Sunday, September 8, 2013

teaching children to value money

I taught a class in relief society last week and here are my notes from the class.

Recognizing that all family dynamics are different and that what works for some might need to be tailored a little different for others, this has been a great system for us for the last 16 years.
   
These are not just temporal principles, many are spiritual in nature so listen with your spiritual ears.

Why set up a chore and money system in your home?
Well the reasons are SOOO much more than just a cleaner house….
1. you’ll teach them a good work ethic
2. it will build unity in your family as your work side by side
3. it will instill feelings of self reliance and boost self esteem when they can complete tasks and provide their own “wants” with their earnings.
4.they will learn the difference between NEEDS and WANTS
5. they will learn how to manage money and make mistakes with their money when it is not painful (versus as an adult)
6.they will learn that there is a relationship between work and money.  That you don’t get money WITHOUT work just for being a kid in the household.  You also should not expect to get compensated for every single task you do at home.  Sometimes we work because it is the right thing to do.  
7.they will learn to be more compassionate with their money as they exercise the ability to be generous with their OWN money.
8. they will learn how to defer gratification (a spiritual principle) as they save for things they REALLY want.
9. They will learn the value of a dollar (theirs and eventually yours) and become “cost aware”.

Citizen of the household chores vs. chore auction.  I talk about that here.

Money vs. marbles and stickers and treats 
(they want to use the same currency they see you using.)  Children love money.  Marbles and stickers really just comlicate things and the more complicated it is, the less chance that you will stick with it.

Let them make money mistakes 
or “the lesson of the medieval times dagger.”
Short version:  Tanner went to Medieval times with a friend when he was 11.  He had been saving for something.  I don't remember what.  He took all the money he saved with him.  I don't know why.
Low and behold, he came home that night with a bright, shiny (and very sharp) new dagger.  When I asked him what he was going to do with the dagger he said, "hang it up in my room" and I said, "you share your room with a two year old, I don't think so!"   He had to lock it up in his locker.  It didn't take long before he realized it was a bad purchsing decision (he had gotten caught up in the whole medieval times aura) and lost sight of what he was REALLY saving for.  

It was a terrific lesson that he has never forgotten and refers too often when making purchases.  "Is this an impule buy like the Medieval Times dagger?"

Three steps to success:
1 Cut them off.  From now on you pay for NEEDs, they pay for WANTS.
2 their AGE is their WAGE (per week) as a rule of thumb.  (a three year old should have $3 worth of chores available to them to do each week so a total of 12 bucks a month as an example.)  
If you have an older child who babysits, has a part time job, etc  you should not feel like you have to supplement that if they typically are able to earn their age each week.)
3 create your list or chore chart.  What chores do you want done?  How much should each chore be worth?  The total of your chore auction should equal your children’s ages added up.

Bonus tips:
Keep it simple!  The more complicated it is, the less likely YOU are to keep it up.  (another excellent example for not using stickers or marbles)
Try to get your spouse on board, you need an ally.
No paying chores before their room is tidied up and checked.
Just like the real world, you can be FIRED if you continually do a BAD job – when mom and dad KNOW you can do better.
CHORE AUCTION IS OPTIONAL, household chores are not.
Don’t ever LOAN your children money unless you want them to live an adult life filled with debt.  That’s a horrible precedent.
Consistency is key

Trouble shooting!
Why it might not be working:  It is ALWAYS one of two things.
1. You haven’t REALLY cut them off and you are still providing their WANTS.
2. You aren’t taking them shopping enough in the world where they can find things they want to do with their money.

Books I love that inspired all of this:
Money Doesn't Grow On Trees: A Parent's Guide to Raising Financially Responsible Children (Neale S. Godfrey and Tad Richards)
A Penny Saved: Teaching Your Children the Values and Life Skills They Will Need to Live in the Real World  (Neale S. Godfrey and Tad Richards)
Raising Financially Fit Kids (Joline Godfrey)
Silver Spoon Kids : How Successful Parents Raise Responsible Children (Jon, Kevin, and Eileen Gallo) 
Raising Self-Reliant Children in a Self-Indulgent World: Seven Building Blocks for Developing Capable Young People...

0 "my two cents...":