Friday, July 24, 2015

Make Your Kid's Allowance A Financial Literacy Opportunity

Welcome to another installment of CCM blog!  I am here today to talk allowances, the dough you give to your kid(s) for...

Location Allowance – An ECA Global Perspective |

Doing nothing OR
Doing their chores.

There are wealthy folk with good intentions out there that give their kids spending money because it is tradition to do so.  Their wealthy parents gave them "pocket money," and now they want to do the same with their own kids.  I'm talking people like the Hilton's, and the credit cards, plus spending cash they undoubtedly gave a young Paris as soon as she knew what money was for.  Because money is abundant, many wealthy kids grow up getting an allowance for doing nothing.  They ask, they get.  They're entitled.

The rest of us are giving kids an allowance for completing chores they've been assigned all week long.

Both of these reasons for giving kids money are not only wrong, but also bad for kids/teens.

Let me ask you this:  Are you paying yourself for doing chores?  When you, the parent, does the dishes or mops the floor, are you getting paid?  No!  So why should you pay your kids for doing chores?  Your children live in the home with you.  They are using dishes, producing garbage, stepping on the floors and carpets with their dirty shoes, just as much as you are.  Tell them:  "The chores we assign each other every week is about family cooperation.  These chores (doing the dishes, vacuuming, throwing out the garbage, putting the garbage cans on the curb, etc.) are so that we can live in a clean environment.  Failure to complete a chore will result in a loss of a privilege."

You decide what privilege your child will lose on account of forgetting or neglecting to do their chores.  Younger children will not want to lose their time on their tablet or computer(games).  Adolescents and teens will hate having their video game consoles put on ice or their smart phones taken away from them for a set period of time.

Why is it better to tie chores with privileges?  Simple.  When your kids begin to save their money from all of the allowance you have been giving them over time, they will not have the same motivation to continue to do chores.  They may think: Oh, I have enough money saved right now, I don't need to do my chores this week.

Money for chores is a bad tradition.  When your kids grow up and get a place of their own, will someone be paying them to do what's needed around the house?  No!  They will have relied for years on mom and dad to reward them for doing housekeeping essentials.  Some of these twenty-somethings have the audacity to call mom to come over and clean!  All because they never learned that chores are every household member's responsibility, without compensation.

You Want Your Kids to Experience Working for A Living

I can see why tying chores to money is easy to do.  Many parents want their kids to have the experience of getting a set weekly wage for a given amount of work.  Example: Vacuum once a week, throw out the garbage each time it's full, and do the dishes Tuesdays and Thursdays, and I will pay you $10/week.  Again, this is not how you want to do allowance nor how you should teach your kids about working for a wage.  No chores = loss of privileges.

Instead, tell your kids they have the ability to pitch a job to you.  Business owners depend on pitching their goods or services to new clients.  Consider your home a business, and your children freelancers who understand your business enough to pitch their services to you.  Encourage them to make detailed observations of what "your business" could use.  Could it use a window cleaning service?  How about a baseboard clean and paint touch-up service?  Does your backyard fence need to be sanded and repainted?  Encourage your child/teen to survey the backyard for potential areas that need servicing.

Then this is what I want you to do:

Have your child/teen write-up a quote.  It doesn't have to be complicated.  Tell them to:

1) Title their Quote.  Ex: "Quote for Cleaning Baseboards"

2)  Give you an estimation of how long they will take to complete the service they are proposing you need.  Ex: 1 hour, 1.5 hours, 2 hours, etc.

3) Give you a brief description of the service.  Ex: I will use a cloth, water, and some wood spray to clean all of the baseboards.

4) Give you a set fee (ex: $15, $20, $25, etc.) for their time.  Note: Do not let them quote you a per hour kids/teens will soon learn to procrastinate to charge more).  If you have more than one child/teen willing to offer you a quote of their own, ask if they would be willing to agree to work together and split the same amount of money.  Or you could make it a competitive setting and tell your kids you will select the quote that best works for your budget.  This way they know that in life, you can lose a job to a company that bids below your own bid.  Finally, be clear about quality of work.  Tell them that their bid is a contract of sorts and you will honor it; however, if they do a crappy job, make sure you tell them you will not be hiring them again in the future.  In other words, they create a reputation for themselves with each completed job. 

So now working has meaning.  It is not about a task that needs to get done every week (chores), but rather about going out and solving other people's problems for pay.  This may encourage some of them to go out around the neighborhood and see if lawns need mowing, or if Mrs. Jefferson, the retired widow across the street needs to have someone roll her garbage cans down the driveway for a couple bucks a week.  You see?  Another benefit of making freelancers out of your kids is that they'll think twice about blowing their hard earned money.  The best part is that any time they need money, you can now tell them to work for it! 

One last tip:

Start giving your kids chores as soon as possible.  By four they should have at least one chore.  Increase the number of chores as they age obviously.  Children can do a lot, so don't be afraid to pile the chores on.  Think about them farm kids milking the cows, driving tractors, etc.  They do chores before and after school.  You'd be surprised what a child can do without knowing any different.  The key is to start them young.

Thanks for being here and make sure to come back for our next episode!  C-los...out! 

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