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It's Not About Giving Allowance, Paying for Chores, or Insisting on a Job; It's About Being a Money Mentor

Parents — and even parenting experts — argue endlessly about the most appropriate source of income for kids. I really think they're missing the point, or at least half the equation. When it comes to a finite resource like money, it isn't just how you get it, it's also how you use it.

Read this personal story from guest blogger Daniel Forsyth of DaddyDirection.com, and you’ll see what I mean. Daniel brings the unique perspective of a (very) young new father who, in light of his own money struggles and lack of financial guidance growing up, is thinking about ways to avoid the same pattern with his son by being a proactive money mentor.

Check it out.


Make That Allowance Count by Daniel Forsyth

Daniel Forsyth of DaddyDirection.com
Guest blogger Daniel Forsyth is the leader and dad behind the dad-parenting blog www.daddydirection.com. Check out his blog for more money saving and dad specific techniques.
Everyone wants the best for their children. We want them to have a great, happy life growing up and continue with that experience later on in life. We want them to make the best decisions possible so they can have the life they want. It all comes down to what we as parents teach them. A huge aspect our kids will be faced with in life is financial decisions. My parents never talked to me about money, and therefore I ended up making some pretty bad, debt-piling decisions. Yes, at times I had an allowance and a job growing up. But is giving a kid a few bucks a week going to really teach them how to be smart with their money?

Being a young and brand new father, I have a huge goal in life to make sure my children know everything they can about money and how to use it properly. Some people might not see this as important or effective when it comes to kids, but let me give you some history. First, since I was never taught about saving money, I blew every single dollar I ever had. I would accumulate hundreds of dollars from birthdays and holidays and by the next week it was gone. In high school I was able to get a construction job. I was making $500 a week for 3 months every summer. That is about $6000 a summer and I did that for 3 summers. I still have not a penny to show for it. Then college came. I wanted to get away and as far as possible from home as I could. I got a scholarship to play soccer for a private school in Kansas. Even with the scholarship, I ended up paying a good $25,000+ a year for school. I will now be paying off student loans until I retire. Fortunately, I was never able to get a credit card, which I am sure would have been just as devastating. I would have spent that until I had debt collectors at my door every day. I had a part-time job in college. That did me no good as it went to needless food spending and social weekend activities. I should have just invested in Budweiser with how much money I gave them.

The problem was I saw my parents doing the same thing. My mom and stepfather never had any savings and lived paycheck to paycheck. They spent all their money on pointless things they couldn’t afford. They are now in their late 40’s and have not a thing to show for it. They now rely on my grandmother for money.

My dad and stepmother were different. They both had very well-paying jobs, making well into 6 figures each year. Still, they never talked to me about money. They were never crazy spenders, but they had the money, so why would there be a need to live on a budget? I had four sisters growing up (one stepsister the same age and 3 younger). We were all well fed and taken care of, but I now see them making the same exact mistakes I did.

So how do we avoid this? How do we, as parents, get our kids to avoid such pitfalls and debt?

We can start by starting small. Try to apply how you save and spend your money to them. Give them an allowance, but teach them how to save it. Make them think logically and thoroughly before they buy something.

Start with an allowance

Tour33PSPAI have heard many people don’t like giving an allowance and kids should just work for the roof over their head and the food on the table. On the other side, I have heard parents think it is great to give kids money for doing work around the house. I grew up in a divorced household, which means my mom gave me an allowance for chores while my dad thought I needed to earn my right to live. I saw both sides of the allowance situation. Since I was not taught to save or spend wisely, I spent my money on candy and unnecessary toys. If I was taught to use money, an allowance would have been much more beneficial.

Set goals

Delayed GratificationAnother thing I was never taught: setting savings goals. I racked up quite a few hundred dollars each holiday and birthday. None of it went to savings, and it all went to junk I did not need. Then my job hit and I became an even larger spender.

When you start giving your kids their money or allowance, sit down with them and have them think about some things they want. Write down 3 things and list them with the “want” they want the most first. Put it next to their piggy bank or where they can always see it. Each week, have them write down how much they have and how much they still need for their “want.”

Another way is to buy some things you know they want ahead of time. Buy a box of those Legos or dolls they want and separate them into equal bags. Make sure your child knows each bag costs X dollars, let’s say $5 for example. At the end of the week, have them check their money to see if they earned enough that week to buy a bag. If they are close, maybe negotiate with them and see if they want an extra job or two to do.

Teach them interest

Teach Your Kids the Power of Saving with Compound InterestInterest can generally be seen as a negative concept. We buy something on credit and end up paying hundreds more than the original price. But, what about your savings or retirement accounts? They accumulate interest over time. The more you save and put in, the more you make on interest.

Give your kids the same incentive to save their money. Work out a ratio, such as a quarter for every $5 they have saved each week. Teach them that the more they save, then the more quarters you will have to give them. Do they want to waste $5 on that toy now or wait and have $5.25 at the end of the week? This idea will help them save more because they will realize there is more money waiting for them if they save.

If you teach your kids to grow up making smart financial decisions, it will carry on for the rest of their lives. They will always remember to think twice about buying something and think about the implications of buying now or saving for later.


As we say on the FamZoo Philosophy page: “we believe a parent is a child’s best mentor.” Kudos to Daniel for taking that role seriously at such an early age. We wish Daniel the best of luck with his young family. Follow his progress at DaddyDirection.com.

Do you have some of your own favorite tips on being an effective money mentor? Share them with us below.

2 comments:

Mama Marlaine aka The Blog Post Author

Standing Ovation Bill and Daniel! Every single societal ill has roots in an inferior educational process. This article speaks brilliantly to the topic of transitioning from passive to proactive education in the area of finance. Popular though the saying "Children learn what they live" is, as teens and adults we can continue learning and not remain forever children.

As Daniel demonstrates, parents need not be limited by their parents' knowing. Teaching children that Life Skills education is a life long process - and we too are learning and improving daily - is the best role model we can provide future generations. Thank you both and especially you Bill for giving Life Skills Educators everywhere a priceless tool in FamZoo.

Bill Dwight aka The Blog Post Author

Thank you for the nice comments Marlaine!

Those who are interested in the broader topic of life skills education should check out Marlaine's site http://www.lifeskillsreportcard.com and join the ongoing discussion on the Parenting 2.0 LinkedIn group.

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