by Dr. Jim Taylor
Teaching children the value of money and financial responsibility is one of the most practical and important lessons children can learn. Americans, with their ravenous appetites for conspicuous -- and unaffordable -- consumption that is fueled by popular culture, have never been more fiscally irresponsible. Americans, on average, carry over $8,400 in credit-card debt, 20 percent of credit cards are maxed out, only 40 percent of people pay off their credit cards each month, and personal bankruptcy is at an all-time high.
How important is fiscal responsibility? Charles Dickens said it well, "Annual income twenty pounds, annual expenditure nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."
Popular culture has connected what people have with how they feel about themselves and how they believe others will look at them. It has also caused people to confuse wants with needs. Today, many people believe they need cellular telephones, big-screen televisions, and expensive clothing, when these products are simply desires rather than necessities.
This connection between self-esteem and consumption has led to the epidemic of financial irresponsibility and ruin. Popular culture has also made spending money easier than ever. Almost anyone can get one or more credit cards these days and, as the statistics above indicate, many people don.t consider the ramifications of their spending until it.s too late.
Because of this out-of-control consumer culture in which our children are immersed, the earlier they learn about fiscal responsibility, the better off they will be. According to one survey, nearly half a million children in the U.S. receive a regular allowance.
Advocates of early financial 'literacy' recommend that young children begin to understand how money works and are old enough to have an allowance. Allowances show children about the reality of spending, saving, and budgeting.
The first thing you have to decide is whether your children should be given an allowance simply for being a part of the family or whether they have to fulfill specific duties. Some experts suggest that basic family responsibilities don't deserve an allowance, for example, making their beds or bringing dishes to the sink. This relationship also teaches them the value of being a contributing member of the family. Other household chores, such as mowing the lawn or, deserve an allowance. Because these chores go beyond daily household responsibilities, they provide children with an introduction to the notions of work and the exchange of goods and services for money. An important part of giving an allowance.and teaching the value of fiscal responsibility.is that your children learn that if they don't work, they don.t get paid, just like in the adult world.
Allowances can also be useful tools for teaching your children about other values. For example, requiring them to deposit a certain amount each month in a savings account teaches them about frugality and long-term planning.
- Having them set aside part of their allowance for their favorite charity teaches children about the value of compassion and giving.
- Helping them to decide whether to wait to buy something later rather than right away shows them about the value of patience and delayed gratification.
An essential part of becoming a responsible person is learning to delay gratification. Yet popular culture encourages.and profits from.people seeking immediate gratification. Fast-food, pre-shrunk jeans, and plug-and-play electronics all enable people to get what they want ASAP.at a price. Teaching children to delay gratification, through the use of allowances, will make them more resistant to the messages of "Gotta have it now!" with which popular culture bombards them, and will help them grow up to be financially responsible adults.
One potential problem with allowances is that children's responsible behavior can become about earning the allowance rather than the intrinsic value of their family responsibilities. For example, if you pay your children for taking out the trash, they see this chore as a job that they should be rewarded for instead of a responsibility they must fulfill as part of the family. "But I give my children an allowance for their weekly chores -- is that bad?" you may ask. Not necessarily. In this case, you are rewarding them for fulfilling their family responsibilities, but it is not for a specific act. Rather, it is an appreciation of their commitment to your family values. You are also conveying another important message, that their actions have consequences: if they do good things, good things happen. They also learn a lesson about the market economy, namely that work is rewarded.
Allowances can also be used as punishment and to teach children lessons about family values. For example, if your children join a group of kids smashing pumpkins on Halloween, a part of a reasonable punishment might be to require them to pay the families out of their allowances to replace the pumpkins. Thus, your children learn that bad behavior has financial consequences. Also, by relating the punishment to the misdeed, you ensure that your children see the connection and learn the value lesson. For instance, if your son neglects to wash the windows as he is supposed to, an appropriate punishment might be to withhold part of his allowance.he didn't earn it.
A difficult question to answer is how much allowance you should pay your children. Though the precise amount depends on your family's financial situation, the cost of living, and your children's needs, I can offer a few suggestions. Children can start to earn a weekly allowance as early as 5 years of age. An increase of $1 per week for each year of your children's lives is realistic until they reach their mid-teens. At this point, when they begin to drive and date, you can calculate their expenses and establish a reasonable allowance that covers their needs.
A final point. The most important financial lesson that children need to learn is that, as the saying goes, money does not grow on trees (at least for most of us). If your children spend their allowances before the next 'payday,' do not give or loan them more to tide them over. An essential part of fiscal responsibility is learning to live within one.s budget. Staying tough in these situations will ensure that your children learn the hard lessons of living within one.s means.
Jim Taylor, PhD, is the author of eight books including his latest, Your Children are Under Attack: How Popular Culture is Destroying Your Kids' Values, and How You Can Protect Them (Sourcebooks, March 2005), from which this article is adopted, andPositive Pushing: How to Raise a Successful and Happy Child (Hyperion, 2003). He has worked with young people, parents, and educators for 20 years. He has been a consultant and frequent speaker to numerous elementary and secondary schools, youth-sports programs, and performing-arts organizations around the country. Dr. Taylor has appeared on NBC's Today Show, Fox New Channel's Fox & Friends, UPN's Life & Style, ABC's World News This Weekend, and major television network affiliates, and has participated in many radio shows and national print publications.
Copyright © Jim Taylor. Permission to republish granted to Pregnancy.org, LLC.