A Kid-Sized Financial Plan

If you’ve been reading this column for long, you know that I am passionate on the subject of kids and money. In addition to the many articles I’ve written, my book, Raising Financially Confident Kids (Revell, 2012), has been revised and updated several times. This subject is obviously important to my readers, too.

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Recently, as I was preparing a talk for a local moms group. I got to thinking about some of the questions I was bound to receive after I explained the system that we used on our boys, and what I write about in the book. After all, we assigned a portion of the family’s resources to manage—an amount commensurate with each son’s age, needs and ability—is not the norm. And that, I believe, is the point. What’s being taught—if anything—isn’t working.

I’m sure you have a few questions about our kid-sized financial plan, so let’s take a peek at my kids‘ book mailbag.

Q: Doesn’t this salary program constitute a free handout that will only encourage kids to turn into adults who think they don’t have to work for a living?

A: No. If you’ve read all the chapters, you know I believe children should do chores and regular work around the house, not for pay but because they are citizens of the family community.

I believe children are their parents’ financial responsibility. While some think that kids need to get outside jobs to pay for things they want, I don’t agree. I believe childhood is a time to learn about life, not to be employed. Kids need to be kids, to participate fully in school and become educated.

We didn’t keep it a secret from our boys that they would be expected to get jobs during the summer after their senior year in high school. They had plenty of notice for when their salaries would end. There were no complaints, no problems. They both got their jobs, we stopped paying salaries, and the transition was seamless. They were pleased because the salaries we were giving them were far less than what they earned on their part-time jobs.

Our salary structure did not allow for a lavish lifestyle. Actually, it taught our boys to be quite frugal—a lifestyle they chose for themselves. The salary we turned over to them was the same money we had used to buy things for them. We simply transferred it from our care into theirs.

Q: I think it’s too risky to give my son this kind of latitude. What if he takes all his money and buys cigarettes with it or worse?

A: If that is your worry, you have something other than a salary problem. Putting your kids on this kind of salary or an allowance program isn’t going to create rebellious behavior. If that behavior is already in place, you need to deal with it before proceeding with this kind of plan.

(Excerpted from Chapter 16 of Raising Financially Confident Kids; Revell, 2012)

Question: What type of allowance or salary plan are you using to teach your kids how to become responsible money managers?

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2 replies
  1. Jessica says:

    I have three children, ages 8, 10, and 12. Recently I bought Raising Financially Confident Kids after hearing a Focus On The Family broadcast you did. I poured through the book and loved the advice and wisdom behind it, but I was hoping to have perhaps a general list of age appropriate things a child could pay for. I’ve talked to my kids and plan to start the two oldest ones next month with an amount I feel comfortable with, but we are already a very frugal family that buys the minimum when it comes to outings, clothing, and that sort of thing. We hardly ever go to the movies or take vacations opting for free or extremely inexpensive outings. I know you stressed that having everything planned out prior to starting the program is important, I am just not sure what all it should include. Thoughts??

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  2. Amanda says:

    My kids get $1 a week per year of age… That’s for treats etc outside of what we buy as family shopping. Once they hit 13 they get $1200 a year for shoes, clothing, sports equipment- etc. They can’t spend this money on other things and what they have left over they put away for following year. When they have a budget they soon realize name brands can’t be bought all the time.
    We also have a ‘junk food box’ for each child. Lunch box that is filled each month with equal junk food, they have to ration it but its all theirs. Each child learns to budget their junk food- our foster kids soon learn that it’s theirs, no one will take it and it will be refilled. Important skills that I then build into money budgeting.

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