Here’s an interesting Business Week interview of Neale Godfrey. Neale is a renowned expert on children and family finance and has written several books on the subject.
In this interview, she discusses raising money-smart kids and “Generation Broke” (you guessed it – our current generation!).
We like Neale, both professionally and personally – I wonder if that’s because she preaches the same things we preach
You’re fourteen and have no source of income. What would convince me to lend you money if I’m not sure you can pay it back?
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:
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:
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
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
In our case, I mistakenly thought our 14 year old understood this but I never explained it explicitly. It was the source of a great amount of unstated frustration for her which festered over several months and created unnecessary animosity towards the system. It took a while to get back on track.
By doing this, you’d be telling your teen “I’ve kept the list small, to relatively few important things, but if you don’t do them, it has a significant impact on your allowance. It’s important to us that you do them”.
While all family philosophies are different, we don’t include homework on the list for any of our children. However, for the younger ones, we do include “homework finished by 6:00 pm” as a bonus item to earn an extra point. And for all our kids, we also give bonus points for finishing major projects (yikes!) early. And it works! Each of our kids accomplished this herculean task twice this year. And they’ve lived to tell the tale
“Any idea how we can inspire our 13-yr old to actually cooperate with our new allowance & chores system?”
There’s no doubt it’s tougher to get teens started on a new system if they never had chores or responsibilities when they were younger. Nevertheless, we do have members who tell us they’ve had good success. Before I elaborate, here’s a brain teaser: Try to distinguish between teenagers’ “Yecch’s” and the “Yay’s” for the following words:
I know it sounds unlikely to some parents, but teenagers CAN often be mature and rational too……but you may need to connect the dots for them. The key is to accentuate the positives – more freedom to decide what they buy, more opportunities to earn extra, more clarity and consistency from Mom and Dad, as just a few examples.
There are no hard and fast rules as to what will work for your kids and your family since a) all kids are different and b) there are so many different family philosophies on this subject. Nevertheless, here are a few things to consider:
For the allowance, create a mini-budget, making it clear how much spending power you’re shifting into his hands and in what areas. Also make it clear what he needs to do to earn extra. This is usually pretty exciting and empowering. For a teen, it’s called “freedom”!
And – especially important – collaborate on creating the chores/responsibilities list too – don’t just hand her a finished version of what you’d like to see. Seek her input and ideas. You can use it as an opportunity to teach her the importance of sharing the family effort as well as help her connect the dots.
Out of the box tip: Sometimes teens suggest a tough task (I’ll wash the floor EVERY DAY!). Resist the urge to rub your hands with glee, or murmur mwah-ha-ha. Consider rejecting it or making it easier, at least temporarily. You might say “Let’s agree to add that one next month” or even reject it altogether. You will be modeling reasonableness which, in turn, encourages buy-in.
Here’s an interesting post
The connection between effort and results (just like work and income) is not genetic – it’s learned at home and at school. And so is the opposite: the expectation of handouts – the dreaded “entitlement” attitude. Kids are not taught to expect handouts deliberately, but that’s the lesson they receive when there’s no connection between effort and results. These handouts masquerade as “let kids be kids”, or “enhance their self-esteem” – all well-intentioned, but so is that ol’ road to ummmm, heck.
I want my kids to be kids too. I want them to have fun, enjoy their childhood, have carefree times they’ll look back on fondly. But I also want to equip them with what they’ll need to be successful in life. I send them to school for that reason. And I teach them values I consider important – maybe even the concept of “earning”. And maybe even with some humor.
Like how funny it is that hard work usually delivers great results
Here’s an idea for Active Allowance members:
You can create a special Summer Responsibilities checklist (as Leslie’s doing right now) and then revert to the old one after the holidays. It’s really easy to do – easy as 1, 2, 3. Here are the steps:
That’s it. Have a great holiday!