Mompreneur » Allowance

Are You Passing a Sense of Entitlement on to Your Children?

admin — Wed, 17 Jun 2009 18:54:47 +0000

Have you ever thought about how your childhood has affected you financially as an adult? When it comes to your finances, there is an enormous connection. One issue that I am starting to see in children nowadays is a sense of entitlement. It makes sense, especially if you read my article yesterday. Over the last few years, we have turned in that direction. However, with this recession, one of the silver linings is that we are starting to make a shift away from that. We are starting to be thankful for what we do have and realizing that material possessions do not define who we are.

Every generation wants their children to have more than they did. As the mother of three boys, I respect that. Who would not want their children to have more than they did? However, you have to be careful what you are teaching your children. If you find you have a habit of spending more than you should and buying yourself, or your family, things you really can’t afford, ask yourself a couple of questions:

Do you feel entitled?
Did your parents buy you everything you ever wanted?
Did you get an allowance and have to budget?
If so, was it enough for you to buy what you really wanted?
Did you sometimes feel that your parents gave you money instead of love?
Were the things your parents bought you out of guilt for not spending quality time with you?
Are you passing this on to your children now?
Are you buying your children everything they want because you are going through a divorce?

If you can take the time to reflect on your childhood, you may be able stop the pattern now. You want to be careful about what you are passing on to your children. Some of the things you want to pass on to your children are:

Give them an allowance; let them learn how to budget money.
Let them make some bad decisions with their money, you would rather them learn this now than when they are in college, or later.
Discuss their purchases with them; make sure they know they can talk to you about money. Keep an open dialogue.
Don’t buy them everything they want, they need to learn about wants versus needs.
If they want something real bad, teach them to save up their allowance for it. This will teach them the value of money and patience.
Immediate gratification can be very bad when they are young, but even worse when they reach their teens and early adult years. This is how they get themselves into credit card debt.

Communication is key. Keeping an open dialogue sets the stage for your kids. You want them to know they can always come to you and talk about money. Get them involved with the family budget when they get a little older. You do not want money to be this big mysterious beast. Shine the light on it! Your children will thank you later…

If you have any questions about how your childhood is linked to your financial health now, check out the products page on my web site. You can download my free personal finance assessments and get your questions answered.

How Much Allowance Should I Give My Child?

admin — Mon, 15 Jun 2009 22:12:38 +0000

It’s the age old question… “How much allowance should I give my child?”

I probably should not tell you this now, but I do not have an answer for you. But, before you give up on me, I have a couple different options for you as well as some sage advice on what most experts do agree on.

First things first, I am pretty sure almost every expert agrees that all children should be given an allowance. If you saw my clip on Good Day Sacramento on May 21st, you know that I am one of them. An allowance teaches children several things, including, how to budget, how to make financial decisions and much more. So, if you are debating whether or not you should give your child an allowance, the answer is a resounding…YES!

What age should I start?

Well then, when do you start? The experts agree that earlier is better. You do not want to wait until your child is a pre-teen or teenager before you start. As young as 3 or 4 years old, they start to understand the concept of money. Now, you do have to remember, children tend to lose things at this early age, but it does not hurt to start teaching them good habits about keeping money in a safe place.

To tie to chores or not to tie to chores…that is the question.

Again, many experts agree that an allowance should not be tied to chores. Your children should do chores because they are part of the family. My allowance was tied directly to chores when I was growing up. And, until I started doing research for this article, I still felt that way. However, I can definitely see their point. This may take a shift in thinking, but it does make sense. When children get older and have their own part-time job, there really is no incentive to do chores for their allowance any more. Rather than trying to shift their thinking then, make the shift now.

Never withhold for punishment…

Most experts also agree that you should not withhold your child’s allowance for punishment. You are giving them their allowance to teach them how to handle money at a young age. It is not a tool to use while disciplining your child. Also, try to be consistent. I understand how busy life can get and you might forget to give your child their allowance. Try putting a “pay day” reminder in your calendar to assure yourself you will not forget to give them their allowance each week.

How much?

How much is not something I can really give you an answer to, but I can give you some different ideas.

$1 per year of age each week
$0.50 per year of age each week
Paying your children based on minimum wage and the time it takes them to do chores (although the experts do not recommend that, just thought I would throw it out there for you)
Factor what they will need to buy what you will no longer be paying for (i.e. toys, lunch, snacks, outings with friends, etc.) and give them enough to take care of it themselves

The fact of the matter is that each family is going to have to make this decision based on their core values, family budget and number of children in the family. This is a very personal decision.

The most important thing is that your children are able to learn how to budget with the money they have. It’s okay to let them make poor buying decisions. Make sure you keep an open dialogue with them about why they made the choice and how they can make a better one next time. Wouldn’t you rather they learn this at 7 years of age rather than 17 or 27 years of age?

Make sure you do not get in the habit of buying them things at the store if they have forgotten their money, then hoping they will pay you back later. This starts a very bad habit. Have a discussion with them about only buying items they have the money for.

Remember the fundamentals and you cannot go wrong!

Children and Money

admin — Wed, 22 Apr 2009 20:00:32 +0000

Have you ever noticed that your children seem to think that money grows on trees? Wouldn’t that be nice! I am here to help you put your children on the road to handling money responsibly now and for years to come. Remember, when it comes to teaching children about money, sooner is definitely better.

At a very young age, children love to collect and save pennies. I remember my six year old would love to go into my husband’s closet and pick up all the loose change on the floor. With this in mind, families can talk about the family’s budget together.

Now, I don’t want you to worry your children about bills or making enough money. But, it does mean explaining to them there is a certain amount of money that comes into the house and there are certain expenses, such as food, utilities, the mortgage and clothing that must be paid for with that money.

You can also explain that there is a set amount every week that should be saved for emergencies. Now, you do not have to go into details about how much, just the concept will suffice. When you start giving them an allowance you can explain to them that they should do the same and save a certain amount.

Once children learn how money works, they often display an instinctive conservatism. You want to make sure you channel this urge in the right direction, it can determine the kind of financial manager your child will be as an adult.

An allowance can be an effective teaching tool. Giving them small amounts of money when they are younger, helps them prepare for when the numbers are bigger and the stakes are higher. Along the same lines, you will want to teach your high schoolers about banking and credit. This will make them more savvy when they move out to go to college or start their career.

Teach your older children how to use a check register, balance the check book and how to use a credit card (the right way). I cannot tell you how many adults I have met that have never kept a check register and just trust the bank’s balance. Believe it or not, banks do make mistakes, not to mention fraudulent charges that could go unnoticed if they do not keep track of everything. Credit cards are a wonderful way to increase your FICO score, if used properly. Teach your children that you should never put anything on their credit card they cannot pay off by the end of the month.

If we play our cards right, we can create very savvy financial managers. I, for one, plan on doing all that I can do. I hope you will too.