We’ve reached an exciting milestone in our house — the Monopoly era. Our kids are finally old enough to sustain interest in the world’s slowest board game.
I’m excited, because up until now, I have neglected my civic duty to teach my kids about money. Monopoly is filling this gap nicely by introducing them to the world of mortgages, rent and the art of strategic (often punitive) negotiation.
I haven’t been actively withholding financial literacy from my children, per se. I just don’t feel an urgency to teach them about money. To me, it falls into the same category as ballet classes for toddlers; I don’t believe I’m dooming my daughter to a danceless life if she doesn’t enroll in “Tots n’ Tiaras.”
Most financial gurus, however, disagree with me. Dave Ramsey says that you should begin teaching kids about money — primarily by paying them for household chores — as early as preschool and “no later than 3rd grade.”
Suze Orman warns that if I give my kids a “no strings attached” allowance I will encourage them to be “entitled,” a term that has been search engine-optimized to get parents riled up.
But I’m not buying it. My kids are young (my oldest is going into the 4th grade) and I think, at least for for now, that the lessons they would learn from getting an allowance or being paid to do household chores are more damaging than the potential gains in financial literacy. Here are a few of those dangerous lessons:
Lesson 1: Spending money on stuff you don’t need is fun!
Because my kids are little, my husband and I provide for all of their needs. This means the only things my 7-year-old spends his money on are “wants.” Unfortunately these wants are mostly created from commercials and product placement. In short, junk. When he took his birthday money to the dollar store, he was determined to spend his money — on anything. All he’s learning is Consumerism 101: The important thing is not what you buy, it’s that you buy.
Yes, we have our kids separate what little money they get between saving, giving and spending, but the concept they absorb most clearly is spending. Even “saving” becomes “spending later!”
Lesson 2: Better work = better money.
LeBron James gets paid much more than your child’s teacher. Does this mean he does better work? Brad Pitt gets paid more than our local garbage man, but I can tell you whose absence I would feel more keenly. Maybe I have a personal issue with this because I don’t get paid for anything I do. Does this mean my work isn’t good?
Instead of setting up this simple formula, I prefer to teach my kids the true rewards for good work: pride, a sense of duty, a feeling of accomplishment. If you haven’t watched the TED-talk by Dan Pink, you should. He explains that the best motivation is intrinsic — the impulse that comes from inside. We do our best when we find a task challenging, or interesting, or because we want to be a part of something important. Letting a child work alongside you as you create your family life is a better motivation them sending them off to wash windows for a quarter.
For most of their lives, my kids are going to bombarded by external motivations: grades, trophies, honor rolls. I want them to first learn at home that we do things well because we want to do our best regardless of who is watching and rewarding.
Lesson 3: Money is a way to control people.
I know myself. I would be tempted to use money as a punishment. I can already hear myself saying, “If you don’t make your bed, that’s 25 cents off your allowance.” I don’t want our parent-child relationship to become a business relationship.
Because in the real world, you would not have to put up with a boss who says he will pay you, but if you’re naughty, he doesn’t. Instead, you would leave that job or you would be fired. I’m not taking applications for new kids.
I have no problem with my kids working for someone else. I gladly pay our neighbor’s kids to house-sit our cats and would welcome an opportunity for my kids to do a similar job. Because that’s what it is: a job. Our family life is not a job; it’s a workshop for building the kinds of people who will do hard work and make wise decisions, independent of the money involved.
I freely admit my financial parenting philosophy will evolve as my children grow older and their financial needs get increasingly complicated. For now, I’m going to enjoy this money-free zone for as long as possible.
Instead of teaching them with dollars and cents, I try to teach by example. When I make a grocery list, I talk about how I avoid impulse buying. I explain that we can’t buy a new car because we’re a single income family and the old car works fine. And before I buy something, I ask myself out loud, “Do I really need this or would my money be better spent somewhere else?”
I know my kids are listening, and, of course, amassing Monopoly money to test their own buying power.
QUESTION: What’s your philosophy on allowances? How do your children pay for what they need and want? What are the advantages and disadvantages of your current system?
