Mon 28 Sep 2009
I’m not a parent yet, obviously, but as a thirty year old soon-to-be-husband, I have some catching up to do before I can be the bona fide parent you’d expect from a person of my age. So, when I came across this article, I got to thinking about my future kids and their allowances. Some questions for you seasoned parents:
- Should we only pay for extra chores?
- How much money should I give my kid? How much does it increase with age?
- Should we let them spend it on what they want OR should we require them to save a portion of it? How much should kids save? 10%
- Coins, bills, or a savings account?
- How old before kids start getting an allowance?
- How often should we give them allowance?
- What can kids buy with the money they earn? Candy? Video games? A TV for their room? Their own DVD player? Guns?
- Should kids get a 401k account? Should parents match 5% up to $5,000?
- When should I read Rich Dad, Poor Dad to them? the E-Myth?
How does your family handle children’s chores and their money?
After reading “The First National Bank of Dad” by David Owen we instituted allowances for our 7-year old ($1/week) and 5-year old ($.25/week). It’s been about one year since doing and we’ll probably make an adjustment soon but haven’t decided how much.
The allowance is not based on chores (they have to do those regardless) but we will pay for extra chores.
We do not require savings or charity because enforced savings or charity is not teaching the correct principle of either. However our 5% interest per month (~70% annualized) helps solve the issue of savings as they quickly see how getting their money to work for them is exciting. We do weekly allowances (Monday when FHE is) and the first Monday of a new month we count up what’s in the jar and compute interest (helps teach math and basic counting).
They can pretty much spend it on whatever as long as it doesn’t break family rules–so no TV in their room for us.
My take on “Rich Dad, Poor Dad” is that it’s tightly coupled with the MLM crowd. Do you feel the same about RDPD as MLMs?
good thoughts, Spig. Thank you.
I HATE mlms (see:
http://www.ryanbyrd.net/rambleon/2006/12/19/sumpin-fer-nuttin-the-fallacy-of-network-marketingmlms/
http://www.ryanbyrd.net/rambleon/2008/10/26/do-you-believe/
http://www.ryanbyrd.net/rambleon/2006/10/08/nothing-says-utah-like-jello-ice-cream-and-pyramid-schemes-mlms-part-1/
etc.)
RDPD taught me to invest in things that generate money (like companies, royalties, apartment complexes, etc.)
I found Kiyosaki’s hubris and self-promotion in RDPD a little much. His board game retails for an astounding $195! Some of the same things that bugged me are articulated in the analysis and criticism by John T. Reed.
RDPD is standard business school reading, which is where I first encountered it. I do think selling the game for ~$200 is obscene. The second time I saw the book was at a display at an Amway meeting. From what I can gather, Kiyosaki is pretty friendly with the MLMs and he will pimp out his time to address crowds to anyone with sufficient cash, regardless of ethical standing. That’s lame. Still, the book did teach me a thing or two.
I must say, I’m not a huge fan of rewards-based systems. I’ve read research that indicates that employees actually perform worse when given incentives. I can’t help but think kids would act similarly.
I generally try to stay away from rewards or allowance. I could be proven wrong someday, but not right now.
I agree about rewards. While I personally haven’t read anything by Alfie Kohn, I understand he talks a lot about the problems of rewards. A TED talk of interest can be found here: Dan Pink on motivation.
With Josh 6 yrs.old.,he has a star chart of things he needs to do, not a couincidence they are things he has trouble with, so this motivates him. Such as, putting dishes on counter,making bed, doing homework with no complaining, etc. He gets a star for each task done, if he gets all the stars for the day then he gets a nickle in his money jar that night. He doesn’t have a concept for money amounts, so a nickle will sufice for now. When he has saved enough he can buy a treat of his choice.
What do your family members think?