Should kids have to work for an allowance?

Posted by random olio

I am still on a kick about the book: “All the Money in the World: What the Happiest People Know About Getting and Spending” by Laura Vanderkam. This is the topic that I have been mulling over: Kids and Allowance. On page 210, Laura says:

“For instance, should kids get an allowance? It seems like a straightforward way to teach them how to manage money. Give them $5-$10 a week, and let them handle their small purchases out of that. Likewise, financial education for high schoolers sounds smart. Given the proportion of adults who live paycheck to paycheck and don’t understand what the interest rates on their credit card mean in terms of payments, it can’t hurt to teach kids about money.”

I take it one step further and ask: Should kids have to work for an allowance? I think growing up, my sister, brother, and I occasionally received an allowance. We definitely had to work for it. I can remember often my father would check our work and if it was not done well, we would not get paid. Honestly I do not think they had the money to truly pay us an allowance, so finding our work not perfect was maybe a way out of paying us. Other times he would find things around the house to give us in payment for the chores we had done. Once I remember receiving a caramel/chocolate candy bar that we were selling for school. So I guess in my house growing up it was more of the barter system. Even with the odd and inconsistent payment system I experienced, I do believe there is a purpose and educational aspect of receiving an allowance for chores or tasks. It starts kids out at a young age to know what it means to work and get paid for it. It teaches the value of money. It could be that if a child was willing to do more, they could get paid more (like overtime for adults, if the parents have the funds to do so). Parents could also institute a bonus system for excellent quality of work or attitude just as some adults may receive a bonus based on performance depending on their company.

If parents give an allowance without having to work for it, what life skills are the kids learning? When they become adults do they receive money without having to work for it? Maybe if they have a trust fund, but for the rest of us, we have to work hard for the money we are paid. I believe that hard work makes us think differently about our money, what we purchase, and how we spend or save. Does working for an allowance teach kids the beginning value of money in their lives? One could make the point that kids can learn the value of money and saving without having to work for it. I agree that it can be taught, however, those kids that have the opportunity to learn about the basics of money and how to manage it, in addition to having to work for it is an even better educational life experience.

I wonder what would financial education look like for high schoolers? I had an economics course in high school where we learned about stocks and bonds. I remember the simulation of our “made up companies” and how well our stocks did, but I never learned about the basics: balancing a checkbook, my credit report, credit score, credit card debt, etc. It was almost as though we went straight to Economics 3.0 but skipped 1.0 and 2.0. If we allow teenagers to drive cars at 16 (in many states), and allow them to be in control of expensive, heavy machinery, then why do we not ever teach them about their financial future? Did you learn what you know now from your parents, or from trial and error as an adult?

What do you think? Should kids have to work for their allowance?

Tomorrow is TAX day…

Posted by random olio

Did you have a good weekend? I did. It was not long enough though, I still have a long list of items on my To-Do list. Next weekend I guess. Chris and I went to the Wooden Shoe Tulip Festival with friends and their precious little ones. It is the perfect place to take kids. The adults can enjoy the flowers (and I think the vast tulip field intrigues the kids too) but they do a wonderful job of having activities and rides for children too. We had wanted to go for a while and Saturday turned out to be the perfect day, the sun was out and it was slightly warmer!

Wooden Shoe Tulip Farm

So tomorrow is tax day. Have you submitted your taxes? I had to remember (and Google) why we have Tax Day on April 17 this year. Since the 15th falls on a Sunday, usually it would be the 16th, but it is Emancipation Day in the District of Columbia, so for 2012 it is on April 17. We just shelled out a chunk of change to the IRS. It is always the dilemma, do you pay more throughout the year and get a refund, or do you have less taken out and have to pay in April? I can see it both ways, but I have to say in the end it is never fun to write a big fat check to Uncle Sam. (By the way, I have always felt bad for those men out there that are named Sam, that are also uncles – your name gets a bad rap does it not?)

So since many of us have to pay out a ton of money tomorrow, maybe it is also a day that we should pamper ourselves and do something that feels good. Something relaxing, something happy, something soothing. I enjoy the EaterPDX website for updates on new restaurants and food happenings in Portland. They have shared a list of restaurants nationwide that are giving discounts and deals on Tax Day, April 17. It might feel nice to get a deal if you just shelled out some cash to Uncle Sam.

Enjoy yourself tomorrow, don’t let the IRS get you down.

Money Club or Book Club?

Posted by random olio

Is it bad that I am intrigued by the idea of getting together with others and instead of having a book club (which of course would be great too) having a Money Club? Is it me, or do I feel that most others would not enjoy it? Is it because money is such a taboo topic among so many of us? I do not think a Money Club would necessarily need to be just women, but then maybe it would make women feel more empowered if it was just women. In any case, I am curious, if a monthly Money Club get-together is something folks would go to?

I got the idea from a LearnVest Daily email newsletter. I wish I had come up with the idea. I did not know the idea had been around for a long time. After doing a Google search I found quite a few websites that give details on how to start a Money Club. Regardless, I think it is something I might try to start. We all need to be more liberated about money issues, debt, talking to our spouses about our checking accounts, spending needs, etc. The above link shares steps for starting your own money club.

It is possible your Money Club might start out and be a bit uncomfortable. I think it is because of how little we talk with others about money, but it is so needed. I know plenty of individuals that are freaked out to even look at their checkbook so they just resist doing so and as a result do not know how much money they have to their name, or if their bank is hemorrhaging their accounts with unwanted and unnecessary fees. Others may not know what their joint income is and whether or not they have an emergency fund (maybe their spouse takes care of all of it and they never talk about it). A Money Club could help shed light on their current financial state, and if they are on track for retirement, are they financially prepared for the loss of spouse, or the loss of income. Or maybe it is about sharing resources, ideas, and encouragement for individuals wherever they are in their financial experience.

