Tuesday, March 7, 2017

Kids and Money



I was toying with starting an allowance for Aaron on his 4th birthday (this month - eek!) 
and a quick google search lead me to this book: 
"The Opposite of Spoiled" by Ron Lieber. 

It was a pretty fascinating book, 
which of course means I have to document all the highlights herein. 
I warn you, this post is loooong. 
Like my Marie Kondo post and my time study post (coming soon!)

***

TOP CONCEPT: 
It is important to actively TALK about money with kids! 
Not glaze over it,
 avoid it,
 or redirect the questions. 
Talk, talk, talk. 


Questions our children will inevitably ask us, 
and that we should NOT avoid answering
1. Are we poor? 
2. Are we rich? 
3. Why can't I have it if I'm going to pay for it myself? 
4. Why couldn't you be a [profession] so we could have/do [x]? 
5. How much money do you make? 

The book, of course, goes into depth discussing options of answers, 
with a few key points: 

1. Lies do not work. 
E.g. "we can't afford it" (when you actually can) 
Kids see through the lies and then they know you don't give a true story. 
Which means, in today's age, they will turn to friends or (worse) Google. 

I can raise my hand here and admit when Aaron asked: 
"Can we buy this?" at Target, 
I used to respond with: "No we don't have money." 
After reading this book, I now respond with: 
"No, because we only get toys for birthday or Christmas or Hanukkah." 


2. The correct answer for anything is: "why do you ask?" 
This also works for sex, drugs, etc. 
However, the key is to ask in an encouraging tone, 
never accusatory or disapproving. 
The hope is to identify whether the child is asking because of: 

a) Stories/exaggerations from peers 
Example:
Child: "How much money do you make?" 
Me: "Why do you ask?" 
Child: "Richard said his dad makes a million dollars."

b) Fears or anxiety about an issue 
Child: "How much money do we have in the bank?" 
Me: "Why do you ask?" 
Child: "If you lose your job, will we have to move?" 


The importance of talking about money early 
can be summed up in one major event:

In selecting a college and college loans, 
we are leaving the options of $100,000s of debt, 
which will affect their ability to save for a house, retirement, etc. 
to a 17-year-old who has probably never bought anything more expensive than a bicycle. 
Crazy? 

***

Spoiled children generally share these characteristics: 

1. Few chores or responsibilities
2. There aren't many rules over their behavior or schedules 
3. Parents lavish them with time and assistance 
4. They have a lot of material possessions. 

***

Materialism is often tougher on parents than kids. 
We want our kids to have everything their friends have 
because we think it shows "love" 
when in reality it just cripples them. 

This resonated with me. 
I'll be honest, I like brand names for my kids clothing. 
Just today, I was browsing sales for next year's winter clothing, 
and I found a really nice down REI jacket 
and my first thought was: "I'd prefer a Northface brand." 
Does Aaron care what kind of jacket he has? 
Nope, not a bit. 
I bought the REI jacket. 

***

Allowance teaches patience in a world where everything is instantaneous. 

When: Start by 1st grade at latest, earlier if they ask 
How much: $0.50-$1.00/week for kids less than 10 
Raise: every birthday 

Every allowance, 
have the child sort the money into three categories:

1. Spend - do whatever*!  Let them squander it and regret it!

2. Give - homeless, church, zoo, etc.

3. Save - short-term goals at first, maybe pay interest later? 


For tracking / "piggy bank", use three see-through plastic containers. 
I was thinking some sort of MoonJar quirky thing, 
but the author found basic Rubbermaid best since 
it's easy to see inside, 
easy to open, 
and the kids can decorate them themselves. 

*The one exception to Spend is that every parent should have a "banned" list
which the child cannot buy even with their spend money. 
Examples: pets, violent video games, tattoos, etc. 

***

Allowance should not be tied to chores!

The author is pretty adamant about this
Adam and I disagree here, 
and our disagreement is open to being resolved 
(probably a reason why we will not start allowance this month). 

I see the author's point. 
1. Chores are something you have to do as part of a member of the house. 
2. Kids, esp teens, may forgo money and not do the chores. 
I would most certainly have forgone money as a teenager and not done my chores. 
Which leaves the parent in the awkward spot of either demanding the child do it anyway, 
and if so, what's the point in paying? 

Adam, however, passionately disagrees. 
He was raised with "chores give you money" and saw it as an early "job." 

So we'll see. 

The author does encourage kids to think outside the box for new ways to make money. 
Such as washing grandparent's cars or shoveling neighbor's walkway. 

*** 

Best to keep "Save" money out of the bank until age 13, 
because otherwise it becomes too abstract. 

However, as teenagers, bank money is fine, 
and sometimes preferred. 

Apparently there are websites like Allowance Manager and Family Zoo 
that allow money to go completely virtual. 
Teens can spend it online or can receive it on a debit card. 

(My mind was sort of blown by this, though it shouldn't be)\\

***

Everyone should watch Annie Leonard's "Story of Stuff"
It's 21 minutes and puts into perspective the amount of "crap" 
that we collect as materialistic people. 

