The other day my six year old daughter made a comment about her allowance, “mom, if I don't do my chores or I am not well behaved - I lose my allowance don't I?”
I had thought about this quite a bit before she asked and already had an answer. My husband was standing by in the kitchen also awaiting my answer which was this:
“No honey, no matter what you are getting $6 each week for your allowance. Why? Because it is important for girls and women to always have a source of income and I want you to grow up with a strong sense of that. If we attach emotional conflict, or power struggles and petty disputes - it will muddy your ability to learn about money and budgeting with a calm and clear head and when it comes to money, we want you to be one smart cookie.”
My husband nodded his head in amused agreement and my daughter simply walked off missing the very important message I was trying to convey to her. I said I didn't want to make it personal or emotional, but in fact: it was VERY personal for me. When I was 31 years old, I cashed out my Roth IRA. For a few years, I harbored resentment against my husband for talking me into it but the truth is, we BOTH made the decision and I know now to next time say no. I opened this Roth IRA when I was 18 years old all on my own with no help or coaching from anyone. Considering that none of my peers were doing this, I was a smart cookie. At 31 years old, there was roughly $8,500 in it. That may not seem like a lot to some people but I worked very hard to send in the minimum $50 whenever I could in those 12 years. Had I not cashed that, it would likely be closer to 20K today. Still may not seem like a lot but by 55 years (assuming I sent in $50 per month), I would have had closer to 200K. A sizeable safety nest egg.
The next time I messed up is when my husband worked a job that netted him almost a quarter million in five years and I squandered most of it. I honestly don't have much of an excuse for this other than I just simply wasn't paying attention. Our daughter came into the world and her needs pulled me away from paying attention. Sometimes babies are born with medical needs that require a lot of time driving, paying cash for appointments and more. Parenting a newborn is already challenging but add other unexpected needs and most of your prior focus slides out the window pretty fast. Most of the rest of the money went into homestead renovations, our daughter's needs and our farm animals. We had c mostly underestimated how much it would cost to own property and homestead. It wasn't so much that we wasted it as much as we became married to projects that really created a vacuum effect with our money. In an effect it was the movie Money Pit meets Groundhog Day. It was never ending and we found ourselves throwing money in the same way one throws gasoline at a fire. We spent 2015 putting all of those projects to bed. For good.
But it is okay, we are still young. We a in our late 30s and now I know myself better. I know now I am good with money when I want to be. I enjoy investing, tracking and watching debt decrease and investments increase. I like websites such as Lending Club where I can be more hands on with my money. I know my husband better too and understand his own relationship with money as well. He's less attached to it. To him there will always be enough. But my husband smokes, he's older than me. If he dies in the next ten years while I have two little kids - it won't be good. Yes, we have life insurance but that my dear is putting all my eggs into one basket. If I die, what will he do? What about kids, at this rate - the burden of their parents will be on them. I'm not okay with that. So it is time to reignite my love affair with investing money.
Using an allowance to nurture the mind…..
I have another reason for not attaching conditions to her allowance. Our daughter is a math genius. Surprisingly so. The girl barely knows how to read but she knows the times table by heart, understands fractions and is able to calculate some fairly complicated financial math in her head that often blows bystanders away. I must admit that WE DID NOT TEACH HER THIS so her dad and I cannot take credit for this. Sometimes certain things come naturally to kids and this is one of those things you are blessed to witness when it happens. Her allowance each week yields the following scene in our living room: a little girl with her awkwardly handwritten money ledger, all her coins and bills in an organized fashion while she faithfully counts and recounts everything out loud for her dad and I to watch. She's already figured out how much she will have in a year, two years and so on. Her goal? To buy her own house at 18. It makes a parent proud.
Last week when she bought gum, she recognized that one was on sale for 30 cents. So instead of buying her usual $1 watermelon kind - she opted for the one on sale to get three for under a dollar. On another day, she calculated how many weeks she would need to wait until she had enough to pay for a three day trip to Great Wolf Lodge. The day before that, she perused all the toys in the store, wrestled decision fatigue and calmly said “eesh, they cost a lot” and walked away. She also understands the concept of how the bank owns our home due to a mortgage and because of this is determined to save as much as she can to avoid debt in life.
I consider her weekly allowance an important part of her education. The cash is simply nothing more than a tool comparable to a ruler or a textbook. We don't become emotional or restrictive over school supplies so why do we with allowances? Yes, she could blow it all on candy or even lose it or have it stolen, but that's part of the lesson. I also believe that all people have an emotional relationship with money and that they learn this relationship while they are young from witnessing their parents own relationship with money. If parents are constantly stressed with funds, children learn that money is a determining factor in happiness. Yes, happiness. If parents never talk about money, well money doesn't exist and stuff magically appears with the swipe of a card. The list of possible dysfunctional scenarios is endless.
Oddly enough my daughter has inspired me to go back into managing and investing our money again. Helping her learn and track her funds has reminded me how much I enjoy it. And it reminds me how when I was young, I thought I was bad at math - but looking back, I realize I was pretty good with money.
I recently started an Etsy business for fun which surprisingly started getting sales in the first 48 hours and my daughter was thrilled by the concept of her mom “running a business”. We both enjoy checking it daily and it adds to her own learning about finances as well. I also reignited our monthly payments to our investment accounts again (including our children's college funds) even though the current balances are so low. But it's okay, I'm stoked to watch them grow. Additionally, I signed up with Lending Club for the first time. And I decided to be more active in supporting my entrepreneur husband in his endeavors as well. Each day I renew craigslist ads and manage some of the smaller details so he doesn't have to. It also helps that all of us have committed 2016 to being a Buy Nothing and Sell Everything year. Even our money whiz daughter is own board with it.
Instilling a sense of building wealth vs entitlement….
I've heard discussions among parents about allowances. Let me tell you, it is very hotly debated. Some parents feel allowances add to the already growing problem of entitlement among kids. I suppose that could be true depending on the circumstances. But in our case, we live a minimalist life. We don't buy items we don't need or even want at the store. I’ve turned down requests to buy items, candy and toys for so long now that my daughter no longer asks me to buy them. We also talk a lot about money at home the same way some people talk about religion or prayer. We talk about what it means for us (stability, freedom, success) and what it doesn't mean for us (happiness, love, success of other kinds). We talk a lot about material items vs valuable life experiences. We are more apt to spend our money on horse back riding lessons or a family trip to the beach rather than material items.
As they get older, I'm hoping to help instill more of an entrepreneurial spirit in our children. In other words, the concept that working a nine to five job is not the only way to build wealth. If our children want to follow the script of graduating from college and applying for jobs, we will be proud. But I also want them to know how gather their resources to create wealth if those jobs go away down the road. I want them to know how to sell, barter, trade and so on. Including our kids in our own business discussions is already doing this. My husband sometimes pays our six year old one dollar if she helps him sort materials. She loves it. It is very high reward for her and gives her a sense of work ethic. I include her in other small tasks such as helping me photograph items for my Etsy shop or even simply turning all the lights off when we leave. The key for us has been to keep all interactions around money not positive…. But calm. And steady.
Another question my daughter asked recently is if she would still get an allowance after she moves out someday. My answer? “Oh honey, I think by then your old mom and dad will need an allowance from you with how well you're managing it.” She grinned satisfactorily and walked off.
PS:
For kids, I recommend checking out Warren Buffets Secret Millionaires Club.
Another great article on allowances from a parenting guru I love to follow:
http://www.positiveparentingsolutions.com/parenting/all-about-allowances
No comments:
Post a Comment