Daily Excerpt: Clean Your Plate! (Bayardelle) - Chapter 1: Need any money?, Part 3
/Excerpt from Clean Your Plate! (Bayardelle) -
Chapter 1
Do You Need Any Money?
(continued from November 22, 2024)
The Need for Need
We’ve discussed the “supply” end of your kid’s finances, but the “demand” side should also get a little bit of attention. The point of having a financial system is to teach your kids how to manage their money as an adult, but they don’t have those pesky expenses we have as adults. We grown-up folk go to work every day because without our salary we can’t afford things like food or rent. This is a pretty significant motivator. Unfortunately, there’s no driving force quite so urgent in your child’s financial ecosystem. No matter what chores they do (or don’t do), you’re going to pay for their food, housing, school, and other necessary expenses, so why bother taking the garbage out?
This is when the art of creating valid needs comes in. You never want to deprive your child of the necessities, but you do want them to have an actual need for things that they have to buy for themselves. Without the motivation of an actual need, they won’t have much incentive to earn money for themselves and, consequently, won’t learn the lessons they need to be learning. That’s where you come in. You can start small, especially if you have little kids. Make them pay for a portion of their own toys. Put them in charge of buying their own candy if they want an extra snack when you go to the grocery store. You don’t have to do anything too extreme, but take a tiny percentage of their “needs” and give it to them to pay for.
Now, you want to make sure they have enough money to actually do so relatively consistently, so balance their total allowance amount with the total cost of the expenses for which they’ll be expected to foot the bill. As they get older you can gradually increase their scope of responsibilities (as well as their allowance) to match their growing level of responsibility. For example, while a toddler might only be able to be responsible to earn (and save) for extra pieces of candy at the supermarket checkout during your weekly grocery runs, an elementary schooler could reasonably be put in charge of their entire toy budget (i.e. “if you want the toy you can save up and pay for it”), a middle schooler could start paying for their nonessential clothing (maybe everything except purchases during a major trip at the beginning of each school year), and a high schooler could be responsible for pretty much everything but food and rent. The idea here is that their allowance and their responsibility level both grow over time, but the proportion between the two of them should stay pretty consistent over time, Basically, you want their fixed allowance to be 80-90% of their total expenses in a normal week. This means that they still have to do some of their a la carte chores in order to get absolutely everything they want. If they have a busy week, they can just do the minimum and still get by just fine, and if they have a high-expense week (like end of-the-school-year parties, holiday gifts for friends, or some expensive toy they really want), they can make it up with extra chores.
One Important Caveat (That Can Throw the Entire System Out of Whack)
This is all well and good except for one thing that can render our entire system null and void. Sometimes we are not the only source of money in our kids’ lives. If you have relatives who like to spoil your kid with exorbitant holiday or birthday money, if you co-parent with someone out of your house (i.e. sharing time with a former spouse), or if your kid has any other ways of coming into money, it can ruin the system for one simple reason: it only works if your kid actually needs the money. If your kids have more money than they know how to spend, they will have little to no incentive to do their mandatory chores, not to mention do extra.
If you have another party who is funneling cash to your kids, you might have to come up with some supplementary rules to ensure your children are still learning the right lessons about responsibility, saving, and the fact that they’ll have to work hard to earn money as adults. Possible fixes here include mandating that all extra cash has to go through you, insisting that your children save a certain percentage of the money they get as gifts in a long-term savings account, creating certain expenses that have to be paid with money they earn through you (e.g. they can’t use gift money to buy things on your Amazon account, only money earned in the house), or just making them responsible for an even larger range of expenses (if the external money is consistent enough).
There will be the occasional child who just really loves to save. These super-human exceptions are my spirit animals, and you generally don’t have to worry about teaching them financial skills. You may have to worry about them taking over the world, but that’s really a different book.
