When I grew up it felt a lot like the movie “The Goonies.” I had my little gang of friends, we had our bikes/ rollerblades/ skateboards, and we had adventures all over town. We traveled the train tracks, built homemade boats for the lake, and camped in our fort in the woods on summer nights. We also locked our bikes up behind the movies, ate at restaurants, went to gas stations for Butterfinger and Mr. Pibb breaks, and hung out at the local yacht club trying to hitch a ride on a real boat or jet ski. We all had our ways of making money to fund our adventures. Sometimes one of our parents would drop us $5 or even a $10 dollar bill, but we all were little entrepreneurs. I sold candy, garage sold stuff pick from trash cans, sold necklaces I made from hemp at the yacht club, traded cards and comics for cash, found turtles in the creek and sold those to some neighbor kids once, hustled on the playground basketball court with the older kids, and eventually got a real job busing tables at age 14. But, the easiest way to get money was to go to the yacht club and just get the rich kids, who got an allowance, to just give us money. They didn’t value the money at all, and they knew they would get free money each month no matter what happened. I know their parents wanted to teach them how to handle money and be responsible with their money, but they didn’t understand the work involved to get money. They didn’t understand the real-life struggle involved in earning and managing the earned income.
As a high school teacher, I get to see this in my classroom going on today. I see a kid pull out 20 plus dollars and ask to leave class to get a bottle of water for $2 in the vending machine. The irony is that the $2 water bottles are in a vending machine strategically placed next to a water fountain with a water bottle refiller attached to it. Then I watch the kids at the end of class throw away the bottle, and later in the day they have a new water bottle in the hallway. They may spend $4-$8 a day on bottled water. When I ask them about this spending habit they replied things such as, “It’s not my money.” “I get $100 a month, so who cares.” “I can just go get more from my mom/dad.” “That water fountain is gross. I’ll never drink it.” “My parents give me whatever I ask for.” I did a little informal economic survey in class to find out who gets an allowance for doing nothing, who gets an allowance from work at home, and who gets no allowance. Out of 160 students I have in my classes, around half just got an allowance for doing nothing. Then the no allowance group was about 30%, and the got an allowance from work at home group was around 10%. The rest didn’t pay attention and didn’t participate. This explained a lot of the behavior I saw in class. Some kids had no respect for the dollar bill at all or how it is earned in real life.
I also noticed this trend with the care they took with their cell phones. Kids who got an allowance also got free cell phones, with the everything plan attached, and treated the phone poorly. They would play catch in class with them, sit on them, and just be careless, knocking them around. The kids who had to pay some money to earn their phones treated their older model phone carefully and they rarely had cracked screens. Some had IPhone 3’s and 4’s in great condition as hand me downs from their parents. They understood that the phone was a once in a lifetime gift or they had to pay $50 to get it and they took good care of it.
We need to teach kids the value of work, and train them to understand where the money comes from. With an allowance, we train kids that money comes from Mommy/ Daddy, and not from work. When I say work, I mean not in the house work. My kids do dishes, clean the floors, clean toilets, mow the lawn, trim trees, vacuum, dust, and do all the household chores at our house with us the parents working with them. They get no monetary reward for housework. I don’t get paid at home in real life for mowing the lawn, and they don’t either. Money comes from outside the house work. If I mow a neighbors lawn, I can get paid, or if I clean a neighbor’s house, I get paid, and that is how I teach my children. My 13-year-old needs money for camp, so I told her she better find a job and earn the $100 she needs. So she went with her go to job, and cleaned my parent’s house. She was still short on funds because she had to pay for some volleyball tournaments (We make her pay for half of the tournament fee, so she puts forth more effort in her play if it is already cost her something), so now she is looking for more work currently. I’m not trying to reinvent the wheel with my kid’s financial lives. I am trying to mirror real life for my kids and make sure they know that money doesn’t come from me, house chores, or anything that money doesn’t actually come from in real life for adults.
Now don’t take this all wrong and think I don’t give my kids any money. I give them the
occasional $5 or $10 bill, but I notice an appreciation for the money when it hits their hands. When we go to the State Fair of Texas I give them each $20 for games or rides, and then I tell them if they want to do more than start saving your money. I slip my kids $5 for concession snacks at high school football games and watch their eyes light up because this is not natural. I pay thousands in sports and activities fees for them to enjoy life and explore new things that might interest them. We eat out together regularly, and I rarely restrict their menu choices, since they do look at prices and order the best value. It’s kind of like when I get an unexpected treat in real life, such as a free night at a hotel because our room was not ready, or I got an unexpected check in the mail for accidentally overpaying on a medical bill. Sometimes, life does just drop some unexpected money your way. But, my kids are well taken care of and do way more than an average kid in America. I would say I spoil them with activities and experiences, but not with free cash. That is earned from hard work.
I do make them save for big-ticket luxury items. My son wanted an iPad and he never asked me about giving him one at age 11. He already knew that he needed to save his money and purchase his own. He ran into my brother, who had an old work iPad he never used, and my brother gave him the uncle discount and sold it to him for $100! My youngest at age 8, wants one now and he knew he could save $100, so he worked hard for his $100, and realized that an IPad starts at $800 new. So now he is realizing that he must work more and save more if he wants to buy an iPad. He is also looking at the Kindle Fire because an iPad is expensive and a Kindle Fire can do many of the things he wants to do for much cheaper. They understand the value of items when they work and save to buy them themselves.
So, stop giving your kid free allowance money! I know you want to teach them about money, but teaching work and where the money comes from is how the world works. We must mirror the model of the world if we are to prepare our children for the world. Let your child go out and hustle, create, think, and save. Let your child work all day and get ripped off or overpaid by people. They will learn to negotiate pay beforehand. Let your child understand that nothing is free and you will see them appreciate things more. Just think of your life and your lessons learned as a child. Reflect and recreate those same opportunities for your kids. You want them to be functioning adults then allow them to have those opportunities in a controlled environment and experience the world of working for their money.