Show them the money!

FIRST, I told you about my parents‘ views on giving an allowance. To recap, they didn’t believe in giving money to children. They paid for everything we needed, but keeping money on our own was an exercise in creativity, subterfuge, and even on occasion shenanigans. Looking back, I think they might have been on to something because the majority of their children are gainfully employed and work our asses off for every cent we have. We also have learned to be savvy about protecting what is valuable to us. So, there are trade-offs to be made, but overall not a bad solution.

LAST WEEK, we talked about the concept of paying kids an allowance based on chores they do around the house. We found out that some of the biggest personal finance people out there like this idea. I, in typical Wil fashion, didn’t like that idea at all. Generally, I’m against turning family members into employees to the household. I think there are chores that need to be done at home, and offering kids money to do what they should be doing anyways just invites lazy, self-centered children in the future. It creates children that grow up to be gold diggers.

So what is left? Well, one argument that I’ve heard a lot about is just to pay kids an allowance because you want to pay them an allowance. No strings attached. This seems like the most honest approach. You don’t want your kids to go and earn money on the streets, where you plan on them learning about sex and drugs, so you want to keep them from opening that lemonade stand or selling pictures of their teenaged sister to the boys at school (wasn’t that an actual plot line in some 80’s movie?). You also don’t want to raise those aforementioned lazy self-centered little bastards, but you do want to start teaching your children how to handle the money they have wisely. So why haven’t I endorsed this method yet?

We’ve learned throughout history that money is a lot of things. Money has been attributed to each of the following things:

-Time

-Root of all evil

-Power

-Makes the world go round

-Talks

Later on in life, we learn that money has value, and part of teaching anybody how to handle money is to teach them to not make deals where both parties don’t benefit. Going back a couple weeks, my parents avoided making deals. They had expectations, and consequences for not meeting those expectations. One could argue, and I wouldn’t disagree, that we benefitted when we met those expectations because we didn’t have to suffer the consequences and we generally got stuff. My parents benefitted because their expectations were met which gave them a sense of pride in their children.

 

In the second example, the benefits are pretty well pronounced. They get stuff done, we get money. Simple, tidy.

 

In the last example, you take away the value of money for your children. If they don’t learn that money has value now, they will not understand that it has value later in life either. You actually create the opposite of a gold digger. You create children who don’t understand the concept of earning money.

 

After all that, after three weeks of talking about allowances, each method of determining how to pay allowances has serious, fatal flaws. It turns out that they all suck to one extent or another! So what is a parent to do?

Never fear, I’m here to help.

In order to most effectively handle the issue of children’s allowances, you need to do some hard work. That’s right; I said YOU have to do some hard work. First, you need to establish minimum standards that you expect your little ones to meet. These standards need to be appropriate for both age and developmental level. Second, you need to clearly communicate these expectations to your child so that there is absolutely no doubt. Whether you need a whiteboard chart to be posted on the fridge, or you need your older child to sign a contract acknowledging the minimum standards in grades, behavior, housework and chores, community involvement or any other criteria, make sure your kids understand what is the least you will accept.

Second, you need to establish privately what is the value you will ascribe to exceeding your minimum standards. For example, let’s say I’m slightly less stringent than AMY CHUA
when it comes to academics. I only expect my kids to earn B- or higher. That’s their baseline. Now, my kid decides to overachieve and earn a B+. I might pay for that, if he has met all my other standards. Similarly, I expect my child to make her bed every day as the bare minimum in housework (I’m so much nicer to my imaginary daughter than my imaginary son; he has to clean the grout between shower tiles!). If she makes her bed and washes dishes (which isn’t assigned to anybody already), that might be worth something to me. The amount you pay must also be appropriate for your child’s age, developmental level, and your expendable, discretionary income.

Third, you need to communicate your pricing scheme to your children, but make it clear that they have to meet the bare minimum in all areas before any allowance can be earned. Your goal is to teach kids that some things just need to be done as part of their daily routine, just like in adult life, but other things will be done for money. Eventually, kids will start doing additional work on their own, in order to earn extra money. Ideally, they will approach you and negotiate a price that is fair to you and to them for certain things. Sometimes that price is zero, indicating that you believe that they should just do whatever as a matter of course, but others will be worth money.

