Parents - Stay Strong at the Store (Allowance Tips)

I Discuss Youth Financial Literacy on "The Intentional Parent"

Back to American Girl

In keeping with my belief that the point of an allowance is to allow kids to make mistakes and learn from them, I said yes to my daughter's request to save for an American Girl doll. She's set her goal and pasted the exact doll she wants on her Save jar. Big bonus - she immediately shifted all of her money from the Spend Smart jar into Save, once again proving that an "owned" goal is just as powerful for 6-year-olds as they are for grown adults.

My hope in this experiment is that she'll earn at least a trickle of appreciation for how expensive the dolls are when she is finally able to purchase one in about two-and-a-half months. It will be interesting. I'll keep you posted.

-John

My American Girl

"Can we just stop in the American Girl Doll Store?" These are ten words that really, truly scare me.

Now, before you get all "what do you have against dolls?" on me, let me explain. Although I can appreciate the theory behind American Girl (learn about history) and the strength of the brand - the colors, the numerous dolls, the consistency (the hair salon? the cafe?), American Girl dolls are first and foremost about one thing - consumption. And those prices? Your entry level fee (doll and costume) is about $100 (the "starter kits" hit you with two bills, including tax). These aren't dolls - they are status symbols.

My question is, "what type of status are you trying to show?" That said, I think it's important in the process of teaching kids about money to let them spend the money they've earned via their allowance in their Spend Smart jar with a reasonable amount of autonomy. So I answered yes when my daughter asked me to go in. For those who know me at all, that was a big step. Also, she had brought only six bucks with her, so I knew there was no real chance that we'd purchase anything at an AG store.

I quietly walked around with her as she pointed out various interesting features on the dolls (she of course knew many of the names). It's a testament to their marketing machine that even someone as jaded as I am gets drawn in by the brand (that just screams to be parodied in Warholesque style for it's impressive sameness). Finally, Quinn asked me the price of the Chrissa doll (which she calls, "Little Eileen," as it bears a striking resemblance to my wife). As objectively as I could, I told her that the Chrissa (who apparently took home 2009 AG "Girl of the Year" honors) was priced at a cool $95. I explained that it would take her about four months to save for the doll, and that was accounting for the fact that she had already saved over forty bucks in her Save jar. She stared at the doll.

This wasn't our first conversation about AG dolls and I have consistently tried to steer her toward other, less expensive dolls. See, I'm not anti-doll! I think dolls are a natural part of a girl's development, just like Han Solo in Bespin outfit was for me (I kid, I kid). I mention that this wasn't our first conversation because, without prodding from me, she looked up and asked to leave. I imagine this won't put an end to her AG fascination (the fact that so many of her friends have them is a big driver), but it's part of the process. I'll keep you apprised.

-John

Share - Charitable Giving For Kids

The least utilized used bank in my daughter's Share / Save / Spend Smart bank set is that pesky Share (charitable giving) one.  I say pesky because we need to provide here more guidance.  We require that she put $1 of her $4 allowance dollars (she's 6) in Share and she did give to a Leukemia society last year, but I think it's time to bring the goal-setting ideas we use for the Save bank (which have worked) to the Share bank as well.  I thought this article on eHow was very helpful in giving us a framework to create a better Share program.

-John

Mistakes Is Good

There may be no better teacher than a good, old-fashioned mistake.  For a time, my five-year-old daughter had been sinking all of her money into her Save jar after success with goal setting and managing her allowance effectively enough to buy a scooter, shoes and mini pottery wheel (long-term saving for a youngin').  Daddy was happy.  The lessons were working and it made good blog fodder.  But then, suddenly, she started plunking her allowance dollars into her Spend Smart jar.  What was this?!  Regression?  A big mistake?

Whatever it was, it was her choice and it remains to be seen whether she is making mistakes by shifting her focus from saving to spending.  What it certainly means is that Daddy has to heed his own advice to her - allow her to control her own money.  The purpose of the allowance is to teach her about money and making mistakes is part of that process.  We'll see what she does.  And after all, if she does slip up it's ok because, you know, mistakes is good.

-John

Stand Strong

On the path we are traveling to teach our children (this generation) to be smart with money, we must be relentless. When your friend tells you to "lighten up" and "just let them be kids," stand strong and tell them that amassing an army of toys is not being a kid. Turning a discarded box into a home for your dolls - that's being a kid.

When you feel guilty that you gauged the success of your birthday or the holidays by the volume of the haul (yep, that would be me too), stand stand strong and realize that you were enlightened by going down that path. You know that going down that road is like playing an unwinnable game. If you don't want to shower your child with gifts (from you or anyone else), don't let it happen. I know it's not easy, but it's your choice. Stand strong.

