Are your young cubs money-savvy? It’s never too early to start being smart about money, a subject we’ll cover regularly with Gwen Rockwood’s Mama Bears column.
I admit it. I’m a worrier. It applies to nearly all aspects of my parenting but particularly to teaching our three kids what they need to know about money. I worry that I’ve screwed it up already or that I’m actively screwing it up now.
When they ask for a game console that costs more than $300, (as if it was as inconsequential as a pack of gum), I worry they don’t appreciate the value of a dollar. And when they’re afraid to order dessert because of the extra cost, I worry that I’ve gone overboard and turned them into penny-pinching misers.
Where is the middle ground when it comes to teaching kids about money, and how can I get there?
Financial experts Dave Ramsey and his adult daughter Rachel Cruze say the road to get there starts with work. Co-authors of the book “Smart Money Smart Kids,” this father-daughter team says it’s important to make sure kids connect money to the concept of doing work. They advise getting rid of the term “allowance” and using something like “commission” or “paycheck” instead.
“You should view teaching your children to work in the same way you view teaching them to bathe and brush their teeth – as a necessary skill for life,” Ramsey writes. “…If your child graduates from high school and his only skill set consists of playing video games, whining, copping an attitude of entitlement, and eating junk food, you have set him up to fail.”
Ramsey said one of the greatest benefits of teaching kids to work is that they tend to lose respect for people who refuse to work. He said that he and his wife noticed that, as their kids became adults, they “didn’t pursue relationships with people who didn’t know how to work.”
Here are examples outlined in the book of work that kids of various ages can do to earn “commissions” or a “paycheck.”
Ages 3 to 5:
• Pick up toys.
• Help carry in groceries.
• Match up clean socks in the laundry.
Tip: Inspect their work as soon as it’s done, brag on them, and pay right away, preferably with $1 bills that you put into a clear container. Kids are visual learners and seeing those dollar bills fill up a container will help reinforce the concept of how money can grow. Also, take them shopping so they can learn the satisfaction of walking into a store and paying for something they want with money they’ve earned.
Ages 6 to 13:
• Making beds
• Feeding pets
• Taking out trash
• Watering plants
• Washing the car
• Sorting, folding, putting away laundry
• Cleaning bathrooms
Tip: Decide on the number of jobs each kid has and the dollar amount assigned to each job. Set up a weekly pay schedule, which helps teach delayed gratification and patience. Don’t pay for work that didn’t get done.
Ages 14 and up:
Ramsey and Cruze say teens should not only share chores around the house but should also be encouraged to find work outside the house, like a lawn mowing service, babysitting service or a retail job at a store.
Tip: Set up a checking account for your teen. Total the amount of money you would normally spend on that teen’s clothes, entertainment and other needs and put that amount into his or her account. If your teen needs more money, he or she should work for it.
We all have to do some jobs simply because they’re part of life
As a parent who has put this “work for pay” system into place, I can guarantee you that, at some point, your precious angel will take a dirty dish to the sink and then ask how much you’ll pay him for doing it. Use the opportunity to point out that we all do some things simply because we live in the house and it needs to be done.
Rachel Cruze explains it this way: “You want your kids to understand that money comes from work, but you don’t want to go so far that they end up thinking they should get paid for everything they do around the house. …We all have to do some jobs simply because they’re part of life.”
Finally, Ramsey tells parents not to beat themselves up if they occasionally forget to go to the ATM and miss a kid’s payday. The point is not for the system to be executed perfectly but for it to be applied the majority of the time so the principles can become a part of who your kids are and who they grow up to be.