Yet another article on kids & allowances

[Nords]

Our 14-year-old recently opened negotiations to raise her weekly allowance, which had been unchanged for over six years. (We were waiting for her to bring it up and I guess it took a while for her to notice.) We had a great discussion (ER forum style) about CPI compounding over the last six years, hedonics adjustments, and one's personal rate of inflation. Despite glazing eyeballs she persevered, however, and scored a 40% boost-- from $5/week to $7/week. (She still retains the same semiannual clothing/toiletries funding.) $1 of her allowance still goes into her "Bank of Kid" CD paying 6% for six months (she doesn't know about PenFed!) and another $1 still goes into her matching "Kid 401(car)" account for her 16th birthday, but she's quite happy with her negotiating results.

The discussion must have been fresh in her mind last night when she sent spouse & I an e-mail:
"Re: My Allowance
Check this article out. (Thank you!) http://articles.moneycentral.msn.com...llowance.aspx"

At this stage of her life these little parenting pearls are made even more precious by their rarity. But once again I suspect that she shows early signs of "getting it".

So now you know that the MoneyCentral article's advice is kid-tested and teen-endorsed.

She also picked up a few shares of Scholastic last summer at $26.50 and advises selling in advance of this July's conclusion of the Harry Potter hysteria series. She's decided that SCHL's stock price moves in synch with J.K. Rowling's publishing schedule. Now I have to figure out if the rally's end can be predicted closely enough to make it worth shorting...

[ziggy29]

Quote:

Originally Posted by Nords She's decided that SCHL's stock price moves in synch with J.K. Rowling's publishing schedule. Now I have to figure out if the rally's end can be predicted closely enough to make it worth shorting...

If you do, and she's right, I think she needs another raise.

[Nords]

Quote:

Originally Posted by ziggy29 If you do, and she's right, I think she needs another raise.

Oooh, I don't know about jacking up the payroll expenses again so soon, but there would definitely be some sort of profit-sharing bonus!

[TromboneAl]

I thought we'd done a super job with allowance, and teaching money management with our daughter, but I have to say that at 19 she's just not handling it well.

[wabmester]

As soon as a child begins to express a sincere interest in material wants -- as in, "I want that!" -- it's time for an allowance. Depending upon the child, that's probably around ages 3 to 5.

... if the children help with the annual "spring cleaning" of the garage, that might be worth greasing the palms of helping hands.

"Children as young as age 4 can learn coin recognition and basic financial principles such as the exchange of goods and services for money," Solter says.

No allowance for our almost-4-yo. So far, our/her focus is on anti-consumerism, reuse/reduce/recycle, and entrepreneurship.

She understands money and monetary transactions. She orders and pays for our shared bagel at the bakery, for example. She understands that TV commercials are trying to sell her things she doesn't need. She has plenty of toys and enjoys them, but she treats a trip to the toy store as a trip to the zoo.

She sold cookies at our garage sale last year, and she's been planning for the next one for a while now. She decided that she'll sell some of the toys she no longer plays with and she'll make muffins to sell to browsers. She's also thinking about upselling. "What goes well with muffins?"

[BarbaraAnne]

Quote:

Originally Posted by TromboneAl I thought we'd done a super job with allowance, and teaching money management with our daughter, but I have to say that at 19 she's just not handling it well.

I have a similar situation, T-Al. My son was very frugal growing up. He used to think his friends/peers in high school were spoiled. Now that he is in college (almost 20) he burns through money (mainly eating out). I guess he's under a lot of pressure and eating out is an opportunity to socialize.

I'm glad he at least works during school breaks...it helps a bit with the money situation.

[wabmester]

Quote:

Originally Posted by TromboneAl I thought we'd done a super job with allowance, and teaching money management with our daughter, but I have to say that at 19 she's just not handling it well.

Any lessons learned or theories about her approach to money?

I pondered this question as I consumed some All-Bran purchased at half-price....

Money management is important, yet schools basically exclude it from the curriculum, so the burden is on the parents. Rather than taking the traditional ad-hoc approach, which doesn't seem to work very well, perhaps we need to develop a more formal curriculum.

1) Where does "stuff" come from? Where does it go when we're done with it?
2) Where does money come from and general introduction to monetary systems.
3) Resource consumption and sustainability.
4) Capitalism, how money flows, free/fair markets, etc.
5) Buying stuff. Consumables, depreciating assets, appreciating assets.
6) Ways to get money. Saving, working, investing, entreprenuership, stealing, gifts.
7) Smart shopping.
8 ) Basic accounting.
9) How to deal with sharks. Marketing, employer tactics, fraud, poor investments.
10) How do you know when you have enough? Retirement planning.

