Dan Gasteazoro, a Grade 4 teacher at Glacier Hills Elementary School in St. Paul, Minnesota, has been using Active Allowance in his classroom for the past two years. I asked him whether he found it useful in teaching his kids about financial literacy. Here are his comments:

I am incorporating your site to instill Financial Literacy in my classroom. But in addition, AA also offers me a forum to promote the social sciences (not just mathematics) – economics and political science – as well as foster teamwork, initiative and leadership skills.

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Dan Gasteazoro is an Active Allowance member. Dan is also a Grade 4 teacher at Glacier Hills Elementary in St. Paul, Minnesota.

And wow….what a creative teacher! Not only does Dan use the site for his family — he also figured out a novel way to use Active Allowance for his grade 4 class. He tells us it really helps him engage the children and teach them a wide range of subjects in a fun way. Dan agreed to share his experience:

I started using Active Allowance in my class last April. My “Eureka moment” came when I figured out how to use your site to connect responsibility and reward in a classroom setting without actually “paying” a monetary allowance. I invented an in-class “economy” — with great success!

I created “teams” of kids. Since it was near the end of the year, the kids knew each other well enough (and I them) that I could create groups based on capabilities, temperaments, etc. In this way, I was able to have a little bit of everything (the good, the bad and the ugly!) in each group.

I wanted the use of checklists to pay dividends based on their behavior. I also wanted them to be able to track their successes (or failures) in the virtual world, so the points-to-dollars functionality of the site and the virtual “Bank” were also really useful.

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I wish we had done this ages ago!

We took advantage several weeks ago of a free service from our bank (TD). We created child bank accounts for each of our teens (14 and 17) and gave them debit cards to access them.

Now, when they want money from their virtual family bank account at Active Allowance:

1. they write us a check from their Active Allowance account.
2. if it’s for more than just a small amount of cash, we log in to our real bank account with TD and do a transfer to theirs.

Quick and simple!

Now, they can pay retailers using their debit cards and not worry about losing their cash or being overdrawn.

I wish we had done that years ago for our 17 year old so she wouldn’t have had to carry so much cash when she went shopping (and sometimes lose it!).

Here’s a list of some of the main benefits:

• No need for older kids to carry a lot of cash when shopping
• No ability to overdraw/borrow
• No charge to get the debit card
• No charge to use it in stores
• No charge for ATM access, if from our bank’s ATM’s
• No need for us to have cash on hand when the kids want it
• Easy to immediately transfer money online from our account to theirs
• Online transfer safely relies on the bank’s mega-million dollar investment in online security
• transfers are free

All free for child accounts (free at our bank – yours may differ)! The only limitation for our bank’s debit card vs a credit card is their debit card doesn’t enable you to buy things online (some banks’ debit cards do work online).

Despite this one infrequent limitation, we vastly prefer debit cards over credit cards for our kids. One of the principles we’re trying to teach them, while we still have some influence, is that they “shouldn’t spend it unless they have it”. And that’s sure hard to do when they have a credit card (especially when I see how undisciplined our daughter can be with her cell phone account! I wish our cell phone company enabled us to create a limit, but that’s a rant for another day).

Oh….and one more thing…..it looks like some of our Teaching Kids Dollars & Sense lessons might be sinking in…at least with our 14 year old son! He deliberately doesn’t transfer too much into his real bank account. He’s a little concerned that if it’s too easily available to him, he might just spend it!

Sometimes, we wonder what lessons might be sinking in. It’s soooooo nice to enjoy those moments when we see some do!

Oh….and did I mention it’s all free

For some reason, my hair loss is accelerating. I really have to stop pulling it!

We recently had yet another, ummmm, not so perfect Parent/Teacher interview. Same old story — our gifted 10 year old’s behavior still leaves something to be desired. Not evil …. just frustrating. He has a lot more “stop” behaviors than “start” ones and gets very little done in school; he’s clearly gifted at lollygagging and being a social butterfly. I bet you’ve never faced something like this

After hearing this yet again, I had a brainwave. We discussed with his teacher the idea of a School “Chore Chart”, whereby the teacher could list those behaviors that needed work and that ……

warning: Parents who abhor linking rewards to behavior should stop reading now and go for a cup of tea.

