I recently read two great books about kids and money:
“Financial Peace: Revisisted” isn’t primarily about kids, but he has the sound and simple basic principles, and there is a chapter specifically about teaching kids. (He has actually put out a “Financial Peace Junior” that is entirely devoted to the topic, which I may have to check out…)
“Debt Proof Your Kids” is, yes, all about kids.
I found it interesting how much of what they had to say was fundamentally the same … yet almost equally intriguing were the differences.
Everyone agrees that we must teach our children to be able to see through the glamorous promises of credit card companies seeking to snare unwary college students (and even high schoolers!) with their too-good-to-be-true offers - because, of course, they are!
Both books advocated giving your kids increasing control over finances in their life… Beyond just getting an allowance for spending money, letting them learn to budget for some of the necessities you’d spend money for anyway teaches them the important lessons while they’re still over the safety net.
One of the chief areas of debate, it seems, and certainly an area of frustration in our implementation, is how to handle chores in relation to allowance - and specifically defecits in the child’s performance thereof.
Dave Ramsey concludes that while children are a part of the family and need to contribute in certain things, they need to learn the way things work in the grown-up world: You work, you get paid. If you don’t do the work, you don’t get paid.
Mary Hunt tackles the issue a little differently. If you get a speeding ticket, she explains, the judge doesn’t call your boss and have the fine deducted from your paycheck. There is a consequence, and it is even financial — but you now have the additional responsibility of taking care of it yourself (i.e. paying the ticket), or facing the (increasingly ugly) consequences. She issued her children “citations” for chores not done, and they had to pay them by a stated deadline out of the money they had already received (or would receive in the meantime).
I thought we could walk a sort of middle road with this, which has not been a notable success.
I love Mary’s idea of a monthly salary for the kids, as this is a considerably bigger budgeting challenge. But as we are just getting started, we opted to go with weekly for the time being.
We decided to designate half of the budgeted amount as a salary paid each week regardless of anything else, and half paid on successful completion of certain weekly chores. This was a bomb, and Nick seemed content to deal with having less money as opposed to putting out the effort to actually get his chores done. NOT what I had in mind.
Now we’re going to try Mary Hunt’s way… Chores are expected to be done, and there will be stiff “fines” associated with the “citations” for any failures. And I do mean hefty. After actually emaling Mary about it, we set the fines at $2 to $5 per chore - enough that he could easily owe me back his whole week’s allowance in a single day if he really put his mind to it.
The theory, naturally, is that it doesn’t take long at that rate for him to figure out that he’s better off doing his chores.
What do you think? Stay tuned, and I’ll let you know how it works…