The other day I posted about Glenn and my transformation of our finances. While I was reading all of Dave Ramsey’s books this past spring to get my own finances in shape, I read one about kids and money. It’s called Smart Money, Smart Kids. It’s really good, if you wanna read it. But in case you don’t have time for that, I’m gonna give you a summary of what I learned and what we have done with our own kids.
1. Our kids work on commission. Lots of people give their kids an allowance, we don’t. We have in the past and it didn’t work very well. So, we stopped. Then I read this book and realized what was missing. All kids need to learn how to work hard and do chores around the house and all kids need to learn how to handle money. If we don’t give them opportunities to do these things at home before they grow up and become adults they will have no clue how to handle money when they grow up and not be able to handle their finances and end up moving back in with us at age 40. I don’t want that. So, here’s our system. There is a job chart on our fridge. Once a kid turns three they start getting paid to do these jobs on commission. There are five jobs, one for each day for each child. If that child does all their jobs in one week they get paid, if they don’t they only get paid for work they have done. They, can, if they choose and we allow it, do additional work for additional money as well. Elijah and Joshua are 4 and 5 years old. They have five jobs to do each week. They are jobs they are capable of doing such as feeding the dog. At the end of the week, they get paid two dollars each. They have clear plastic containers with their names on them and the money goes in there. They need to see it, in cash. They need to make the connection of work=money. They can then spend that money on whatever they choose. We usually take them to the dollar store once every few weeks, or they can choose to save up for something, but at this age they don’t have much patience. We don’t worry about teaching about tithing or saving at this age yet.
At age 6 they start getting paid every two weeks and they get paid five dollars. They have three envelopes for their money, one dollar goes in tithe, two go in spending and two in saving. They may spend the “spend” money on whatever they like, but the “save” money must be saved towards some goal they have.
Our 11-year-old has a job now. He mows the neighbor’s yard every other week for $25, in addition to his $5 every two weeks from us for his jobs he does here. The chores he does at his age are a bit harder than his younger brothers. One chore is mowing our yard. He gets paid a fraction of what he gets paid to do the neighbor’s yard, but he doesn’t mind, because he understands the system. He now has a bank account and we have taught him to keep a check book and write checks. I remind the kids that they have a chore each day and usually help the little ones do theirs, but there generally is no complaining about doing chores now, because they are getting paid. There are chores they do just because they live here, such as clearing the table and picking up clothes. They are learning a ton about money and we are getting chores done without complaints. Yes, it is expensive to pay our kids to do stuff around the house, but I see it as a long-term investment in their future. It’s extremely important that they learn how to handle money and how to be content with what they can afford. They need to be allowed to make mistakes on a small level so that we can help them learn from them now and not later when the stakes are much higher. Once they are around 14 years old they will be given the money we would spend on clothes and entertainment for a month and they will be responsible to pay for their own stuff.
2. More is caught than taught. The kids are watching us and seeing what we do with finances and that is how they will learn to handle money, not from what we say. We allow our oldest to see our budget spreadsheet and talk with him about our financial decisions and why we do what we do. We don’t allow him to see anything that would make him nervous or stressed out, but just explaining how we keep our budget and how we are saving for the future. He is listening. We were playing Monopoly the other day and he won because he had an emergency fund!
3. Encourage them to be entrepreneurs. Sam is now running his own business at age 11. He is mowing the neighbor’s yard this year, but next year he has plans to expand to mow three more yards each month. He is going to get a bike trailer to haul his lawnmower in so he can serve people farther away from our house. His long-term goals are to be able to buy a truck and trailer when he turns 16 and have his own larger lawn care business. I don’t know if he will actually do that, but we are encouraging him to think big. How great will it be for him to graduate high school having run his own business. That will really give him a leg up as an adult in a lot of ways. We are already telling him he will need to save up to buy his own car and some of his college expenses. He has financial goals and this year is paying for part of his Disney tickets himself. It has really been good for him to understand the cost of things and how to be responsible.
Glenn and I were blessed to have parents who taught us the basics of money management and it has been great for us in our marriage. I think many parents today don’t think about teaching their kids money skills, a lot of times because they are struggling with finances themselves. It’s really important to think about these things and be intentional with your kids.