Wednesday, May 26, 2010

Kids and Money Update

You may or may not recall our stance on kids and money and allowances, so I'll refer you to my original post on the topic. As a quick refresher, if you don't want to go read my earlier brilliantness thoughts:

  • The older kids get a regular allowance--Ryan is still at $3 a week, Morgan has recently started collecting $1 a week.
  • They are free to keep or spend that money (and money given to them as gifts for birthdays, etc.) as they will, no restrictions (apart from things that are inappropriate for them to have, such as scary R-rated movies, and firearms. Yes. Firearms.).
  • They must keep track of their money (they each have wallets) and remember to bring it places--no loans (we've learned this the hard way--they are terrible risks, and often default. Sheesh. Kids these days.).
  • We share this money with them so they can learn money management skills, and in exchange for this money, we no longer purchase certain things for them, such as souvenirs, little toys at Target, etc. With this allowance, they explicitly take on responsibility for certain types of purchases.
  • They can earn extra money by doing odd jobs around the house at contracted rates.

I think this strategy has worked very well. Obviously, Ryan has the most experience with it, but Morgan is beginning to learn some ideas, too. Brendan is still not 100% on board though, but he has agreed to the plan and is supportive of it with the kids.

Here are a few stories about the kids and money from our recent past.

One (or both) of them have forgotten to bring their wallets to fun places like the zoo, and have missed out on buying exciting pieces of crap souvenirs. Whenever this happens, they ALWAYS bring their wallets the next time. They generally handle the momentary disappointment well, partly, I think, because their responsibilities are very well-defined and they have agreed to them.

Both have improved in keeping track of their money. In the last month or so, Morgan has finally grasped the value of a dollar (such as it currently is, sigh), and now puts her money right in her wallet and knows where her wallet is at all times. This is a significant event!

Brendan, who is still not quite convinced of my genius in this matter that the kids will learn some valuable, first-handed lessons about money through this strategy, conscientiously and with enormous effort, kept his mouth shut when Morgan wanted to buy some (within her budget) trains at HobbyTown USA. He was concerned that what she was buying was cheap and meaningless to her. And you know what? He was right. She lost the trains five seconds after she bought them. I think though, there's more going on here than just buying a piece of crap she didn't really care about.

First of all, I've noticed that what's important to her lately is the experience of transacting business. Ryan went through a similar thing at about her age. She loves picking something out, handing over her money, receiving her item and often some change back. It's a very grownup thing to do! She is also learning that when she hands over her money, then it's gone, and she can't use that same money to buy something else. She was upset a few weeks after this incident that she didn't have enough money in her wallet. We talked about the things she'd purchased, and I pointed out that if she hadn't purchased them, the money would still be in her wallet. So each time she wanted to buy something, she needed to decide which was more important--having the Thing, or having the money in her wallet. These are good money management lessons she has learned, more important than the cheap little toy she bought.

Now Ryan has been saving and saving and saving his money for months. About a month ago, he'd saved up about $111 (or thereabouts). He said he was saving for a LEGO project (damn those things are expensive, and I'm glad LEGO is his responsibility!). Then once at the grocery store, he bought a pack of little cars, the Hot Wheels kind. A little unusual, since cars as such have never been his thing. Then the next time we went, more cars. Then, still more. Each time, he remembered to bring his wallet stuffed full of money, thoughtfully picked out a package of cars, patiently stood behind me in the grocery line, counted out his money, and purchased the cars.

Then the other day, he asked me to help him count out his money, so we sat down with his wallet. The sum? $79. Oh holy cow, he nearly had a panic attack! $79!!!! That wasn't enough money! He'd been saving and saving! He didn't want to live in the poorhouse! (He really said that.) He needed to get back up over $100 pronto. It would take him FOREVER to get over $100 at the rate of $3 a week, so he asked if he could do some extra work around here. So I said yes.