Fourth, you have to be consistent. That doesn’t mean that you can’t increase your expectations, but until you do so, you have to pay the same amount for the same work every time.

Fifth, you have pair any money going to your child with solid education as to what to do with that money. Many people believe in giving to a church or a charity. If that is your thing, you need to educate your child as to the importance of doing so and the reasons why you are making them do so. Part of that education must include some level of allowing the child to make decisions on what they want to do with their money. I have no problem with telling your kid that they can spend only 10% of their allowance on frivolous things, but that should come with guidance that they don’t have to spend that 10% each payday, and that they can choose to save that money for something big that you wouldn’t necessarily buy for them yourself.

Doing this will start your child on a path to becoming financially independent and fiscally literate without spoiling them or forcing them to hide their money and their decisions from you.

 

For Pete’s sake, pay them!

Last week, I told you how my family dealt with the topic of allowances (Spoiler alert: They didn’t!), and gave some possible outcomes of that treatment. I’ve talked to a couple parents that do the same thing for much the same reasons. But there are other sides as well.

The most popular stance is, “pay allowances, but tie them to doing chores around the house” which does seem to make sense. The rationale here is simple. We are training our kids to understand that they earn money when they do a good job.

When asked, this is what Dave Ramsey had to say about allowances back in December of 2010:

I don’t do allowances for anyone. The word “allowance” sounds way too much like welfare to me. We put our kids on commission at an early age. If they worked, they got paid. If they didn’t work, they didn’t get paid. We put a little dry-erase board on the refrigerator and listed all the jobs they had to do during the week, with a dollar amount next to each one. When you did a certain job, you were paid that amount.

Keep in mind, though, kids shouldn’t get paid for every little thing they do around the house. There are some jobs they should have to do just because they’re part of the family, or because mom or dad tells them to do that job. Some of these jobs should have a higher purpose, too. As a parent, you want to find as many teachable moments for your kids as possible.

Once they’ve earned their money, sit down with them and divide it into three separate envelopes: one for saving, one for spending, and one for giving. This way, they get to learn about these three important things while they’re learning how to work.

Teaching kids that there’s an emotional connection between work and money is one of the best things you’ll ever do as a parent. If they learn this when they’re five, chances are they won’t be clueless and financially irresponsible when they’re 55!

—Dave

Suze Orman says:

If you have children, and you give them an allowance, I think you’re making a big mistake. Here’s how I think you should do it: There should be a list of chores around the house that they just have to do because they live in the house. Anything above and beyond those chores- if they do it- oh, you should pay them to do that work! Forget the allowance, pay them for work. I want you to be money minded so that you can save more and worry less.

Now, I know that it sounds like they are saying not to pay allowances at all, but if you really dig in there, they aren’t saying any such thing. What they are saying is that you should peg their allowance to the chores or work they do around the house.  There is some upside to this.  Maybe you get your teenaged kids to mow the lawn, wash the cars, or do other things that you might pay someone to do anyways.  Maybe they learn a valuable lesson that will stay with them into adulthood.  That sounds suspiciously like what we want for our children, right? 

So is there any down side to this idea? Well, look at this possibility. If you pay your kids for some chores and not for others, which ones are going to get done? Even if you say ‘all’, which ones will get done better?  But then, if you pay for all the chores, indiscriminately, you run the risk of socializing your kid into believing that it is right for them to only do something if there is a monetary incentive for them to do so. If that isn’t a problem for you, then it do it!

While I’m not a huge fan of this method (actually, I think it pretty well sucks, if you really want to know my feelings), I can’t say that it doesn’t work when used correctly.  I can also see the argument as it comes from a mother who doesn’t work outside the house, but counts on getting her spending money to do the things she needs to do.  If she is getting paid in this manner, how can it not make sense to pay her kids in the same fashion?  In fact, that argument is part of why I don’t like this method.  Personally, I consider it work when someone gets paid from outside the family.  I don’t like the implications of a man (and let’s face it, it usually is a man who works outside the house) who works outside the house paying his wife to take care of the house.  I think that cheapens all the work that she does, and lets him off the hook to support her as he promised to do when he married her.  When it comes to kids, you are paying them to contribute to the family dynamic.  I don’t like what that allows them to not do.