A Note to the Thrifty Budgeters among Us
It may not have escaped your notice that even money your kids “earn” usually comes out of your budget. If your kids’ tastes run to the extravagant and they have the time and energy to do all the chores in the world, it can actually run up a pretty large bill for you as the parent. It is at this point that you get the happy duty of teaching your child the joys of entrepreneurship. Almost regardless of your child’s age, there are ways to earn money outside of the house. Whether it’s an elementary schooler running a weekend lemonade stand or a high schooler getting an after-school job, it is possible for your kid to earn money that doesn’t come from you. If your child’s chores are starting to become a serious line item in your family budget, it is totally reasonable to put a cap on the amount of money they can earn inside the home. Make sure you explain why they have this extra regulation (be cause they should definitely understand that money doesn’t grow on trees for you, either) and help them find external ways to earn money, but never feel guilty for making your kids operate within the financial realm of reality.
Cheat Sheet
Okay, let’s break it down. This is the section where I give you actionable tips and practical strategies for how to implement everything we talked about throughout the chapter.
• Think out your system before your children ask for money. If you try and create a system when your kids already have dollar signs in their eyes instead of pupils, you’re too late. (If this is you, it’s still possible to get them on a system, but you’re in for a bigger battle. Sorry.) When your children get to be around the age when they start understanding the concept of money (somewhere between ages 3 and 5), sit down and create a financial system for them that handles chores, allowance, extra spending cash, savings, giving, and all the other financial hurdles you’re going to encounter. Taking 30 minutes of preplanning will save you roughly a decade-and-a-half of heartache.
• Some chores should be completely mandatory without any financial compensation. The type of chores that benefit your kid the most in the long term will be the ones they do to help out because they’re a part of the family. Make sure you have a few jobs for your kids that are completely divorced from money, bribery, or other rewards. To get the full benefit, these chores should be things that help out the entire family (like cleaning common areas, caring for family pets, etc.), not self-serving chores (like doing their own laundry or cleaning their room).
• Don’t pay your kids for anything if you want them to ever do it for free again. Paying your kids for something will kill their intrinsic motivation to do it. Paying them for reading? Congratulations, they may read like crazy when their wallet is empty, but they’ll never pick up a book for fun again. Only pay for boring stuff like taking out the garbage, helping you stuff envelopes, and other tasks that are already pretty dull.
• Create a chore chart with an allowance that covers eighty to ninety percent of your kid’s expenses. You want to make sure your kids have some needs that aren’t covered by their basic allowance. This means they have to consistently engage the part of their brain that says, “You need to figure out how to make more money.” Whatever financial habits they build as kids will set the stage for their financial behavior as adults, so make sure they are developing the right habits.
• Help your kids with giving. Giving away their hard-earned money is not necessarily instinctive, but you want your kids to grow up thinking of people other than themselves. The average person donates roughly 5% of their income to charity (“Sam”, n.d.) while some follow the Biblical rule of tithing 10% (Ramsey, n.d.). Whatever decision you make as a family, hold your kids to it. Don’t let them draw into their “giving” money to fund their own purchases. That said, help make giving fun. If they like dogs, help them google animal shelters, and then let them walk their donation in in person so they can pet the dogs they’re helping. Find a way to make giving personal, enjoyable, and fulfilling, and you’ll help create kids who care about more than just their own purchasing power.
• Be consistent, and don’t give in. The thing that can kill the lessons of a chore chart faster than anything is a parent who doesn’t stick to the system. If your kid knows you’re going to cave the first time they come to you with big puppy dog eyes and a sob story about how all their friends are going to the movies and they can’t afford to go, then they won’t have the necessary motivation to actually earn the money for that movie ticket by themselves. They don’t have the urgency of a potential eviction or the fear of having to live off of ramen to motivate them, so it’s your job as a parent to create as much motivation to earn as possible. This is what’s going to drive them to start practicing the good financial habits you want them to learn.
• Actually, use a physical chore chart. It’s important for kids to have a tangible way to record stuff. Whether you create one yourself or use the template I referenced earlier, have something that your kid can physically see, hold, and consult.
For more posts about Liz and her books, click HERE.
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