What do you think? Do we need an age-appropriate lesson plan, or do we continue to assume that kids will absorb these concepts through osmosis?

[Lusitan]

I think that's a good lesson plan, Wab (although, I think I'm going to leave out the lesson on "stealing" when it comes time to teach my son ...)

These are the life lessons that we all hope will be implicitly picked up, but it wouldn't hurt to explicitly try to team some of them as well.

[wabmester]

Quote:

Originally Posted by Lusitan I think I'm going to leave out the lesson on "stealing" when it comes time to teach my son ...

I was thinking back to when I was a kid with an allowance. I guess the idea of an allowance is to teach kids to work with a constrained resource. But my goal as a kid was to find end-runs around the constraints.

Stealing will come to the mind of a kid as a natural solution, so it should be explored in depth, IMHO.

[BarbaraAnne]

Quote:

Originally Posted by wab What do you think? Do we need an age-appropriate lesson plan, or do we continue to assume that kids will absorb these concepts through osmosis?

Good ideas, Wab, but peer pressure to spend and fit-in are overwhelming for teens. Kids can be influenced when they are young, but in the later teen years it is more difficult. It is especially difficult when they go to schools with affluent kids. I think you will be surprised, as I know we were, at just how much $$ many parents throw at their offspring! BMW's in the parking lot of high schools and colleges is the first clue...

[Sandy]

Quote:

Originally Posted by wab 1) Where does "stuff" come from? Where does it go when we're done with it? 2) Where does money come from and general introduction to monetary systems. 3) Resource consumption and sustainability. 4) Capitalism, how money flows, free/fair markets, etc. 5) Buying stuff. Consumables, depreciating assets, appreciating assets. 6) Ways to get money. Saving, working, investing, entreprenuership, stealing, gifts. 7) Smart shopping. 8 ) Basic accounting. 9) How to deal with sharks. Marketing, employer tactics, fraud, poor investments. 10) How do you know when you have enough? Retirement planning.

I've discussed many of these topics at various times trying to get the right developmental level. Some sticks, some doesn't. But I have not been systematic. Thanks for putting it all in one place. At age 10 they may be getting a bit too much on retirement planning - if I am on the computer at home and they walk by, they role their eyes when I am on this site.

[RedHawk]

Quote:

It is especially difficult when they go to schools with affluent kids

I went to a high school where there were affluent kids. I know that some of them were well-off and could afford the BMWs, but now I wonder how many parents were just going deeper and deeper into debt.

[lazygood4nothinbum]

Quote:

Originally Posted by TromboneAl I thought we'd done a super job with allowance, and teaching money management with our daughter, but I have to say that at 19 she's just not handling it well.

i still remember being weened off allowance and into the real "w*rking" world. but up through the day i finally quit w*rk forever, i never quite took to it.

i got allowance from a very early age. also i had a bank account from when i was a little kid (i even recently found what i think must be my mom's first bank savings book from when she was a little kid).

i did all the household chores, raking leaves, shoveling snow, taking out the garbage, washing the cars, the boat, keeping the pool clean etc. mom used to contract many of these items with us. contracts where written out and signed by all parties. for schoolwork i got $10 for each a. $5 for b's. nothing for c's. in theory i'd have to pay $5 for d's & $10 for f's. i made out on report cards like a bandit.

but i found it very difficult working for others later during high school summer breaks and really all through my adult life. i was never comfortable taking money from nonfamily members even though i had earned it. i never once asked for a raise and i never figured out how to command the money i was sure i was worth.

i don't think allowance spoiled me. i think i was just never very comfortable outside of my family. it still takes some effort but i always seem to be able to force myself to have a good time outside of family.

the inheritance mom has left means a lot to me. it is more than just financial security, it makes me feel at home. but even with all this, i'd rather still be getting my allowance.

[Nords]

Quote:

Originally Posted by TromboneAl I thought we'd done a super job with allowance, and teaching money management with our daughter, but I have to say that at 19 she's just not handling it well.

That's truly the acid test. And until our kid leaves the nest and makes it through a couple years on her own, we have no idea how well all those years of parenting have worked.

Quote:

Originally Posted by rjpatt I went to a high school where there were affluent kids. I know that some of them were well-off and could afford the BMWs, but now I wonder how many parents were just going deeper and deeper into debt.

I was astounded at some of the vehicles I was seeing in USNA's midshipmen parking lots (e.g. Audi Quattros, Porsches). Some of the parents must have been sharing their college savings with their beneficiaries...

Quote:

Originally Posted by lazygood4nothinbum for schoolwork i got $10 for each a. $5 for b's. nothing for c's. in theory i'd have to pay $5 for d's & $10 for f's. i made out on report cards like a bandit.