I watched it and yes, this is an amazing movie. 
Many of this I already knew, but seeing it in a video is a little startling. 

*** 

Too many gifts? 
Try "coupons" for instead! 
Instead of a giant toy pile on birthday or Christmas, 
maybe try one big toy with some coupon gifts. 
"Drop everything and play a game with me" 
or 
"One trip to the donut shop." 

***

The more money parents spend on sports, 
the more pressure felt by the child, 
and often the less the child likes the sport. 

This is talking about the tons of money parents shell out for travel teams, 
and super-expensive classes/gear. 
I'm already very opposed to "overscheduling" children, 
but if my kid gets selected from some prestigious team (unlikely), 
it's good to keep in mind. 

***

Kids like to work so start chores early! 
Not necessarily for money, 
but for privileges 
(e.g. screen time, play dates, etc) 
The author mentions as early as age 3, 
and references the Montessori chart here

My thoughts on chores are pretty long 
(I was scarred by the chore regime my mom setup for us as kids), 
so I'll bottle this up for another post. 
But I do agree in concept. 

***

The rest of this is about 10 years beyond Aaron, 
but I'm documenting it in the unlikely event I decide to reference this post in 10 years... 

*** 

Teenagers should not have credit cards - DISAGREE

I vehemently disagree with the author on this. 
Once the kid goes to college, he/she will be bombarded with credit card offers. 
Better to teach the child how to spend and pay off a credit card, 
rather than fail later in life. 

I had a credit card as a teenager, 
and I laugh that my total bill was like $45 a month. 
But it taught me early on that you 
ABSOLUTELY PAY THE ENTIRE BALANCE EVERY MONTH NO EXCEPTION. 

*** 

Needs vs Want 

How do you determine what a teenager "needs" vs "wants"? 
Let's take socks. 
Apparently certain Nike socks are hot hot hot now, 
and apparently also $$$$$. 
(I have not researched this; purely hearsay from neighbor moms)

The author devised this scheme called the "Land's End Clothing Line." 
The price of the "need" is equal to what is available at Land's End. 
Anything above that price, is a want, 
and they can pay for it out of their Spend jars. 

So if the kid wants socks, 
the parent will buy the sock at the price of a Land's End's sock. 
But if the kid wanted expensive socks, like those Nike things, 
the kid pays the difference between the Nike price and the Land's End price. 

(Personally, I'd use Target... maybe GAP if I'm feeling generous.) 


In highschool, figure out your kids "need" budget, 
and give them that money all at once. 
If they blow their whole need budget on a pair of jeans, 
well that sucks! 
Won't lie, the control freak in me is going to struggle big time.  
What if my kid blows it all at once and wears flip flops all winter???

*** 

Start the car conversation at age 13. 
Consider matching the money they set aside. 
They won't want to spend a penny of any birthday money! 

My hesitation with this... 
Do I want to pre-commit to a car at 13? 
Ehhh. 

*****

So that's my takeaways from this book. 
It was very interesting and I'll probably nag Adam into eventually reading it. 
As of this point, I don't foresee us starting allowance at this birthday. 
I think age 5 will be a good birthday to start. 


3 comments:

  1. This will be a long comment so be warned!

    First of all, I am definitely getting this book out of my local library. Unlike the 168 Hours book they actually carry it. Whew.

    Second of all, as I've mentioned earlier, we are totally doing the "spend, share, save" concept and it's been working pretty well (about two months into it!).

    Third of all, Sam started getting allowance at the end of January and Rachel started getting allowance last week! Ha! It was too hard for her to explain why Sam had been able to save money to buy a toy when we wouldn't buy it for her and she had no way to get the money to "earn" it. She's getting 2.50 a week and Sam is getting $5.

    We have tied it to "chores" -- how well they get ready in the morning and last week Sam only got $4. He learned his lesson pretty quickly. I do think tying it to chores is a tricky concept but we have obviously done that. I think it's teaching them early that to earn money you have to work responsibly. There's no such thing as "free allowance" when you grow up.

    Fourth, my parents gave me a clothing allowance when I was in Grade 9. It was $30 a month (in 1986 so there's that!). It taught me early to make bargain decisions or to save it for a few months to buy running shoes. We would get around $80-$100 at "back to school" time to buy a new outfit or something. I still refuse to spend a lot of money on clothes so I think it was a wise move.

    Fifth, I totally agree about the credit card. I got my first one in first year university and all I thought was "free money" I don't have to pay back. It took me five years to get out of credit card debt and I've never done that again. It would have been a good lesson to learn earlier.

    In conclusion... Okay, I have no conclusion but the rest of this comment felt like an essay so I couldn't resist!

    ReplyDelete
    Replies
    1. This comment looks a lot longer published all at once as opposed to when I was typing it out in the little box. Ooops.

      Delete
  2. All great ideas! And I think we're going to wait until 5 as well... though not for any particular reason other than that we're not ready, ha. I'm not sure how I feel about the chores issue, either. I see the benefit of not tying chores to pay (since they have to pull their weight and it shouldn't be optional), but giving them money without tying it to anything seems odd, too. Something to ponder!

    ReplyDelete