…… we would provide the reward for good results.

We agreed that while it’s ideal if Adam were intrinsically motivated, it was also wishful thinking. With this process, we could at least guide him towards appropriate behavior — and over time, he’ll develop good habits.

The whole process mimicked what we do at home. Working as a team with his teacher, and also involving Adam in the discussion, we agreed on the behaviors, as well as some special bonus items (if he achieves them, there’ll be dancing in the street!). We asked him what special reward he would like to work towards – that he would get in June if he earned enough. He said he would love to earn a remote control car.

Technically, it was dead simple to make this happen in Active Allowance. We created a second account for him, designed his School Checklist (he chose the colors and decorations), and created just one bank account — his Remote Control Car account. Every Monday, he brings a clean copy to school. On Friday, he comes home with his completed Checklist, signed by his teacher, and we enter the points. Quick and simple.

And so far, after two weeks, his teacher says he’s much more focused. I know he’ll still have his ups and downs, but I’m optimistic that on average, it will be “up”. I’m keeping my fingers crossed (and away from my thinning hair).

OK……exulting here. I know it’s a breeze for web design firms to do something like this, or maybe most 20 somethings, but ….. me?

Leslie and I wanted to create an easy to follow “Setup and Process” video for our Chores and Allowance System and put it in our Help Guide for new members, but do it without breaking the bank. Here’s the result (a small size version):

Ahhhh, tres satisfying. Yes, I know. We could undoubtedly do a better job with pro talent …. and Leslie winces whenever she sees it and wants to do a reshoot …. blah, blah, blah ….. but not bad for a first effort, huh?!

Full disclosure – I’ve become pretty good over the past year with end-user software (praised be Apple for their Macs) but I am not an HTML/CSS/Javascript writing techie. That stuff’s for our Development team. If you’re interested in what tools I used to do this, let me know. You could probably do it too.

Still exulting here

In my previous career, I learned that I could do a presentation for five people in a room and have them walk away with five different misinterpretations of what I said. A few key conclusions:

1. OK. Let’s deal with the obvious first. There’s, uhhhh, something, errrr, wrong with my, ahem, communication skills.
   
   And now on to something more useful for you.
2. Repeat with a twist: It’s very useful to repeat a concept, but do it in a different way. You never know what might achieve the “Ah-hah!”. With that in mind, here’s a terrific summary of key lessons to teach your children about money by Leo at Zenhabits. Although I don’t know Leo, he’s obviously traveled down the same road as Leslie and me. Many of the ideas he conveys are identical to what we incorporate into Active Allowance. But perhaps he says it in a different way, so you might get a new Ah-hah today. It’s sure worth a good read!
3. Just because you said it, doesn’t mean they get it: Words are often not a very effective way to communicate. But until we can do mind-melds, we need to find multiple ways to teach our kids. That’s why it’s so important to have your kids learn by doing – a far more effective instructor of life lessons.

As a minor quibble with Leo’s post, I disagree with the black and white position he takes in #8 on what’s appropriate for how your children earn money (eg types of chores). In his defence, this issue is a big one, and it’s hard to do justice to it in a paragraph.

Nevertheless, there are at least two sides to that debate. I often liken it to politics and religion. People may have strong points of view, and arguments are often heated and sanctimonious on both sides. But in my mind, neither is right or wrong – it comes down to personal preferences, beliefs, attitudes, philosophies. I have my own strong point of view, but I accept the fact that others vote for different people (ok, I call them names, but I’ll fight for their right, yada yada).

With that caveat, Leo’s post is a great read

Here’s an interesting idea from one of our members – she created a Responsibilities Checklist for herself so she can model appropriate behavior for her children. This helps her show her kids that Checklists aren’t a punishment – that they’re really a useful tool you’ll use your entire life to help you remember to do things. What a great idea! I’ll have to try it out.