Now I haven't exactly figured out all of my principles when it comes to paying for extra work around the house. On one hand, I absolutely will not pay someone to handle their responsibilities. I will not pay people to pick up after themselves or do their laundry or help clean up toys out of the yard when Brendan needs to mow. This is the main reason I didn't want allowance tied to chores and responsibilities, with elaborate pay schedules for how much per job, and how much to dock when jobs aren't performed. (We had this for a little while growing up, and it was an administrative nightmare for my mom.) There are some jobs that need doing, even without the paying.

On the other hand, I recognize that it's important for kids to learn that money is (often) tied to productive work, and I know that they really can't go out and get a job at this point. And there are definitely things I'm willing to pay peopleguys to do. So for now, I decided that I am generally willing to pay Ryan and Morgan for extra jobs if I might be willing to pay a real-live peopleguy to do it. I don't do yardwork, for example, partly because I hate it, and partly because I'm still pretty allergic to grasses and trees (my allergy shots were a fantastic--but not complete--success). I'm willing to pay peopleguys to do yardwork (though our budget hasn't allowed it, alas), so I'm willing to pay the kids to do yardwork.

Similarly, I'm willing to pay them to do cruel and unusual or infrequent jobs that need doing that I just don't have time to do myself, such as washing windows. Kelly disagrees with me on this point--her thinking is that if it has to do with the general upkeep of the house then that falls into the "responsibilities" category, since we all live in and use the house. (Correct me if I'm wrong on this, Kelly--this may be an oversimplification of her thinking.) I see her point, and it's a good one, and one I need to think through a little more. For now, though, I don't really have a problem with hiring him to do something that, let's be honest, probably would not get done otherwise. I'm such a lazy housekeeper, I'd probably hire peopleguys to do EVERYTHING if I had enough disposable income. Again, I'm not going to hire him to do regular household maintenance jobs, like dishes and picking up. I'm thinking strictly about infrequent, often different, kinds of jobs (as you'll see below).

So yesterday, Ryan and I sat down and negotiated a contract. :o) I came up with ideas for jobs that I'd be willing to pay for, and he told me whether or not he'd be interested in doing those jobs. Then we negotiated prices for each job. And here it is!

Ryan's job contract (blog post to come soon) on Twitpic

In case it's hard to read, here are the jobs and their values:

  • Wash the walls: downstairs bathroom, staircase, upstairs hallway: $4
  • Weeding front flower beds (on the right): $1
  • Trim front bushes: $1
  • Putting books on bookcases: $1
  • Wash garage doors (originally planned for today): $2
  • Mulch flower beds and tree: $4
  • Repaint mailbox: $1
  • Help Daddy clean garage: $6

He was thrilled to learn the value of the contract was $20 (though I'll pay out as each separate job gets completed). I helped withdrew my assistance and made him do the math and he got so excited to learn how quickly he'd be back up to almost $100 (because apparently that's the magic threshold for not being in the poorhouse). He even got started on the weeding job right away.

Oh, and that squiggle on the bottom is his signature. I'd suggested we sign the contract, since that's what grownups did when they made contracts. Evidently he'd been working on a fancy signature and I didn't know it! I asked him if he wanted me to sign "Mom" or "Jenn" and he told me to sign it "Jenn" since that's more grown up. :o)

I'd love to hear your thoughts in the comments!


Lynne said...

You wash your garage doors? I'm impressed.

Your system sounds good to me.

The valuable lesson that comes from mishandling your money and having to forgo that trinket is one that is not soon forgotten.

I'd have to give the window washing "as chore or extra job" issue more thought. Bathroom mirror washing? Definitely chore -and I know just who to give it to.

Victoria said...

I remember when I was about 10, I had an allowance of ~$5 a week and saved voraciously to buy this expensive electronic dictionary I really wanted. My parents told me they were proud of me for saving so conscientiously.

I think receiving an allowance and having to buy things I wanted with my own money really helped me develop the ability to save and live within my means. It's really a whole different world when money comes out of your own wallet instead of your parents.

I'm glad you're doing this with your kids!

Sarah V. said...

