As someone who has worked so hard to pay off $62,000 in debt in four years and is now living a debt free lifestyle, I sometimes worry about how I’ll pass on a debt free legacy to my children. How can I teach them about money so they don’t make the same mistakes as their parents? So far, I’ve spent a lot of time modeling good money management to them and talking openly with them about money.
I’ve resisted giving my kids any kind of allowance because I didn’t want to send the message that they are entitled to anything. However, my mother insists on sending the kids a dollar or two a week with her letters, so they can buy themselves a treat at our local store. This and birthday/holiday money has been their only access to money. Well, that and begging for things from mom and dad any time we are on an outing.
I noticed my kids were developing a spending pattern: Get money (from grandma or a holiday) and immediately spend it. This made me start re-thinking the allowance situation.
So, I did it. I set up a system where my kids could earn some money. I talked to them about paid work they must do (cleaning their rooms) and that I will also expect them to do unpaid work (putting away the dishes). I explained, this is because adults have both paid and unpaid work.
A friend of mine told me that she found it saves money to give her son an allowance because he asks for less stuff and she doesn’t feel like she has to buy him things he wants quite so often. After all, if he really wanted it he’d buy it himself.
I have to say, I have found out that my friend’s experience has been ours as well. Instead of money having no value to my kids, they can calculate that it takes them one week of keeping a clean room to earn $1. That life-energy is what gives money meaning. Otherwise it is just paper, right? But because we all put in something we do value (our time) to get the money, then the money now has value.
I think the allowance has helped my kids to understand the time value of money. I think this is another tool I can use to raise kids who won’t be sucked into the debt machine as adults. This is my hope anyway. I can’t really know until they are grown.
What do you think? Do allowances help kids understand money? Will a better understanding of money necessarily mean they will be debt free adults?
(Photo by trenttsd)