I know I have mentioned before that my husband and I have experienced a financial conversion of the Dave Ramsey sort. We are trying to “live like no one else so later we can live like no one else”… actually, for us, it’s more about having a sense of peace and rightness when it comes to our finances. But, it won’t hurt our feelings if we end up with more money than we ever thought possible. In fact, I’ve thought of several things I’d love to do at that point.
Ahem. Back to the topic at hand.
If someone handed your child a $100 bill, what would he do? Think about it for a minute.
To my eight-year old, Ladybug, this sounds like an almost mystical amount of money that would buy doll clothes and Lego sets galore. To my almost ten-year old, Butterfly, this sounds like a nice sum to have in her wallet. To thirteen-year old Legoman, this just represents a new larger than normal Lego set. Honeybee (15) sees the pile of makeup she can buy while saving some to spend later. I know what they would do with $100.
In the last week I have had conversations about children and money with at least three different people. Each person had a different quandary and perspective. One lady bemoans the fact that her children don’t want to do their chores. Another worries that her children won’t know how to handle money when they have to be responsible for themselves. The third situation has teenagers who don’t realize the potential of their paychecks. These are not small issues, and they certainly aren’t uncommon. They are problems that my family has struggled with for several years.
My husband grew up with an allowance of sorts. He was allotted money every month for bus fare and that sort of thing. I, on the other hand, never had an allowance. If I had a school trip my parents would give me money for food. I never had to worry about that. If I babysat or worked I was allowed to use my money how I wanted. Since I never tried to do anything bad with it my parents never got involved.
So when it came to our kids we had some discussing to do. We both wanted them to learn how to manage money. It’s an essential life skill. It’s very hard to have real peace when your money manages you instead of the other way around. My husband wanted to give them an allowance, with the admonition that they were not allowed to ask us for snacks, candies, or toys if we went to the store. I, being my parent’s child, did not really want to just give them money, but I also didn’t have any other bright ideas. So we gave them each $10 a month. We had two requirements: 10% for tithing, 20% for savings. That left $7 to do whatever they wanted, within reason.
Every first of the month, without fail, we experienced the same thing.
“Mom, can we go to Wal-Mart?” they’d implore. “Please!?!”
At Wal-Mart each one would agonized over which cheap toy to buy or how many candies to buy. My words of caution fell on deaf ears. Not one of the four was worried about being able to buy candy later or saving money to buy a nicer toy in a month or two. Then for the rest of the month they’d whine about wanting a candy when we were in the checkout line. My husband hardly ever went through this experience since he almost always was at work. So he was a little surprised after six months when I announced that I wasn’t giving money to the kids anymore because they weren’t learning anything except spend, spend, and spend.
Like Dave Ramsey says, doing the same thing over and over again and expecting a different result is insane. Every month I’d hope our kids were learning something, but they never did. When I stopped handing them free money their world stopped for a while. I’d hear comments about if Mom would still give me an allowance I could do/buy (insert something)…. No one appreciated me for a couple of months.
Flash forward to fall of 2014. My kids were older, but still money foolish. And asking for help with chores? Like pulling teeth. I was frustrated with their sense of entitlement. And I didn’t really know what to do about it that would be effective.
All of that changed as my husband and I began to take Dave Ramsey’s class. When we began to see the hope of actually controlling our money and making it work for us, it became so much more important to us that our children learned too. As I have tried to be more intentional in my approach to life it just made sense to be intentional about teaching my children about money. Dave Ramsey gave us a solid plan for helping our kids. I’m sure some of you were smart enough to think of this on your own, but I wasn’t.
His plan: pay your kids for doing certain chores. If they don’t do it, don’t pay them. Require them to help with other chores for free because everyone should help out at home. When you pay them help them set aside 10% for giving (in our house we tithe) and 20% for savings. Sounds so simple, but will it really teach our kids how to handle money? You better believe it!
As I was learning about the plan my very first reaction was that I could not afford $80 a month for paying my children. But, as I worked on our budget (I’m the nerd in the family so we did have one) and began to see the benefits of the plan, I began to see the wisdom in having my kids learn this so early that budgeting, giving, and saving are an automatic habit. How could I afford not to do this?