And when you see a behavior that you don't like, help them to change it. If you think YOU might be the cause of the behavior, stand strong and work it out together. I remember when my daughter first used an unacceptable word (I'll admit that I felt a pang of pride that she used it in context...but that's not the point). It was obvious to my wife and I that she had learned it, surprise, from us. So, in order to avoid looking like hypocrites, we decided that anyone (mom, dad, her) who used that word would be sent to time out. Our method worked (it's nice when ONE of your method's works). If you think your behaviors might be negatively influencing your kids, change them.

A root cause of this country's current financial crisis is lack of education. It's time to teach our kids to be money smart. The premise is simple - save, share and spend SMART. Because the pressure to simply spend is so great, though, the execution is difficult. We're in this together. Stand strong and believe that we can help our kids.

The Challenge Continues

How is your Money Mammals Challenge going? I thought it might be helpful if I posted a completed challenge sheet right here. Take a look and you'll see that our daughter is saving for a new pair of shoes. She's turning five and tells us (oh, about every five minutes) that she's getting bigger and will need some new clothes and shoes that fit her better. This is a bit of an exaggerating (she's doing just fine with most of her clothes), but her choice was pretty practical and she could use some shoes. $3/week (her allowance) will net her $12 by the end of the month. Enough for the pair she'd like.

We used to have a beautiful hibiscus plant that recently died so my wife is saving for a replacement plant - a new palm tree. We're lucky enough to live in Southern California and she's always wanted one of these iconic trees.

I have a good friend who has multiple sclerosis and I missed the MS Walk in which my wife and kids recently took part. So I'm saving to "Share" my money with MS. $80 is only a dent, but it will help.

For the month, my wife and I will be making a point to show our kids the money going into our clear "Save" and "Spend" jars for the month. I want them to physically see that the money is being saved and that's it's accumulating over time (albeit a short time).

Comment here to let me know how your challenge is going.

Starting An Allowance

At one of our recent super-fun live "Money Mammals" shows, a parent approached me about starting an allowance for her 5-year-old. I figured it was a good time to share the approach our family is taking as it might be helpful for others. We've just started allowance for our 4-and-a-half year old and I've begun by using David McCurrach's book, Kids' Allowances, as a guide. I like this book because it's simple, includes a survey of what parents of various age kids do r.e. allowance, cites various experts on youth financial literacy, and provides you with a structure to provide allowance for your children. The author is also experienced - he has honed his method on both his kids and grandkids. And he's not "preachy" or condescending, refreshing when you consider the approach of some financial self-help gurus today.

So what are we doing? We are using a three bank system (Share, Save, Spend Smart) and she's getting three dollars per week - two dollars and four quarters. Providing the money in different denominations provides us with a teaching opportunity each week (e.g. four quarters equals one dollar - and you can change up the coins each week). She is required to put two quarters into the "Share" jar (for donations) and two into the "Save" jar. At her age, we're making saving tangible by putting a picture of a savings goal on the bank so she knows that she's saving for something. She can do what she pleases with the other two dollars - put them in the "Spend Smart" jar or either of the other two (Save or Share). We are not tying our allowance to chores and we will revisit our approach at least every six months. At some point, we may consider some type of savings matching to encourage savings and I envision giving her complete control of her allowance (no mandates) in a few years.

I hope this is helpful and good luck to all parents out there. Remember, it's most important to just do something. You can't afford not to teach your kids about money.

Put It In Writing?

Memorialize your child's commitment to learn the value of money by putting it in writing - or at least make it visual in some way. Just as you should write your own goals down to "train" your brain to follow your direction, writing or memorializing your child's commitment is something to strongly consider if you want to begin their lifelong commitment to money smarts. If you want some help (and an easy way to start), you can print a free copy of a Money Mammals certificate for your kids to help them to commit to share, save and spend smart (Click Here to download certificate). Or have your child make his own certificate. Or simply write something on a piece of paper that you refer to on a continuous basis. I personally like the idea of a certificate because it carries more weight - and it goes on a wall for easy reference. Another idea (or a complimentary idea) might be a wristband so that you can refer to it when you are out the house and out of range of the certificate. As always, good luck and always remember to Share & Save & Spend Smart Too.

Kids and Ads

Advertisments are the primary way in which kids are hit with the "spend, spend, spend" message. Parents can help their kids understand how to analyze ads. Commonsense Media has an short, useful paper about how to protect kids under seven from being exploited by advertisters. The main key questions Commonsense lists are as follows:

1. Who created this message?
2. What words, images, and sounds are used to attrach my attention?
3. What is really being "sold" in this message?
4. What does this message mean to me?

These may seem like somewhat adult questions, but with advertisers targeting the massive kids market as young as early as two, it's time we equip our kids with the tools to spend smart.