All posts tagged allowance

11 Reasons Why: Kids + Wallets

11 reasonsThis summer is a great time to encourage financial practice! Having a wallet in your pocket (with your own cash IN it) puts a swagger in your step and instills confidence that you can decide to spend or save. It gives you a feeling that you know you are the master of your financial fate.

Here are 11 reasons why every kid should rock a wallet:

  1. So they can lose it and experience a financial loss. (OUCH, right?)
  2. So they can run to the ice cream truck and decide on their own if $3 is a reasonable price for a popsicle.
  3. So they can purchase an entire box at the store AFTER they learn (by going broke) that $3 is far too much to pay for a single popsicle.
  4. So they can walk confidently into the store and make a decision on which plastic toy they want, need or can live without (one that could take an agonizing three hours, showing you just how much practice kids need at making choices.)
  5. So they can play around with cash on hand- do they carry all of it? Some of it? Lend it out? Cover the cost for a friend? Put some in the bank? Eventually, they’ll develop real habits (especially after #1 happens!).
  6. So they can have something better to do than ask, bribe, barter, negotiate, whine while you navigate the store – something that proves quite difficult at first- something like keeping track of a brightly colored wallet for the entire adventure.
  7. So they have a reminder as to why homemade gifts and thrift store purchases are not a bad idea.
  8. So they know of a perfect gift for their friends – a wallet! (Likely, from the thrift store- why pay full price?)
  9. So they can misplace it (which is different than losing it altogether!) only to find it months later and discover the $30 they had in there, automatically owning all of the following real life experiences without a word from mom or dad: what a horrible day, I’m frustrated, what a wonderful day, what will I do differently next time, what did I learn?
  10. So you have someone to ask to borrow money from (likely with interest) when you make a mistake like forget your wallet or lose your $20 bill. Thanks Kids!
  11. So your child can decide to say, “I love you too much to loan you money” because he discovered you aren’t great at paying him back OR make the judgment that it’s really important and say with confidence “no problem, mom.”

All this starts with a wallet. And some consistency, trust and encouragement from mom & dad. So go ahead, nod to those paying jobs and keep in mind all the reasons it will benefit your child to stay on the allowance track this summer!

Allowance: 15 Ways Kids Can Rock…

a Healthy Relationship with Money

kids and allowance: 15 ways to build a relationship with moneyOver the last few posts, we covered reasons and helpful basics on giving kids allowance and money. In our final post on this topic (for awhile anyway!), we wanted to give a few helpful tips to make the process smooth and steady so that you can stay consistent, organized and help your kids grow ever more confident and comfortable with managing their funds. Some of these recap what we’ve already mentioned, while others are logistical “tips” to stay on track!

Giving Kids an Allowance: Relation$hip Builders

  1. Give them an allowance ($1 per year)
  2. When they ask you for something simply reply, “Yes, did you bring your money?”
  3. Open up a bank account when they are old enough
  4. Give your tween / teen a bank / debit card and teach them online banking.
  5. Have your children help you balance your checkbook.
  6. Discuss purchases and ask questions about do you think it’s worth this amount? Get them thinking!
  7. Stay calm and collected if your child wants to buy an outrageous item.
  8. Encourage vs. lecturing or steering. For example, “Hey, in just a few weeks you’ll have enough if you decide you want it.” (vs. You don’t have enough money- remember you bought that toy and spent it all?).
  9. Talk to your children about what charities you give to or help them give to charity.
  10. Encourage selling their old toys or working “jobs” if they want to put more money in their wallet. Once they realize how much an extra $10 will help them, they get creative.
  11. Hold family meetings at the same time each week- be consistent!
  12. In order to stay on schedule, get 100 $1 bills, keep them in a family meeting box for “more convenient” handing out.
  13. Plan for trip ups- ask the kids to list things that might happen to derail family meetings/ $hand out (soccer games, parties, etc) and have a plan b – let them develop it!
  14. Let the kids choose where to keep their money “safe” – some might discover that trash bag was a bad idea- it’s ok.
  15. Don’t worry about it once it’s in their hands. Trust the learning

