Keepin’ it real with this week’s three picks:
LearnVest interviews Ron Lieber who makes several excellent, practical comments about allowance in this Forbes Woman article. His key points include:
- wants and needs are a continuum worthy of ongoing conversation,
- the importance of giving kids the power to make their own decisions and the responsibility of living with the consequences,
- how a simple allowance for wants can eliminate toy-aisle meltdowns, and
- how to neutralize materialistic peer pressure.
My favorite quote from Ron is: “There is nothing like real dollars in the real world to teach real lessons.” Indeed!
Read the rest of the article here.
Related FamZoo Activity: Set up a modest allowance to constrain your child’s wants.
Discuss on FaceBook.
Here’s a solid article on teaching young kids about money with one caveat. At the end, Gail recommends: ”Get a piggy bank, as it’s a tangible way for little kids to understand money and saving, as opposed to an offsite, virtual account.“
I think a physical piggy bank is a great start, but the sooner kids understand the concepts of online banking and the fact that a balance in a statement or on the screen represents real money, the better. They’re growing up in an increasingly online world and need to understand how to handle all forms of money — from physical to electronic. We’ve found that kids as young as 4 or 5 easily grasp the concept of online banking — kids are pretty darn smart these days, they just need a little explanation and lots of practice making wise money decisions.
Gertrud Fremling, a PhD in Economics and a Mom of 5, shares her 7 economic principles for teaching her kids good habits. There are some clever and perhaps controversial ideas here — maybe keeping it too real for the kids? Keep in mind that economics is nicknamed the “dismal science”:
- No allowance, minimal TV, tightly restricted video/computer game time
- Pay for household jobs
- When multiple siblings want same paid job, hold a reverse auction — lowest bidder gets the job
- Let kids propose their own jobs
- Allow siblings to rent items like games and toys to each other
- Have long term contracts for things like agreeing to take care of a pet if purchased by parents
- Impose fines for violations like swearing or hitting a sibling
Read more about Gertrud’s 7 rules here.
We’re constantly scouring the Internet looking for articles related to family finances and teaching kids good personal finance habits. You can visit our ever growing list of family finance bookmarks here. We’re up to 2,981 now!