Next week, we talk about the parents teenaged me would have wanted.  These are the parents that just give allowances because they can!  In the mean time, this reminds me of a pushy kid trying to get paid for the work he did at home.  I generally call them twerps!

Write for Finance For Youth: The Blog

Ever thought that you would want to write for Finance for youth: The blog? Maybe you are a writer who wants to reach a few more readers. Maybe you are a money person who has something to add to the discussion. Maybe you are a young person who wants to share your point of view or the point of view of youth in general. Hell, maybe you are some crank who wants to prove to the world how stupid I am and how much smarter you are than me!

Who knows what your motivation is, but you are feeling the urge to jump on your computer or grab a notebook and a pen and start writing. Writing can be a lot of work, but it can also be very rewarding, especially if you get the chance to write about something as universally important as personal finance. So if you think you’ve got a great article in you that you are dying to get out there, I have only two words for you.

Do it!

 

Send me your best article about youth issues, finance, education, or fun! If it’s good enough, I’ll put it up, along with a link to your site as my post of the week. You’ll get full credit; I’ll get to read some awesome new writers’ works. Everybody wins!

Of course, to keep this all honest, there are a few things I need to make clear:

1. Since I don’t charge for people to read the blog, I don’t pay people to write for it. If I use your piece, you are getting exactly what I get out of it. You get exposure for your work and the means to reach and potentially influence my audience. As I said, I’m more than willing to put up a link to your other work on another site.
   
2. I am a lot of things. I am a writer, a teacher, and a financial advice provider. Notice that I didn’t list “editor” as one of the things that I am. I’m not in the business of editing your submissions. If I have time to spare and an interest in seeing your particular submission on F4Y:TB, I might engage in a dialog with you where I present suggestions that I think will make your article better, but chances are better that I won’t. Generally, I will either use it as it is presented to me, or I will reject it. Either way, I won’t leave you hanging. You’ll know ASAP whether or not I’ll be using your article.
   
3. I’m not the language police, but I don’t like gratuitous profanity or vulgarity. Nothing pisses me off more than having to sift through a bunch of s–T to get to a decent f—ing article. Got it? If absolutely integral to the article, I can see looking the other way, but I’ll make that decision when it comes up.
   
4. I’m only one guy with a blog. I’m more than happy to share whatever resources I have to get your article seen by as many people as possible, but you have to do your part as well. I expect that contributors will do some sort of advertising on their own. Post announcements on your other sites, tell your friends, stand outside the Starbucks with a sandwich board; whatever it takes to let people know to read your article.
   
5. Do yourself a favor and read F4Y:TB before you get all type-happy. You’ll start to get a feel for what I stand for and what Finance For Youth is all about. I’m not going to post an article that goes against what I stand for or what my brand represents. In other words, if you are advocating something that goes against my Qualities of Success, chances are good that you get a quick TNT e-mail.
   
6. I will only entertain original work. Don’t try to pass of “recycled” posts from other writers or link farms.
   

So those are my rules. But what does it take to get your article read and posted? Well, there are no hard, fast rules here, but the basic things I’m looking for are accuracy, personality, and relevance. That being said, there are some suggestions that will help you get your work read, whether here or elsewhere. These are some things I like to see:

1. While brevity is the essence of good communication, don’t sacrifice quality or completeness for a shorter post.  Give the reader the whole idea.
   
2. My best posts, and the best posts I have read always tell the reader a little about the writer.  Let’s face it, there isn’t much new about personal finance.  The only thing that separates a factually accurate post that is dreadfully dull and one that is good is personality. I want to be able to see yours.
   