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11 Benefits of Giving Allowance

allowanceThere’s little argument at this point that handling money as a child will prepare you for handling money as a young adult and eventually, as an adult. Great. But what exactly- as in literally- do the benefits of giving allowance look like? Why is it such a valuable commitment?
Well, imagine for a moment, that you have been giving your children money each week from the time they were four years old and each week they were encouraged to make decisions about the money. Imagine if you handed over the gift buying power, the junk food buying power, the cheap “crap” purchasing power, and so forth. Imagine if you allowed your child to experience the frustration when she didn’t have enough money to go out with friends, buy the perfect jeans or pay for her car payments. If you can imagine these lessons during childhood, you can imagine her respect for money heading into the real world.

The Benefits of Giving Allowance (Why it’s worth the inconvenience of getting cash and handing it out!)

  1. Kids, at an early age learn the true value of money. As in, what can I buy for one dollar? $100?
  2. They discover what money can and can not do (happiness is not in the box you waited all month to buy, only to forget about a week later).
  3. They learn the “real” way how hard it is to save money and how easy it is to spend money.
  4. Kids develop a keen ability to assess what purchases are really important to them and which they can do without. (They’ll eventually say things like, NO. NOT WORTH IT… and walk away).
  5. Kids discover things about themselves- Am I a saver? Am I a spender? When will that benefit me? When will it not?
  6. Kids who buy their own things, DO NOT expect the adults around them to buy them stuff. In fact, they stop asking.
  7. Kids learn to negotiate, barter and work together. (i.e. If one kid only has 15 bucks and his brother pitches in five, you bet they come up with creative reimbursement plans!).
  8. Kids who carry their cash grow independent. There is no need to ask mom or wonder what she’ll say or how to sweet talk her (note: no fits because the answer is yes if the child has money). The child simply walks over, and decides if he wants to purchase or not.
  9. Kids who make mistakes with their money have learned the good old fashioned hard way money has value, it can go away and with time, you can earn it back– financial resiliency is valuable.
  10. Kids who spend enough time practicing also have time to understand- and make a judgement that sometimes, it’s ok to say– it’s only money– and there are things more important than a wad full of ones.
  11. And finally, as a result of their experience with money, kids develop a strong work ethic and an appreciation for everything you provide.

Also, it’s Good to Note

Kids learn to keep their money safe, lend it to those they trust and how to make interest in inventive ways. (As in, hey, I’ll buy you a donut if you pay me back – plus extra).

 

Kids Allowance Guide 101

Some people believe chores and allowance go hand in hand. Some feel kids have to “earn” money through extra tasks. Some think paying for good grades is a smart idea. For clarity’s sake, I’ll say it up front: I do not believe this about kids and money.

Kids Allowance Guide: A System That Works

If you take the stance, as I do- and countless others, including NYT money blogger, Ron Lieber, that an allowance has one key purpose: to give kids real life experience handling real life money, then it becomes easier to commit to a process where money IS NOT attached to chores, work, grades, or any other “task” but it is given freely to allow for ample practice saving, spending and giving it away.

Incidentally, earning money for work performed is another skill set altogether

Why Give Kids Money?

It is valuable for parents to allow their children,  at the earliest possible age, to make choices about how they will spend their money, when they will spend their money, where they will keep their money and so forth so they can develop a healthy relationship with money when they are young- one that will carry over to their adult lives.

Kids Allowance Guide 101: The Basics

When should parents start?

Parents should begin giving children money as soon as they are certain little cherub won’t put it in mouth his.

When should it be given?

Money is given each week so that it becomes a part of their lives and they grow ever more confident about all aspects of money.

How much should parents provide?

The reasonable rate is one dollar per year. ($3 week for a 3 year old). If it sounds steep, think of it this way, when you hand the money over to the children, you remove your obligation to purchase anything non essential for them. That means stuffies, gatorades, video games- you name it. While it seems like a lot up front, I assure you– you get out of spending on useless crap. Guaranteed.