CHALLENGE: If you’d like help figuring out a family economic system, check out our Work and Money Program.
Image: kongsky / freedigitalphotos.net
I appreciate this so much. A “Family Economy” just hasn’t felt right for our family yet (4 kids, ages 2-8). You put into words what I have felt in my heart, that we are doing just fine without it. For now.
I love it when I can “put into words what someone has felt in her heart.” No higher praise for a writer 🙂 Thanks!
I can respect your feelings and totally agree with you on most of your ideas. One thing I do know is that everyone goes through the spend everything you make on junk stage at some point in their lives. We have a family economy and I have watched my children evolve from spending all of their money on candy to saving everything to finally buy that expensive item (a kindle, a large lego set, etc). It’s amazing to watch them mature financially. I’d rather have my kids go through the blowing money stage when it’s only a few dollars, and learn for themselves first hand the principles I’m teaching by example.
I thought this article was great, but I think you make an excellent point! There are lots of mistakes that, if we’d allow them to make when they’re young, the cost would be so much less. (And I’m not just talking money mistakes) My worry is (and I’m just wondering *aloud*, not disagreeing, actually) – what if they don’t learn it? And then I’ve just helped encourage something I never meant to… Such a balance, huh?
Even though I feel differently than you on this topic in general, I love that you made me reexamine our household financial policies. 🙂 We have four children with our oldest also in 4th grade and we give the oldest three a small allowance in order for them to have experience with money -saving, giving, spending. We also like that we can use it to teach ongoing lessons. The thing I realized after reading your article was that I’m not giving them enough autonomy in how they spend. I’m pulling way back in order for them to better learn through trial and error. Thanks for making me think and all the good ideas!
For us it isn’t about the money we are paying them, because it’s minimal. it’s about teaching them to save, to open a savings account, to save for those wants (it’s okay to have wants and it’s a good feeling to earn them). My oldest is now 15 and is very responsible with money and has a great savings account at this point.
Thanks for your comments, everyone. I love that this is a space where we can respectfully disagree with each other and always learn from each other. It’s refreshing to find a safe space for talking about our ever-evolving parenting practices.
Great thoughts–especially Lesson #1. Even for me, “save” often means “spend later”; I think it’s especially hard for young kids to understand that lesson, since chances are, they’ll never need to cover necessary, emergency expenses.
We started our kids on allowances (which they earn) when they were 10. I’ve been pleasantly surprised by how generous my children are with their own money. They save up money to buy presents for their siblings and friends and donate to charity (above the donate/save/spend threshold). I think the freedom of having their own money gives them the freedom to be generous. It’s a benefit I hadn’t anticipated, and that makes me feel like the allowance is worthwhile.
I love your article!! In some ways,that is kind of what we have done (whether I had thought it thru or not!). One other thing we tried for awhile (after reading some book where this is what they did) was pay the kids for reading. I would give them different prices depending on the book and depending on the child. sometimes I would flat out say (to the tweens) “I will give you $5 for reading this book because I really want you to read it!” The prices varied from 50 cents up. They were supposed to keep a reading list for me to see…but they eventually stopped keeping lists and asking for the money, though thankfully they kept up the reading!! I prefer them to get jobs that are paid by someone else! 🙂
So glad you referenced Dan Pink! I read his book, Drive, just recently and loved it. Everything in it rang true from my own education and work experiences. This is a great article. Thank you!
I agree with this. I don’t get paid to do laundry. I do it because it needs to get done. I want my child to participate because we all contribute towards household responsibilities.
My kids are paid for “extras”….working with Dad for the day(outside the house), etc. My problem comes when it’s time to deal financially with our 10-yr old foster child. We were told recently by his social worker, that they gave us $1 per day more in our stipend that is to be given to him as an “allowance”. When I inquired as to WHAT he needs to do in order to earn this money, I was told it’s automatically his; I cant withhold it, and he can spend it on whatever he wants. He could feasibly lay in bed all day (hypothetically) and be handed $30 at the end of every month for doing NOTHING. Because my 3 kids are close to him in age, how do I explain the irrationality behind this money?