Charting the Middle Ground with Kids and Money: Family Finance Picks #65

Charting the Middle Ground with Kids and MoneyStrong differences of opinion, extreme positions, insistence on “perfection” — they’re all classic roadblocks to progress. Just ask Congress!

Those classic roadblocks can get in the way of teaching your kids about money, too: strong differences of opinion between spouses, extreme controls on your child’s spending, a fixation on finding the perfect all-encompassing system.

How do you move beyond the roadblocks? Find some middle ground.

This week, each of my three picks illustrate the middle ground when it comes to some classic kids and money debates.

10 Popular Money Questions Answered

Maybe your spouse feels strongly that an allowance is a terrible idea — a work ethic crushing entitlement! Maybe you, on the other hand, view allowance as a simple, effective tool for practicing basic money management habits like saving and resisting impulse purchases. Instead, your spouse wants to pay your child a “commission” for doing chores. How else will your child learn to appreciate that money is earned through hard work? But, you worry that paying for chores sends the wrong message about pulling your own weight within the family. After all, nobody pays you to make the bed or fold the laundry! Do you want your child demanding payment for every little request for help? Nope.

You and your spouse are at an impasse. You can’t agree on a system, so you continue to be ad hoc or even inconsistent with your child when it comes to money. With no reliable, predictable income source, your child has no opportunity to practice good money habits.

What’s the middle ground in this case? Perhaps Jack Otter, the Executive Editor of CBS MoneyWatch and author of the book Worth It... Not Worth It?, has the answer for you. In this article and short video, he handles a rapid fire pop quiz on 10 common money questions. Among them is the classic: “Kids, allowance or pay for chores?” His answer is short and sweet: a modest allowance coupled with pay for “big” chores that are outside the normal, expected household duties.

Related FamZoo Activity: Set up an allowance and a (big) chore chart.
Discuss on FaceBook.

13 Things to Teach Your Children that Will Make Their Financial Lives Easier

You’re disgusted with all the focus on consumption within our society. The thought of kids running around with the latest, greatest shiny techno-gadgets or trendy fashion items turns your stomach. And now your child announces she wants to save her money to buy that bleeding edge, “insanely great” tablet computer. Absolutely not! You’ll decide what’s appropriate for your child to purchase. Everything beyond that — money from birthday checks, odd jobs, you name it — goes right into to her savings account. No questions asked. After all, you know best from your own experience.

The problem is: by withholding all financial decision making responsibilities from your child, you’re robbing her of the most effective teacher of all: personal experience. It’s awfully hard to learn a skill without some of your own trial and error.

What’s a good middle ground solution here? Relinquish some financial decision making responsibility to your child, but couple it with some smart spending guidelines to ensure an appropriate level of frugality. That tablet for example? Fine — as long she purchases a gently used one. As Gary Forman, founder of The Dollar Stretcher, advises in tip #1 of this excellent article: teach your kids that “hand-me-downs” are acceptable. That will lead to smart money decisions later as a young adult, like buying used cars instead of new ones. Read the rest of Gary’s list here.

Related FamZoo Activity: Agree on a savings goal with your child.
Discuss on FaceBook.

MintFamily with Beth Kobliner: Allowance, “Modern Family” and My Family

Budgeting is the cornerstone of personal finance. So you’re determined to teach your child that critical money management skill. Many experts recommend putting your children in charge of their own spending and tracking it relative to a budget. In a perfect world, that budget wouldn’t just cover pocket money for modest “wants,” but real world “needs” too: school lunches, birthday presents for friends, mobile phone charges, clothing, entertainment, you name it. And if your child mismanaged her budget? Tough!

In this article, Beth Kobliner describes why her “tough love” allowance/budget failed for her tween. She abandoned it, and went back to a nominal allowance to cover just miscellaneous “wants.”

That’s too bad, because I think there’s a middle ground learning opportunity in the real world “needs” budgeting department. There’s an approach that keeps things simple while retaining a little of the very effective “tough love” learning element. Just focus on a single, well-defined area of spending that your child truly cares about — clothing is a classic example. Work out a budget together focused on just that area of spending, allocate an allowance that matches the budget, and have your child manage spending within the budget. It’s far more manageable than an all-encompassing budget, and it teaches the basics of the skill effectively.

Related FamZoo Activity: Make and manage a clothing budget.
Discuss on FaceBook.

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 2,978 now!


Lou Rodriguez aka The Blog Post Author

Agree with your “tough love” statement in number 3. It's a missing ingredient that I see every day as an involved parent at my kids school. The word "no" is non existent and not only does the child not effectively learn what it takes to navigate the real world; the one outside of mommy and daddy, but the parent is failing in their job as well.

Hence, the sense of entitlement, instead of the rewarding feeling they should learn to achieve for a job skillfully and well done!

Bill Dwight aka The Blog Post Author

Lou, thanks for stopping by and sharing your thoughts.

Folks, Lou has some great posts about battling consumerism over at his blog: http://theamateurconsumer.com/ Check it out.

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