Parents - Stay Strong at the Store (Allowance Tips)

Guest Post by Raine Parker

Raine Parker approach me about doing a post on youth financial literacy.  We agree a some things (setting goals, starting early and the importance of allowance) and disagree on others (chores vs. no chores).  Have a look and please comment to let me know what you think.  Enjoy!

5 Lessons Children Can Learn from Getting an Allowance

I'm a firm believer in giving a child an allowance even for children as young as four and five! Why? Because it teaches them the concrete value of money as well as effective money management techniques at an early age. Allowances also provide many opportunities for teaching children specific lessons about money. Here I will discuss five key lessons your children can learn from getting an allowance.

1.) "Money is something you work for." 

I don't condone giving a child an allowance without giving them some sort of age-appropriate chores or responsibilities around the house. This way they learn that money doesn't just appear out of nowhere. Four- and five-year-olds can make their own beds, pick up their own toys, set and clear the table and even feed pets. With help, they can even do more "grown up" chores like sweeping, unloading the dishwasher or drying off dishes with a kitchen towel. You might even send them throughout the house to gather any trash and dirty dishes to bring to you. Older children can do more difficult chores, like taking out the trash or vacuuming. The key is that they associate doing these simple household chores with the money they receive at the end of the week. If your child doesn't want to do chores one week, make it clear to them that they will not receive an allowance that week. You'll really drive the point home when they beg for toys or treats at the store, and you tell them, "You haven't earned any money for that toy or treat this week."

2.) "You save money to get the things you want." 

Speaking of saving for toys, giving a child an allowance is a perfect opportunity to teach young children about saving. You may even want to give them an incentive to save at first like matching dollar-for-dollar every little bit they save in a jar in your child's room. When your child points out a toy that he or she particularly wants, ask them how much they have in savings (when they're old enough to count). You don't have to make them pay for the whole thing at first, but at least encourage them to pay for half of the toy out of their own savings. As they get older, they can pay for certain toys in their entirety.

3.) "It's important to give money too."  

Allowances are also a perfect opportunity to talk to your child about charitable giving. If you are a church-going family, train your child to give a little of his or her allowance to the offering plate and explain that the money helps the church pay its bills. You may even want to encourage your child to use the money to support a child in a third world country through a nonprofit organization such as World Vision or Compassion International. To make the giving lesson more concrete, you can take your child to your neighborhood food bank or other local nonprofit organization and explain how giving some of the money from their allowance helps people in need.

4.) "You can save money toward a big goal." 

Let's say your child wants something a little pricier, like a certain Wii or PlayStation game. You can talk to them about saving their allowance toward this big purchase. You can print out a picture of the game on your printer and tape it on the wall above their savings jar so they can keep their goal in mind. This will encourage them to save little by little until they can afford their big-ticket item.

5.) "Money is something to be grateful for." 

When it's the day your child gets his or her allowance, teach him or her to ask politely for their allowance and to say thank you once they've received it. Explain to them that not all children receive allowances and that it's something that mommy and daddy have to work hard for. Encourage them not to brag about their allowances at school and to share their allowance when necessary by buying little things like snacks at a convenience store for a friend.

In conclusion, children can learn many valuable lessons by receiving an allowance. These are only a few examples. What lesson has your child learned in the past few months?

By-line:

This guest post is contributed by Raine Parker, who writes on the topics of online accounting degree.  She welcomes your comments at her email Id: raine.parker6@gmail.com. 

Build Good Habits Early - Why to start now!

It's gratifying that more of my friends are asking me about starting their kids on an allowance program at the ages of five or six. I think those are great ages to start (even four for younger siblings as they like to mimic the older ones). More and more of them are getting the message that building good habits early will help them avoid having to break bad habits later.

I thought it prudent to share some of the ideas I've been sharing with my friends. Here are five really practical reasons for parents to start teaching kids about money that I've learned from personal experience as a parent:

1. A Strong Foundation - Building good habits early (which includes making some minor mistakes along the way) will help you avoid having to break bad habits later (or REALLY big mistakes).

2. Have Mall Fun - A good allowance program will make trips to the store or mall so much easier. When your kids ask you for something, you can tell them to save for it. You might get a few tantrums when you first start doing this, but if you stick to your guns your kids will get it.

3. Goals are Good - Setting goals is essential to teaching kids about money (that's how they deal with #2) and is an incredibly valuable life skill for them to learn. Set goals together. Note to self - follow your own advice more often on this one.

4. Confident Kids - Money is subject to so many taboos, not the least of which is discussing the stuff within the family.  Set an allowance, give them cash to handle and discuss making choices, needs and wants and other essential money concepts.  It will help make them more confident consumers when the subject is brought out into the open.

5. Visible Dough - So much of the transactions that kids witness involve invisible money. Make sure there is a physical component (cold, hard cash) to your allowance so that kids can count, transact and get confident with real money. Sure, money is already largely virtual and is only trending more in the total virtual direction, but young kids have tremendous difficulty with abstraction.  Handling actual money is essential to early money learning.

I hope these tips help you.  Let me know if they do or if you have anything else to add.

Visualize - What Superbowl MVP Drew Brees can teach us about goals

Everyone now knows Drew Brees.

Being inches shorter than your average Joe NFL QB, performing for a once moribund franchise, and playing for a city that was almost completely destroyed, Brees is now on top of the world. And he used one tremendous tool to overcome all of those shortcomings to take himself and his team to the top - visualization. I read and listened to numerous interviews leading up to the Superbowl and I was struck by how many times he attributed New Orleans Saints' success to visualization.

While I've talked a lot about goals in this blog, I haven't really talked about or really focused on the need to "visualize" those goals. We are going to focus on this with our girls and their goals. Kids are incredibly good with imagination so I think this will be easy for them - likely easier than for we adults.

Here's an easy way to get started. If you haven't done so already, create a Save jar, find an achievable goal (start with something that will take 3-4 weeks if you're just starting and a bit longer if it's your kids' second or third goal), paste a picture of that goal that they want on the Save jar and then encourage them to visualize having that goal as much as possible. If you haven't started an allowance program, I highly recommend the book, Allowance Magic, which is available in our store.

Visualization is a tool they'll take with them forever. If Brees in any indication, visualization can help you achieve pretty much anything you or your kids can dream up. Good luck.

-John