We've talked about this a lot and apparently some other kids in her class have a financial incentive to get good grades. This is one of those areas where we'll have to side with the utopian ideals of learning as its own reward.

If I'd been under that sort of contract in my high school days there would've been overwhelming pressure to cheat the system, to say nothing of offering to share my "good fortune" with my teachers if they'd pad the gradebook a little...

[wabmester]

Quote:

Originally Posted by Nords We've talked about this a lot and apparently some other kids in her class have a financial incentive to get good grades. This is one of those areas where we'll have to side with the utopian ideals of learning as its own reward.

There's a theory that reward systems (including praise) teach one to rely on external motivation. As a kid, it wasn't very hard for me to get good grades and I often dismissed praise as insincere or too easily obtained.

We're trying to take it easy on rewards/praise and simply acknowledge hard work.

Interesing article on the subject:

how not to talk to your kids

[laurence]

ahem, wow. Nords, in 1990 I was recieving $20 a week allowance for some time when mom switched to "just grab some money out of the envelope in my desk when you need it". $7 a week in Hawaii in 2007 And she's cool with this? You are already an extremely lucky Dad.

Oh, and I didn't have to pay for lunches, or buy my own clothes or anything else with that money. It was all Taco Bell and video games. One way or another, this is a wake up call for me.

As far as the envelope thing, I probably didn't up my allowance more than 10%, I felt like she was trusting me and I would have felt guilty taking advantage of that. Maybe my mom is smarter than I thought...

Now I wasn't totally spoiled, no car or other mega expensive toys as a teen. I had friends who got brand new cars on their 16th birthday. My parents wouldn't spend the money to even have me insured until I was 18 - and that was so I could drive my little brother to his school on the way to college.

[Nords]

Quote:

Originally Posted by wab There's a theory that reward systems (including praise) teach one to rely on external motivation. As a kid, it wasn't very hard for me to get good grades and I often dismissed praise as insincere or too easily obtained.

My experience with that has been a resounding "Well, duh." After decades of fiddling with various retention incentive systems like choice of next homeport, choice of next duty, or other off-the-wall benefits, the Navy's personnel people have discovered that the best and most consistent way to improve retention is to hand out large wads of money.

Worked for me every time.

Quote:

Originally Posted by wab We're trying to take it easy on rewards/praise and simply acknowledge hard work. Interesing article on the subject: how not to talk to your kids

Po Bronson really nailed that one. It got discussed at our dinner table that night.... Apparently reader reaction is almost as big as his "What Should I Do With My Life" book.

Quote:

Originally Posted by Laurence ahem, wow. Nords, in 1990 I was recieving $20 a week allowance for some time when mom switched to "just grab some money out of the envelope in my desk when you need it". $7 a week in Hawaii in 2007 And she's cool with this? You are already an extremely lucky Dad.

Maybe the luck is the most important factor. She's totally filled up every waking hour with her own chosen activities (school extra-curricular activities, extra-credit projects, basketball, tae kwon do) and she really doesn't have much free time to think about spending all that money. OTOH she's somehow convinced herself that the secret to basketball success lies with $150 shoes, and she's gonna have to learn that lesson all by herself.

[laurence]

Wab, that article was great. We try to focus on praising the action-good job, not good girl, not the attributes already, but it was more a fuzzy notion of, "what, if she hadn't set the cup up right she would be a bad girl? What are we going to return her to the store?". A really great study.

[justin]

Quote:

Originally Posted by Laurence "What are we going to return her to the store?".

I knew California was a strange place, but can you really do this?

I'm moving to California.

[lazygood4nothinbum]

i never felt like mom was bribing my grades and i wasn't about to bribe my teachers. didn't need cash for that anyway as just my smile melted them. school & good grades came fairly easy to me. i think the contracts was just mom's way of showing how to get rewarded for good work, only that's the lesson that never quite took.

my brother now is having a terrible time with his 16-year-old. i've never seen so many f's on a report card, worse than some of the screw-ups i grew up with. he's a bright kid, easily capable of straight a's. just refuses to do the work. psychologist hasn't helped. now my brother has let the 16-year-old pick out my brother's new car which the kid is promised in two years if he gets his grades up. personally i think they are nuts but they admit they are desparate.

i tried talking to the kid the other night at dinner. he's learned the art of distraction which he thinks is working well for him. i was trying to discuss a project he's supposed to be working on but he kept deflecting to a project the teacher showed as an example. after a while i just got tired of putting him back on track and so he thinks he succeeded in removing himself from the equation. and that was just our conversation before dinner. my brother and sil have this 24/7.

reason #676 to be gay, single & childless.