Remember!

Teaching your kids to spend, save and give away their money takes a lot of practice in restraint. In order to let them learn, you must be willing to zip the mouth (Duct Tape Moments!) and watch them buy the big plastic toy that breaks or the sparkly robot lazer gun that turns out to be junk. Kids learn really quickly whether or not something is valuable once they’ve had a chance to buy the crappy stuff or find disappointment in a purchase!

Key Takeaway: Let Them Do It All Wrong

Most importantly, you have to let the kids go about it wrong. It’s ok to allow your children to forget their money, lose their money, give the money to their siblings, or anything else they want to do with it. Once it crosses from your hands to theirs, it is no longer your concern. The trick here is that when they do “run out” or “don’t have any money left” you look at them and say, ok, well, next week you’ll have another chance vs. saving them or giving them a loan.

Yes, you’ll feel upset, sorry for her, heartbroken (if you’ve seen a six year old lose a baggie filled with her life savings, you know what I mean!), angry, annoyed- all of those and more but if you trust there is value in it and you plan for the emotions to arrive, then it’s far easier to stay on course. – Vicki

Do you give a dollar per year?  How has it worked out for your kids?

 

 

 

 

Allowance: Don’t Wing It

kids, money and allowanceKids and money are often a confusing combination. Ask any parent their “allowance” process and I bet you’ll find one of two responses:

  1. They don’t have a solid system and they’re wildly inconsistent and/or winging it. (Is this you? You’re not alone!)
  2. They have a system that “works” and  they’ll happily give you all the inside info on how to give your kids an allowance.In either case, it doesn’t matter.

Why? Because in order for you to implement a successful system, you must first ask YOURSELF key questions about your family’s relationship with money. You can’t find the guidance you seek until you understand how money plays out in YOUR family’s day to day routine. (Plus, just because a system technically “works” it doesn’t mean it will transfer over to YOUR family and it may not be teaching the healthiest relationship with money.)

Start Fresh

If you’re a parent without a system and your brain is filled with confusion, I give you unsolicited permission to TOSS all the advice you’ve been given and start from ground zero.

If you have a system, I’d ask you to look at the lessons it’s teaching and see if there are changes you can make to further develop a healthy relationship with money. (If you’re on track, then continue on!).

The Point?

Each family (including YOURS) will have a unique relationship with money. This basic information is often overlooked but it is valuable! Knowing your family’s relationship to money tells you where you’re starting from, what your values are, and will give you the means to measure progress. In order to pick up and start from where you are, it’s important to stop and ask yourself These 4 Valuable Questions:

  1. “What kind of relationship do my children have with money right now?”
  2. “Do my children expect me to buy them everything they want?”
  3. “What’s stopping me from allowing them to take over responsibility for their own money?”
  4. “How many years do I have left to help guide my children towards a healthy relationship with money before they leave my house?”

Once you answer these, you’ll begin to see how an allowance process can benefit your family, how much time you’ll need to get in the routine and most importantly how to ID YOUR role in the experience.

Parents, how are you feeling about your allowance routine? Have you stopped to ask these questions? Leave a comment or discuss it on our Facebook wall

 

Podcast: Kids, Money & Ron Lieber

lieber-podcast-300x222Today’s blog post features a practical, insightful podcast with Ron Lieber, “Your Money” columnist for The New York Times.

In this conversation, we talk about his new book, due out in 2014 titled The Opposite of Spoiled.Ron shared the premise of the book and his unique take on how parents can combine teaching kids about finances with the development of strong character traits ensuring they don’t end up in the spoiled category. His ideas were fascinating and I walked away with an arsenal of ideas I’ll be sharing with parents with young kids.I encourage you to not only listen to the podcast, but to follow Ron on Facebook where he will be sharing this adventures in writing his book with his readers.

You can also follow him on twitter  or visit his website. Add this to another resource in the case for training kids to be independent!

Click to Listen–> Parenting Strategy: Give your Kids Money & Cultivate Values with Ron Lieber