Financial conversations may not be something that you care about, and it may bore you to death, but it is as necessary as attending to many of our basic needs. Maybe I should start a virtual Money Club via phone or online if there are not enough interested individuals in my local area. So if an ETF or a living will leave you with a blank look on your face, maybe a Money Club is a great way to learn more, have fun, and get to know others while helping you to feel at peace about your financial future.

I am off to ponder this idea further.

Engagement rings as downpayment?

Posted by random olio

I just started reading “All the Money in the World: What the Happiest People Know about Getting and Spending” by Laura Vanderkam. I am intrigued by quite a few ideas I have read so far, so I have a feeling I might end up writing about this book over the next few days. For those of you that may not know me, I am avidly interested in personal finance. I believe that as we grow up we do not learn about personal finance unless our family teaches us, or we specifically take classes in college, or some other random way. Most of us wind up learning about it by default, and even at that we do not feel completely confident about what we really know regarding finance.

The premise of this book is that even with all the money in the world most of us would still not be happy. The author explains how we can use money as a tool to creatively set ourselves up to do the things we want to do in life. Because I am passionate about money issues and women issues I found the following ideas interesting about engagement rings. The average couple spends $5000 on an engagement ring. My husband and I quasi eloped. We told folks before we left to get married, had a send off party, but went to sun and sand just the two of us, with the officiant, photographer, and videographer as our witnesses. Based on how we got married, I have an interest and intrigue for big and small weddings and how folks decide to get married. With that I have always been fascinated by the engagement process. We did not have a formal engagement, or an engagement ring, our experience was all very non traditional. In her book, Laura talks about how men in the 1930’s would propose to women and then have a string of fiancees. To protect women multiple states added laws that allowed women to sue for breach of promise, meaning that men had expensive consequences when proposing to multiple women. I am shocked (and a bit in awe) that women had very few rights at the time, and yet they could sue a man for breach of promise. This is the background Laura shares:

“Then in 1935, a legislator from Indiana sponsored a bill abolishing broken engagement as a reason to sue for damages. Other jurisdictions followed, which soon raised a question: if a woman couldn’t sue, what could she do to protect herself? One solution would be to demand a large transfer of capital as part of an engagement. That would make any prospective grooms think twice about seducing a woman under false pretenses. The most efficient way to do this would be for the man to give his beloved money. Money can be used for anything, and so this method would at least let the woman do something useful with it, like go to school or start a business. But genteel folks have always found cash a bit tacky in proper situations, so that didn’t catch on. Fortuitously, at the same time brides were looking for something expensive yet respectable to secure their honor, the diamond industry faced a glut of the precious stones and needed some way to move them. Seeing an opportunity, the DeBeers company staged one of the first national marketing campaigns to boost diamond sales. Its advertising agency got Hollywood stars to wear conspicuous rings, and movies soon featured engagement scenes involving diamonds. Within just three decades the diamond engagement ring was welded into the culture, almost universally accepted…” page 18-19

So our current day engagement ring came about from women finding an expensive way to secure their honor. Does that mean if the man breaks off an engagement then the woman keeps the ring, but if a woman breaks an engagement she has to return the ring to the man? It made me start to think: is the cost and purchase of an engagement ring still necessary? Is it the most fiscally responsible way for a groom (or a couple) to spend their money before starting their life together?

Food for thought.

Mr. Yuk + Finance

Posted by random olio

Do you remember the Mr. Yuk stickers? At an early age, we were taught not to touch bottles or anything that had the Mr. Yuk sticker. I can also remember the campaigns for: Stop, Drop, and Roll, D.A.R.E., and MADD. Yet, what I do not remember was ever learning about personal finance. I was set for poison, drugs, drinking and driving, and fires. However, I never learned the basics for spending and saving money in my everyday life.

Over the past few years I have become a Suze Orman fan. I like her sassy style and her direct and to-the-point message. I was not always so interested in money advice and information (just in collecting Mr. Yuk stickers). I learned much of what I now know because I was put in situations where I had to learn quickly or the hard way. Now I like to try to learn and understand things before I am put in such situations. What I’ve always wondered though, is why money is such a taboo topic. Discussions about money are met with discomfort by others. We do not discuss our personal salary, our adjusted gross income, our interest income, or total household wealth. Now, I am not encouraging you to go out and do so. What I am hoping, is that personal finance is something that is more prevalent in our everyday discussions.

When you find a great sale or an amazing find, you tell your friends and family, right? Do you do the same when you learn about an excellent ETF (Exchange Traded Fund)? I’ve always been baffled that I was taught how to cook in Home Economics, but I was never taught how to balance a checkbook, what an APR on a credit card meant, and how important a credit score was on purchasing a house, a car, and now even finding a job.

If we do not teach the ramifications of avoiding our bills, or what happens when we default on a credit card, then how can we live in society and be responsible for our obligations? Yet, we are taught early on how to sew and make chocolate chip cookies (or depending on the school how to saw wood, or hammer a nail). These types of money discussions should be happening with children early on in life. Children should understand that charging items on a credit card means that at the end of the month they should be able to pay for their purchase.

Maybe this is all a factor in why our nation is in such the mess it is in? Is more education needed for both adults and youth about the importance of money conversations in our lives? I know I can benefit from continuing to learn about personal finance and how I can better set up my retirement. Should we all proceed with more caution and resolve to be more open and honest with ourselves and others about finance? No eye protection or Mr. Yuk stickers required.