I have to say that your idea to require your children to keep track of their own money and to bring it with them when they want to purchase something is genius. It really encourages purposeful spending and shows the value of it. In the real world loans of money are hard to come by and are only offered to people with a history of personal responsibility.

Out of curiosity what is your definition of a small toy? Is there a certain price point or is there other criteria you use to judge?

Jenn Casey said...

Hello, thanks for your comments!

Lynne--he volunteered the garage doors, and it then occurred to me that they're pretty dirty (orange GA mud dirty). So I figured, what the hey? Washing windows was a job my mom often paid extra for, and I don't mind paying for it, too. Because we can barely get sunlight in's pretty bad! :o)

Victoria--thanks! We are hoping that getting some independent first-handed money management skills now--when the stakes (and mistakes) are a little smaller--will help in the long run. I had an allowance; Brendan didn't, and I'd say that while I've certainly made my share of mistakes as a grownup, it was nice starting out adulthood with a clue about money, and a perspective he didn't really have.

Sarah--we don't have a set criteria, other than something "extra." Souvenirs and things at the store fall into this category. If it's something beyond things they really need, and it's something I don't want to buy for them (sometimes I'm generous and buy something just 'cause I'm nice like that), then it's "something you need to use your own money to buy." Example--we went to Target earlier this week, in part to get some new pool toys. I told them I'd be willing to buy some basic pool toys, but after I'd reached a certain dollar amount, any other pool toys would have to be purchased by them. Neither wanted to spend money that day, so they are satisfied with the basic pool toy supply I got for us all to share. I suspect Ryan will end up buying a squirt gun, which will then belong to him (he won't have to share it).

Thanks for commenting!

Rose said...

Interesting, we do something similar with 4.5y old but I keep track of the current amount electronically. We started a year ago and at that point she was not ready to keep track of the money herself. I think from reading your post it may be time to switch to actual cash. She's starting to understand why mommy and daddy can't buy everything but it's more a vague idea of "I have money now" or "I don't have money."

I am dreading the first time she leaves her purse out and her sister runs off and hides her money... but better a lesson learned now.

Btw.. we mainly started it to put a stop to the wild tantrums when the grownups would seemingly randomly buy something she wanted in the store or not. So we did the same thing. If you want something in the store you must have allowance saved. ($2 / week)

Parenting is... said...

Such a wonderful story, thanks! I recently noticed that my son Alex (4) has suddenly become drawn to organizing, saving and putting away his things. (No, he still doesn't want to pick up after himself, but is obsessive about important items.) It's been a joy to watch, particularly because I am very disorganized. I found that I feel more comfortable considering significant purchases because I know he will take care of them. Perhaps I'll go forth and adopt your idea exactly as described. Love it!

allergy mama said...

Such a great discussion! We do some similar things here. I know I learned money management early because my mom supplied the basics and we were to cover the rest with our earnings. (Of course, we all went and got jobs rather than actually do chores. I mean really, eww. First regular paying job at age 10.) As such, I now pay my kids to do my chores. More time for bon bons and such. =) There is a chart of jobs that I am going to do anyway that they are allowed to do. If they do one, they get a sticker. If not, I do it. At the end of the week they get a nickel for each sticker they earned. They're little, getting all those nickels makes them feel rich. I have more time to play with them, they have more money. Win-win.

Adam Thompson said...

Wow, I think this is a GREAT approach! I'd have loved the heck out of that as a kid, and maybe would have learned financial responsibility :-P

Amy said...

I love your system. Samantha is about to turn 4 and I'm thinking we might start her on $.50/week. When I started thinking about it I came right back to this post to review what you've done.

I love the wallets idea. Sam is too young for that, but maybe next year! She has no practice at bringing something along with her, so I guess we'll have to work on that.

I even agree about the windows. My principle is that the children have to help with the routine maintenance of the house as part of living in it, but if I don't do it regularly, I can't expect them to. Washing windows is an "optional" item around here, so it would be a paid job.