3. Give your post a hook.  You want to tell me about your journey from bankruptcy to financial independence?  Great!  Make it sound like an epic like The Iliad! Want to give the readers rules for being financially smarter than the average young person, write a limerick that is easy to learn and remember.
   
4. Pictures might not hurt.  Especially if they are funny and add/or to the story.
   
5. I’m big on humor!  I’m just saying.
   
6. Be as entertaining as possible. Give me a reason to want to read what you write.
   
7. Hot chicks always get their stuff read faster!  Of course I am kidding, and do not use physical beauty or gender as criteria for submissions.  See number 5 above!
   

If, after reading this, you still think you’ve got something to say that my readers want to hear, send me your article, any pictures you want included, a paragraph or two about yourself, and if possible, a picture of yourself to include with the article to wil@finance4youth.com. I will read any submissions received in the order I receive them and will communicate with the author to let them know whether or not I will use their article ASAP!

While I was writing this, I stumbled upon a great song by one of my favorite bands, cake.  I saw this awesome video, done by youtube user camillathethrilla that really fits in with the whole writing thing;  unfortunately, Sony and Youtube are full of dickness and the video won’t play from this site.

So, instead I present Greenday singing about one of the best known books ever!  Enjoy!

 

 

Wil’s Top 10 of 2010!

Every year, around this time of year, PF people will post their most popular posts of the previous year. Well, I’m no different! Since 2011 will usher in changes to F4Y, I want to put a period at the end of everything that happened this year. What follows is a list of the top ten posts from Finance For youth: The Blog of all time!

I’d appreciate any feedback on the new look and feel of Finance For Youth: The Blog. Nothing is ever written in stone, but I think this new look speaks more to young people than the old one did. If you disagree, bring it on!

 10.Where the current economic problems started: Way back in 2009, I attempted to pinpoint where the economic problems we are still experiencing started. My basic conclusion is that kids aren’t, and haven’t been taught basic economic and financial principles in school to a sufficient extent. My opinion here hasn’t changed.

 9.Honor: The Most Important Quality of Success: Even further back, in 2007, I presented the Qualities of Success. These are qualities that everybody needs to posess in order to achieve success. Honor, while a shorter post, is one of my personal top three Qualities. The advice here is deceptively basic: Do the right thing and do your best to follow all the Qualities of Success.

 8.Moving Out: This is one of a few posts I did where I talked to young  people about the importance of thinking through the inevitable decision to move out on your own. In this post, I encouraged young people to write down and think about their reasons for wanting to move out.

 7.Thoughts on Marriage and long-term commitment: This is actually one of the posts that heavily influenced the idea of writing Finance For Youth: The Book. I’ll boil down my thoughts on young people making these kinds of decisions: Prenuptial Agreement!

 6.Shh! We don’t talk about that here: Last year, I went to a Christmas party. I found out that people don’t know a whole lot about personal finance, and they are afraid to ask. Another great reason for me to write F4Y:TB. Nothing should ever be taboo to discuss when it comes to finance. If you don’t know something, make damned sure you ask!

5.Dating advice for Young People: I’m married now, so my dating has been severely curtailled, but even as an old, married man, I suggest being honest with your partner and finding someone who is on the same page as you are when it comes to personal finance.

4.The truth about Bank of America: Originally, I wanted to like BofA. At the time of this post, I kind of did. Of course, since then, they have done plenty to F$#k up their reputation even more.

3.QUALITIES OF SUCCESS: Starting the top three is actually the whole page of the Qualities of Success. This page lists all the qualities, provides a link, and gives a very brief description.  I feel good about my readers that this is in the top three.

2.Where Should I Put My Money?: This is another one that turned into a huge part of F4Y:TB. I talk briefly about the differences and similarities of Banks and Credit Unions.
 

And the number one, numero uno, most popular post is…,

1.#1 Rule for Becoming Rich if You Are Young: This is one of the earliest posts and another one that figures prominently in the creation of F4Y:TB. I won’t ruin the surprise with any spoilers here, if you want to know, check it out!
 

