Monday, December 13, 2010

Hey Kid, Get Your Hands Out Of My Pockets!

This morning, I read a blog post from The Family Wallet, entitled, "Mooching Kids?? How to Set Financial Limits." In this post, the author talks about how youngsters can grow up believing that parents are simply an extension of their own piggy banks. When the child runs out of resources, they turn to mom and dad for help.

Does this sound familiar?

In a recent article, Fatherhood: When To Start Teaching Life Lessons?, I talk about making that childhood transition from being cared for to caring for oneself. Financial responsibility and intelligence is a must for adults, but when should kids first begin this lesson?

Based upon my own experience, and child's maturity level, I found that my son reached this point at age 12. By the time he became twelve, my son was in middle school, transitioned into Boy Scouts from Cub Scouts, and was able to successfully demonstrate his ability to make his own meals, get dressed, and manage basic personal hygiene tasks alone. Although, he still needs a quality check from time to time.

As it pertains to personal finances, I found that my son recognized money, but had little understanding of its value. When things got broken or misplaced, he showed no signs of disappointment or loss. Instead, he expected his parents to simply replace it. No matter the cost.

This concerned me. For one, we don't have an unlimited amount of money, and two, I feared he would grow up with a feeling of entitlement. As if we owed him something.

To combat this issue, I thought to include the following tactics into my personal parenting arsenal:

  • Earn Your Keep: While providing food, shelter, clothes, and other necessities is a must, paying for school pictures, trips, toys, and games is not. Yes, they may be fun, educational, or just filled with good memories, but these types of things are extra. They are privileges, not a right! If the child is interested in partaking in these things, they need to earn it.

    "Earning" the extra stuff can be acquired through good behavior and personal savings. Instead of paying for a new Wii game outright, I will provide my son with work that pays. Assuming he starts soon enough (time management), does enough tasks (money management), and behaves, he'll be able to acquire or attend desired object/event.

  • Fines: As the Federal, State, or Local governments will do to us, we can impose financial fines for poor behavior or lack of quality control.

    One of the few chores my son is asked to do is wash dishes. His mother complains that he does a poor job of washing them and fears she might contract some disease as a result. To remedy this, the parent can deduct money from a paycheck in the form of fines. For every dirty dish, deduct $0.25, for example.

  • Job Description: As with any job, the child must understand what is expected of them and how much they will receive, if done right. To achieve this, simply create a written document that outlines the tasks and expected outcomes. By having it in writing, the job description will help minimize disputes when they arise. Trust me, they will arise.

  • Allowance Schedule: Similar to an adult pay day, kids will look forward to a regular and consistent schedule for receiving their allowances. Assuming all tasks were done according to their job description, pay them in full and allow them to manage their own money. Failure to have enough money for special events or toys means that Daddy or Momma will not "fill in the blanks."
These items are just a few ideas for communicating the value of money and financial responsibility. Although, I recognize this is not an exhaustive list. What ideas do you have? What do you find works really well in your house? Let me know in the comment section below.

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Damond L. Nollan, M.B.A.

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