Money Matters

September 1998

Mom has been so happy with her daughter’s cooperation that she takes her out for a special treat. They do a movie. Then they do lunch. Then to the mall. Now Julie wants a new hat. Mom buys the hat. Now Julie wants a T-shirt. Mom buys the T-shirt. Now Julie wants popcorn. Mom buys the popcorn. Now Julie sees an expensive bracelet and she wants the bracelet real bad. But this is the last straw for Mom and Mom loses it.

"That’s it! We’re going home right now. You are nothing but a selfish, spoiled brat. I try to be nice to you but you’re never satisfied. This is the last time I’ll ever take you shopping!" A nice afternoon spoiled by money matters.

When parents need to buy something for themselves they check their money and make a financial decision. If they decide to buy the item they put their hand into their own pocket and take out their money. Kids need to do the same. Kids need to have their own money when the family goes out. And when kids want to buy something they need to put their hand into their own pocket and use their own money.

One way to avoid the begging and the whining is to give the kids a set amount of money before the trip and allow the kids to decide what they want to buy. When their money runs out their shopping is over.

An even better technique to avoid the begging is to give the kids an allowance each week based on their age. An allowance is money given to kids each week to give them experience with making financial decisions. The allowance is guaranteed each week and is not connected to work done around the house. Parents do not get paid money for doing work around the house. And kids should not get paid money for doing work around the house.

Kids should be rewarded for their chores with words, feelings and their privileges. And if kids do a poor job with their chores their consequence should be different words, different feelings and a loss of privileges.

When kids need extra money parents can come up with a household task like cleaning the attic and give them money for their work. When kids want to buy something like more expensive sneakers parents can negotiate a team approach. Kids pitch in their allowance for one or more weeks and the parents will kick in the difference.

It’s amazing how much kids can learn about practical math when they have their own money. I have seen very young kids begin to read the weekly fliers from department stores looking for sale items and ways to get a bargain for their money. When kids shop with their own money they can learn how much change to expect. They can learn about the 5% sales tax. They can learn what 25% off really means to their budget. I have seen a lot of kids who had no interest in math in school become very skilled in handling the math connected to their own finances.

If Grampa sends $25.00 to your child for a birthday gift and you give the same child only $1.00 for an allowance your allowance is not going to be very important. An effective technique is to put the $25.00 in your child’s personal bank account in his own name. When your kids have their own bank account you can negotiate a team approach to buying an expensive item your child may want. You can take some money from their bank account, some money from their allowance and then the parents kick in the difference.

Giving money for chores can cause a lot of trouble in a family. Some kids who get money for their chores won’t do anything around the house without asking "How much do I get?" A parent who paid the kids .25 each time they made their bed told me that when one of her kids got some money from a relative she handed Mom a dollar and told her " Here Mom, now you can make my bed for a few days."

Giving each child a different amount of money for an allowance based on age is also a very meaningful way to cut down on sibling rivalry. The allowance shows the kids that they are in different leagues in the family. And when the youngest screams that it is not fair to get only .75 when his sister gets $1.00. You can tell the child that when he is the same age he will get the same amount.

Effective parents are aware of treating each child differently. Either on a birthday or on the first day of school many parents make changes in the responsibilities and the privileges for each child. " Now that you are 7 years old I am going to treat you like a 7 year old. Your chores and responsibilities around the house will be increased. But also your allowance will be increased, your bedtime will be extended, and your privileges will also be extended."