 

One thing that I am keeping with the new look is that I like to include music videos.  Some are new, but many are older and more obscure.  These videos could open your mind to some music that you’ve never considered before.  I try to tie them to the theme of the post whenever possible, but sometimes I just like the song.  Today, the song is post-appropriate.  Enjoy!

 

 



 



In celebration of a leader in the Civil Rights movement (ten months late)

Today, I’m going to leave finance again to talk about HONESTY, one of the QUALITIES OF SUCCESS in relation to the Civil Rights movement of the 1950’s and 1960’s.  While today’s post isn’t directly related to Personal Finance, the Qualities of Success are directly tied in with Personal Finance, and as such are deserving of coverage regardless of the context in which they appear.

I believe that putting the Qualities of Success in an historical context allows for parents and teachers to be able to have more complete discussions with young people about themes that are current and yet still timeless.  One of the goals of F4Y is to foster these better discussions so that young people can benefit, not only in Personal Finance, but in all aspects of life.

Because this post is a little more “important” than other posts, I’m not including the standard music video or pictures of animals striking curious poses (sorry, couldn’t resist the Price reference) that I usually include.  If that makes you decide not to read this week, I understand.

Do you know who this person is?  Well, if you’ve looked at Google today or a calendar with historic dates, you would recognize Rosa Parks.  Mrs. Parks was huge in the Civil Rights movement of the United States in the middle of the last century.

What you know about her is probably that she was on a bus, it was raining, and she was too tired after working all day to give up her seat to a white person.  That’s the way I learned it.  I felt sorry for the poor woman.

Her “accidental” breaking of the law was emblematic of an unfair system that treated one group of people as less than another group of people based on nothing more than the color of their skin.  It was shameful, and even though I have no relation to anybody involved in the whole incident, I was ashamed for all of the white people involved.   Then I learned the real truth.

I’m not going to say anything bad about Mrs. Parks.  I’m just not.  But I’m also not going to allow the lie to persist any longer.

Do you recognize this person?  Let me give you some hints:

• She is famous because of actions she took on a Montgomery, AL bus.
• In 1955, she was riding a bus, sitting in the section that was reserved for blacks.
• When asked (ordered), she refused to give up her seat for white people who had boarded the bus after her, leading to her arrest.

Any guesses?  Well, if you guessed Rosa Parks, you would be…, INCORRECT!  Although there are many similarities, this is Claudette Colvin.  She was the first black rider to challenge the Montgomery Bus system and the segregationist policies.  Few people heard of her until a book came out in 2009. 

   CLAUDETE COLVIN: TWICE TOWARD JUSTICE, by Phillip Hoose is the first book where I’ve heard the story of Ms. Colvin.

Some things you will learn about this tragic hiccup in history:    

• Ms. Colvin, a minor, was threatened with being taken to an adult jail for the “crime” she was accused of.  This meant that she would be subject to the punishment that was normally reserved for grown-ups instead of the (relatively) easy sentence of manual labor in a school where she would have faced picking cotton.
• She was advised and helped by Mrs. Parks who was not simply a tired, working woman, but in fact worked as secretary for the local chapter of the  NAACP.
• Ms. Colvin’s case was to be a test for the constitutionality of the segregation policy prevalent in Alabama and many other places at the time.
  • It was later decided that because she came from a poor family, lived in a poor part of town, was young, and finally became pregnant by a much older man, that she would not become the face of the Civil Rights movement in Alabama

  Let me say this again.  Because she was poor.  Because she lived in a poor part of town.  Because she was the victim of statutory rape, and got pregnant, she was ushered out-of-the-way to make way for what was a much more acceptable and activist Mrs. Parks.

  Again, I’m not saying anything against Rosa Parks.  I’m glad that due to the actions of Ms. Colvin and others after (and yet still before Rosa Parks), the policy of racial segregation has been repeatedly challenged and beaten.  My point here is that this is yet another case where young people are taken advantage of and shuffled out-of-the-way by older people.  My point here is that once again, an organic, authentic show of bravery by a young person was sanitized by the older establishment.

  What has the movement lost by not allowing the story of Claudette Colvin to be told?  What have young people lost by not knowing about another young hero?