I modified his plan to fit my family circumstance. Each job I assign is worth a dollar, no matter how easy or hard. It’s easier for me that way. Each week my kids are assigned five paid jobs. If they do them they earn their money. If they don’t, they don’t get it. Every two weeks I pay my kids for the jobs they have done. Each of our four children has two envelopes and a wallet. One envelope has Tithing written on it. The other has Savings written on it. The wallet is for spending money, of course. On payday they get their money and put one dollar in their tithing envelope and two in their savings envelope. The rest is for whatever they feel like buying, although I have retained the power of veto since I am the one who takes them to the store. (Legoman, reading over my shoulder, said, “Yeah, you do!” Mostly it comes in the form of gentle persuasion though…)
At first we had two reactions. The first was disbelief that I would actually make them work. The other was pure excitement over the possibility of having money to spend. Almost immediately they expressed concern over the kind of jobs I would assign to them.
I started them off with relatively easy jobs like taking out the recycling, emptying the dishwasher, and running the vacuum cleaner. We’ve added loading the dishwasher (a real step for me since I am incredibly picky about things), sorting the dirty laundry, cleaning the sink and toilet, cleaning the shower, mowing the yard, folding towels, folding jeans (again big steps for picky me!), changing their sheets, and making dinner when Mom and Papi go on a date. There might be more, but I don’t remember them. I don’t assign things on a rigid schedule. I decide what I want done on a daily basis and write it on the chore chart. And I inspect the jobs too. There have been a few repeats.
The first payday I was a little apprehensive. Flashbacks to my previous experiences haunted me. When it was time I sat down with my kids and counted out their money. I helped them get envelopes (something they had been watching me do for a month or two) and separate their money. Someone asked me to go to Wal-Mart. We went. Something interesting happened. They all decided to buy one candy and keep the rest. It was so much harder to justify a cheap toy when they had worked hard for that money.
I have watched them develop their financial skills. Butterfly has learned the joy of saving her money. She was saving for a Kindle Fire, until my husband and I decided that we didn’t want our children to have such devices at young ages (a whole other story!). That left her high and dry with about $100 in her spending money. When she asked to go to Wal-Mart I wanted to cringe, but we went. She spent about 30 minutes analyzing the Lego Friend sets. She really wanted the cruise ship, but she could not bring herself to spend the $75. She ended up buying the high school set that was on clearance for $35. She recognized the effort it had taken her to save that much money. Just recently she finally decided to spend that $75 on the cruise ship. It took her six months to decide it was worth the price.
Legoman still wants to spend his money, but he has learned the value of saving it for a while to get larger Lego sets. He’ll never have enough Legos, I think…
Ladybug likes to spend hers too, but she is learning the joy of saving for bigger purchases. After Christmas she decided she wanted a My Life doll from Wal-Mart (they are a much less expensive version of American Girl dolls). They were on clearance for $17, but she had already spent her money. She saved and saved for an eternity (about one and a half months) until she had enough. Of course by the time she had enough, they were not on clearance. (I knew that was going to happen so I had purchased one for her birthday in June and hid it.) Instead of encouraging her to save more (another month) I told her she could ask for it for her birthday. She happily spent her money on something else. Her birthday rolled around and she received the doll and loved it. But soon she wanted another because it was lonely to play by herself. Butterfly was willing to play, but she wasn’t about to buy a doll! It just so happened that she was given some money later that gave her enough to buy a doll at full price, so we went to Wal-Mart. She choose a beautiful doll. I bet you can’t guess which one she likes better and which one Butterfly ends up playing with!
Honeybee, well, she had already developed the habit of saving up for bigger purchases. Now she is having to learn the habit of budgeting so she can replace her eyeliner and mascara as needed. (SIGH!) The other day she asked me to take her to garage sales to look for clothes. She has learned that her money goes a lot further when buying gently used clothing. This makes me happy.
It has made all the difference in our children. Not only are they learning important skills, they are learning to value their money. They are learning to give and to save for later because we let them do their own tithing at church and we take them to the bank so they can hand their money to the bank teller. Their sense of entitlement is dwindling as they gain a sense of accomplishment and self-worth. What great bonuses!
The lady whose children don’t want to do chores might find a lot of motivation if their money gets tied to doing chores. The one worried about her children knowing how to handle money probably wouldn’t worry as much if she started teaching them now by having them earn some. And the teenagers wasting their paychecks would learn valuable lessons if Mom and Dad made them buy their own gas, clothes, and other necessities.
Maybe it is tough love, but it is working for my family. What are you doing to teach your children the value of money?
Smart Money Smart Kids by Dave Ramsey and his daughter Rachel Cruze is a great resource on this topic. The Total Money Makeover is another great book, although I would recommend getting the workbook that goes with it.