You’ve probably already heard a great many reasons for why an allowance makes sense for kids. Without going through the whole laundry list yet again, here are a couple of important ones worth emphasizing:

1. Creating many “Teaching Moments”: Unlike parental education about the birds and the bees (usually a one-time discussion; future attempts receive an “Eewwww!”), this is a subject that needs to be discussed on an ongoing basis over many years (e.g. making spending choices, saving for a goal, charity, etc). That means that parents need to create a sustainable system that will cause earning/spending/saving/sharing issues to arise and be discussed in a positive way…..the “Teaching Moments”.
2. Preaching vs Doing: It’s important to make this learning part of everyday life. I’m not sure about your kids, but mine seem to be impervious to “preaching” (especially from Dad), but they learn amazingly well by “doing”.

Just a thought for the day

OK. I’m exulting. We just had a fantastic time visiting Canada’s Wonderland, a huge amusement park near Toronto, with our 9 and 11 year olds.

You may recall Poor Boy – he’s still poor and rebelling. But his 9 year old brother is comparatively rich (he takes after our 13 year old).

When we went to the park, they understood that Mum ‘n Dad cover the cost of park entrance (includes rides) and lunch. But if they want to play arcade games, it’s on their dime and they’d have to write a check from their Active Allowance account as soon as they got home.

Well, Rich Boy chose to spend $5.00 throwing 2 basketballs….missing of course. But there wasn’t a peep nor a nay from Mum ‘n Dad. Not even when he spent another $4.00 trying to ring the bell with a sledgehammer. It was his money to spend (full disclosure – I REALLY had to bite my lip. What a colossal waste!!).

And not a peep from Poor Boy. He looked longingly at the basketballs…currently his 2nd favorite sport. But he knew he had no money, so he couldn’t play – he could only step back and watch. So sad…..but what a great teaching moment. Another step on the path to his understanding that earnings and savings might actually have some merit.

We spent over 6 hours at the park and didn’t hear one “gimme”.

As Hannibal Smith used to say on the A-Team TV show: “I love it when a plan comes together”

PS. Rich Boy was later heard to said to his brother on the way home “those games were a big waste of money”. And I don’t think he was just trying to make his brother feel better. Both kids learned something today!

So I think this is a good thing but I’ll let you decide. Rich Boy

Our 13 year old is a great saver, diligent about doing his chores and fulfilling his responsibilities, and even remembers to check things off on his Active Allowance checklists. As a result, he usually earns his entire allowance and often earns bonuses. And when he babysits, he asks us to put it into his big ticket item account so he wouldn’t be tempted to spend it on movies. This summer, he finally bought that big ticket item – an electric guitar.

End of story, great lesson learned, right? Well….right, but there’s more to the story…..

Poor Boy

Our 11 year old is also pretty diligent about his chores and responsibilities. But as soon as he has some money in his Family Bank Account (note for non-members: it’s on Active Allowance), it manages to burn a hole in his pocket. And to make matters worse, he hates filling out the checklist….so he hasn’t been doing it. And therefore earns no allowance. He still does his chores – he knows there will be non-allowance consequences if he doesn’t. But he just doesn’t fill out the checklist (go figure!).

We’ve hung tough, so when he wants to buy something, our simple answer is “Do you have the money?”.

The Drama

Last week, Poor Boy came downstairs with a few gift cards in his hands – he’d previously received some as gifts and some as prizes for winning squash tournaments. He asked me if I’d “buy” them from him. I smiled, told him I’d buy the one from an electronics store since we needed a new DVD player. But not the one from the music store.

So he went to 13 year old Rich Boy to see if he had a buyer. No dice. Then a brain wave. “I know you want to buy a DVD of a rock concert. I’ll sell you a $25 card for $20.”

That was brilliant! Necessity – the mother of invention. He managed to figure out on his own some basic principles of economics, use his salesmanship and demonstrate resourcefulness. I’m not quite ready to put this on his college application, but not bad!

The Learning

Rich Boy said yes. And now Poor Boy has $20 cash instead of an unwanted gift card. Rich Boy learned cash is king. Poor Boy learned about market principles. Both of them won.

And we learned again that sticking with our Allowance and Responsibilities process and making it part of everyday life teaches the kids important lessons – even when it’s not initially apparent.

Mind you, now that Poor Boy has sold off his “assets, I sure hope he gets into “earning” mode real soon! Stay tuned for future episodes in the ongoing saga.