're a long way off from that phase, but we're already started teaching our 15-month-old about "saving." (He knows that money goes in his piggy bank--it's pretty impressive, considering we've only done it a few times, and he knows exactly what will happen when he has a penny or a quarter.)

la bellina mammina said...

Thanks for these tips - I'm gonna show the hubby your list so we can work out a plan for our 2 elder boys - time they learn to earn their keep!

Petite Mom Blogger said...

This topic is a big deal in our house right now with our 6 year old son. Great ideas!

BTW, you won over at the ContestForMoms.com blog

my4kids said...

We have the kids save money for things they want beyond their needs also. They do get toys for bdays and christmas and occasionally if I decide to do something special but if they want something I usually have them earn the money for it in different ways. I think its good for them then they can learn about saving money and if they earn money but don't have something special to buy they are still learning to decide is this really what I want to spend my money on?

Melissa R. Garrett said...

And this is exactly the reason why I love reading your posts and think you're one heckuva mom.

Hannah and Jacob have sticker charts, and it's been the only reward system to which they have positively responded. I basically took a poster board (for each kid) and divided it into 400 squares. They are each responsible for various age-appropriate chores, for which they can earn a sticker. They can also earn or lose stickers for good or deviant behaviors. When they have filled a row of stickers, they earn a dollar. When the entire chart is full, they get their reward. Hannah wants a kitten; Jacob wants new track for his train set (what else?!). We are almost six months into the chart system, and it's working really well. They are very much aware that their actions determine how quickly they earn stickers and, ultimately, their prize. They also now know NOT to whine for small toys whenever we go out.

MC Milker said...

This is a great post for me right now. I am just starting to wonder about whether or not to give my 5-year-old an allowence. I've been struggling with this issue and you've now given me the answer1

Thanks

Stephanie said...

Our attitude about earning luxury items is the same. Though they do get quite a bit of those as gifts from other family members. Things that are earned though are much more appreciated and better cared for.

We do give Kellen (8) a small allowance to teach him money management. It isn't tied to chores, those need to be done either way. But the small allowance gives him some practice. He keeps 1/3, saves 1/3, and gives 1/3.

Yuva said...

great idea but with this-- iam wondering... kids loss innocents sooner than they should..no??

Erica said...

Love the marble idea, especially for preschoolers.

Little Tyke said...

I read your article with some interest about attitudes to money. I always find it interesting about how other people teach their kids how to appreciate money. As your article says you always make your kids earn what they wanted. Did you ever think it was appropriate to buy your kid something that they wanted solely because you thought it would help their development educationally, such as their first computer for homework which would be way out of the price range of a young child could earn,

Scribbit said...

Little Tyke, I appreciate your comment and question--and my answer would be "yes" and "no." Yes, I've spent money on things like piano lessons, swim lessons, educational opportunities like that. However, I wouldn't buy the kids a computer or other electronic device--not because I'm against computers but mostly because I don't seem them as a necessity towards education. My poor kids have a mother and father who made it through lots of years of college without owning our own computer so I tend to think it would be better to have them pay for their own. When I got my first computer I bought it myself and 23 years later the prices have come down so much it's really within their reach. Plus I do have a problem with computer and video games--real issues there. Does this answer your question?

Tv License said...

You have a lot of the same views on child rearing as I do. Especially that everyone in the household does chores, etc. just to pitch in. But how do you get the children to not lose interest because 50 cent here and there takes a long time to save up.