Creating a Family Economy: Ditching the Kid’s Allowances, Maybe
Growing up, I never received an allowance. The expectation on Saturday morning was to work through the list of choirs my mom left for us before she went to work. Doing the dishes, sweeping the floor, dusting the furniture, and vacuuming the rug were all part of the Saturday list. My mom raised five daughters while working full time, so having everyone chip in was essential to maintain the house. Yes, my dad chipped in too. He oversaw maintenance, cutting the grass, fixing appliances, and plowing the snow. We observed our parents working two or more jobs to pay for parochial schools and our college education. We knew early in life that there was no such thing as a “free lunch.”
Fast forward to college, my Economics professor explained the principles of supply and demand. He very clearly stated that in life, there are no easy shortcuts to success, “No Free Lunch.” But waiting to learn that lesson in college seems a little late. My family established a family economy because we didn’t have much. It was out of necessity. Shouldn’t every family teach the basics of finance before their kids are off on their own?
So, what is a “Family Economy?” It is learning about earning, saving, spending, and giving money with the safety of making mistakes within the family unit and making it very clear that money is something you must EARN. With that definition, why would you give an allowance? Isn’t that free money? Maybe.
Although I never had an allowance, I worked in the family business since I could walk. It might have only been ten cents an hour, but I learned to count very early with money. I always had money as a child, and I was free to spend it on whatever I wanted. My parents supplied the basic needs of food, clothing, and shelter, but my hobbies were mine to purchase. My sister would buy knitting items, but I would buy figurines to paint. Although I was granted this freedom, the first and foremost lesson was to save money for college. Yes, at six years of age, I was saving for the future and learning the time value of money.
But a typical child in society today would not be able to get a job before 16 years old. So how do you prepare them to be financially literate? Yes, it might be wise to introduce an allowance, but with lessons about responsibilities. You need to support the expectation of a chore list to earn an allowance to learn lessons on finance. But work with your children on ways to earn additional money. Make a list of how they could make more money by doing things above their everyday work. Wash the car? Weed the garden? Anything not in their everyday expectation would work. And let them pick and choose what they would like to do. Get their input on ideas. Maybe a lemonade stand or shoveling the neighbor’s driveway?
Once they understand how to earn money, save, spend, and give, go on the list of lessons to learn. As a grandparent, don’t waste the opportunity for financial lessons by spoiling your grandchildren with “Free Lunches.” Use the opportunity to facilitate financial acumen by assisting your grandchildren to learn about how they could earn.
My parents had a white picket fence that needed constant repair and painting. Our children learned early on how to do the hard work of painting a fence. No, it isn’t fun. No, it isn’t exciting work. But it was work, and my kids earned five dollars for a well-done job—nice lessons on earning.
What can you teach your grandchildren about earning money? Are there chores you can give them to earn extra money? How can you facilitate the lesson of “No Free Lunch?” As a grandparent, your wisdom of earning, saving, spending, and giving can make a difference.
