Now that you’re working on simple and impacting ways to affect your bottom line for your family, it’s time to pass that information on to others. I’m not talking about starting your own finance blog—unless you’re interested in that. What I am talking about teaching is teaching your family and friends about being frugal. You can, of course, refer them to this blog and Facebook page, but you also may have personal knowledge and experience. Your friends will be very appreciative of you helping them save money unless, of course, you are offering unsolicited advice. I wouldn’t suggest that you tell your friend how bad they are at dealing with money and expenses. Instead, I would recommend that you talk about how much money you’ve been saving by doing the small tips that we’ve been discussing in this blog and on the Facebook group page.
Be a Leader
An important part of being aware of where and how you are spending your money relates to your immediate family and specifically your children. Children watch and learn by your examples and habits. If they think only purchasing high priced items and fancy clothing stores are “what you do” then they will continue that trend as they grow into adulthood. This type of attitude and action will likely keep your children in debt rather than building savings.
The key to being successful in the financial aspect of life is that it’s NOT how much you make, but how much you spend (and save). If you live within your means (whatever that may be), you will be financially fine. If you consistently spend more than what you are making, you have to draw on your savings and thus create a negative cash flow.
When our family made the decision to move to a single income home to raise our children, this was a decision that was not taken lightly. Sacrifices had to be made and we were willing to do that. We made choices to not have a new car every two years and even not to go on great vacations, but the importance for us was to raise our children ourselves. Sometimes you sacrifice in the short term to see benefits in the long term.
You want to pass on the correct habits to your children so they grow up understanding how to handle money and are not overwhelmed when they are overwhelmed with debt opportunities when they get hit age 18. Many young adults take on a lot of debt in their early adulthood not quite understanding the long-term repercussions of having this debt.
Allowance
An important way to help your kids understand and handle money is by giving them an allowance. The age at which you begin this process will vary depending on the personality and age of your child. If you have a mature child that seems to have a feeling for money, maybe they could start at 4, but it’s probably best to wait until they start elementary school at the earliest. Parents can figure out what works best for their personal families.
To tie or not to tie, now that’s the question. There is a big debate on whether to tie a child’s allowance to chores or not.
Pro
The pro side says that in the real world, people get paid for work that they do so to have a real-world experience; it should be tied to work completed. Some parents even take out “taxes” so children can understand that they don’t receive the full amount. Money for nothing doesn’t teach the child responsibility and creates an entitlement issue.
Con
On the con side, people think that there are responsibilities around the house that should be done whether or not there is a monetary reward solely because they are members of the family. They should be doing them because that is a requirement of being a member of the family and not just for money. So, they feel that it’s a bad idea and kids will only do things if there’s a reward on the line.
Hybrid
The real purpose of an allowance is to teach children how to handle money successfully and that’s why I agree with both sides. In the real world, people get paid for the work they do so I think allowance should relate to some chores (jobs) that need to be done around the house. If they don’t do the work, they don’t get the money. That’s how it works in the real world and they need to learn that they don’t get money if they slack on the work or don’t do it at all. That makes even more sense when you look at an example in an academic situation. Teachers do not give students an A on a paper if they didn’t do it just because they came to class or tried hard. The end result had to be satisfactory.
However, I don’t want my kids to only want to do things when it’s related to money or when there is some sort of reward at the end. I want to teach them responsibility about being a member of the family and a member of our society in general where you don’t get paid for being a good citizen, person, and neighbor.
How to Make it Work
To enforce both the importance for receiving compensation for a job done as well as family responsibility, we have a hybrid of both. My children have specific chores that they receive money for and others that are required as a member of the family. In our home, their personal bedrooms and bathrooms are tied to their allowance. In my mind, if they don’t do these chores, the rest of the family will not have to suffer by constantly looking at the mess, such as a living room.
Plan Ahead
If you have younger children, I would recommend being very explicit on what your expectations are for the chore to be done in a satisfactory manner. When my own children were younger, I helped them clean the designated areas so that they would know what was expected of them prior to inspection. We made sure that everything had a place and it was clear what I expected of them when I said “clean your room.” We did “inspections” every Sunday. During the week, we cut them a little slack as long as clothes are not all over the floor. Clothes had to be picked up before bed every night. If they do not do their chores to my satisfaction (remember we laid it all out at the beginning), they would not receive allowance—none of it. Not half of it, nothing. It’s an all or nothing deal. Did you just inhale and think OMG, I can’t do that?
You may do a variation of this, but I figured for my children, this was a better motivator or they would simply do what they wanted and accept a reduced amount leaving the rest a complete mess. You know your own children, so you can decide (even use trial and error) to see what works best for your family. To make sure that it’s not an impossible task for them every week, I would recommend that you limit the amount of extra stuff that they can have in their room. Our children were only allowed five toys and five books in their room at one time. The rest of the toys were to stay in the play room or in a specified spot. This makes it be a doable job for them and it’s important for their chores to be reasonable for their age.
As a member of our family, our children are required to help around the house in other areas as well. Some examples include setting the table, cleaning their plates from the table, picking up the family room, taking items off the stairs, putting laundry away and even sweeping and mopping. You can also have them help with getting the mail, guide a younger sibling, and taking items out for recycling. My personal thought is that each individual is responsible for their personal stuff and we’re all responsible for things affecting the whole family. These things don’t need to be done every week (outside of their allowance chores), but only things that come up as the day progresses. For example, if they spilled cereal on the floor, they’re responsible for picking it up, not me. This format has been successful in our home.
In my opinion, allowances are great for two things, first to assign responsibilities around the home to begin their “working” knowledge of the real world and secondly, to teach them the importance of budgeting, finance, and money overall. I feel that I have been successful in this goal. I currently have two children that are working, they frequently get complements from their bosses about how hard-working they are. I would also like to think that this is also due of the work ethic we instilled in them when they were growing up.
Once you make the decision whether you want to tie allowances to chores or not, you then have to figure out how much is actually reasonable for them to earn. How do you decide? What’s fair? What’s too much and what’s too little?
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