So today we sat our kids down and had the ‘talk’. No, not what you’re thinking, get your mind off that for just a moment 🙂 the talk about money. About saving. About giving. I never got pocket money when I was growing up and I’m pretty tight with giving pocket money as I don’t believe in something for nothing and I don’t believe kids should just get money for the sake of it. My kids, well two of them anyway, have to do some very basic chores every week. They include feeding the dog and cat daily, folding their own clothes after the washing is done, they have to pick up the dog poo, keep their rooms clean and the eldest one has to take our dog walking on the weekends. All these jobs amount to $1.00 each although we’ve just added the dog walking on the weekends to the eldest one (11) so we will increase hers to $1.50 starting next week. Like I said, we are not overly generous, nor do we demand too much.
We also save money for each of our children, it started with $1.00/day from the moment I found out I was pregnant (we made sure all of them started from the same moment in their lives). Then it went to $1.50/day at 5 years then $2.00/day at 8 years, $2.50/day at 10 and will increase once again to $3.00/day at 12 years. From then on, we haven’t worked it out, but we’re trying to ensure we can give our kids a start in life. As soon as their savings hit $3000.00 we start putting it into a mutual fund account (whilst continuing to deposit money into it) where we have stipulated the projected date we need the money and leave the rest to the professionals who manage these sort of accounts taking into account that date, as far as risk is concerned -for more info on these sorts of accounts you can go to websites such as:
Anyway, back to the ‘talk’. I read this great article the other day (unfortunately I have just spent the last hour searching for said article on Facebook and cannot find it; lesson learnt: if you want to refer to something interesting you read as a blogger, take a note of it immediately so you can share it) where the principles really hit me. He or she (again I would know had I taken note) talk about involving your children in your money-making decisions and we’ve never done that before but as I read the article, it made complete sense. Why wouldn’t you involve them if you want them to be responsible and make good choices when it comes to money? If that is the end goal to raising a well-adapted, smart, kind, responsible child, then one doesn’t even need to question the motivation behind it.
So we sat the kids down this morning as we gave them their pocket money and asked them to get all the money they have earned (& haven’t yet spent of course). We talked about how everything requires money and they need to start saving, perhaps for a car (particularly the older one). We also talked about gifts and giving/donating. My husband has this great saying he always says to our kids: “Do you want to be the person on the street begging for money, or do you want to be the person on the street giving the money?” Their answer is always the same, they want to be able to give the money. Therefore, they need to make smart money choices. Today has in fact been all about money. We spent half of our car trip on the way to Osan (from Camp Humphreys, South Korea- about 1/2hour as long as there’s no traffic) discussing money decisions including but not limited to investing, car payments, regular household expenses, college, first jobs, employment goals and so much more. It was truly great as the girls kept asking us questions about career decisions, about what a car payment is, about credit cards, about our regrets, even about re-dos (you know, where if you could do something all over again, what would it be). In the store it became a discussion of mathematics and if I buy this, how much would I have left over and is it a good investment/decision? I’ll come back to that though as firstly I need to get back to the most important point of this talk.
I asked them to collect all of their money, then we explained that before they pay anyone else, they must pay themselves in the form of saving 25% of their income. We used some great mathematical equations to arrive at the amount that equaled 25% of their total money (my favorite being 1 quarter out of every $1.00 needed to be put aside and totaling that up for the 7y.o.). The 7y.o. Was so excited because of the way I worded it, she seriously said something along the lines of, “so this belongs to me and no one else? No one else can take it from me or use it?” I told her that this was hers to put aside to save for something big, something she needed like a house or a car or even both. The excitement in her was uncontainable! I loved it! Now, I was a little more concerned about 11y.o. DD, she was a different kettle of fish, but to my surprise, she was actually quite excited too, especially when I talked about the fact she will need a car in 5 years and perhaps we could match her dollar value in a car, then hubby chimed in with “well up to $1000.00 anyway.” And he has a point. She will be 16, she needs a reliable beater, if there is such a thing, and not some fancy car. In my opinion, here in the States anyway, she shouldn’t be driving anything over $2000.00 anyway. So if she’s capable of saving $1000.00+ by that time! then I would only ask her to put $1000.00 towards a car. The rest she can save up for a house, travel, college tuition, you know, all those things that suck away our money otherwise known as life and/or debt.
As far as good investments go, well at this age it’s very subjective. Hubby was all about letting them spend their money on whatever they wanted to and they would soon learn when they made bad decisions and didn’t have any money left over for when they saw something they really wanted, but I couldn’t let them spend $9 on a giant bag of candy! Firstly, we’re already at the dentist enough, secondly, the Mummy in me just says a big fat no to that for all sorts of reasons and thirdly, what a terrible decision! They both got a bit cranky with me and I was definitely the ‘bad’ guy but I was ok with it. Then they wanted to buy nightlights of all things, but I told them they already had nightlights and would it really make them happy to have another nightlight? Is that really a good investment or could they just make do with what they’ve got and perhaps keep their money for something they want even more? In the end, they each bought a small bag of lollies (candy) for $1 and came home with money burning in their wallets.
The great thing about kids is they forget they’ve got money burning until the next time you go to the store, so next time we go, we’ll deal with that problem. Until then, I’ve got another small amount of pocket money to give them next ‘pay day’ and this time, I’ve got it in change so they can immediately put away 25% into their newly decorated ‘savings’ containers. As far as the 10% giving part of it, we’ll save that for another blog all of it’s own.