A Dad’s Attempt to Teach a Money Lesson

On my last flight, I had the opportunity to listen to one of the podcasts (Your Money Minute podcast, see Episode 38) with Mary Karges about a really cool product called the Moonjar.  The Moonjar is a tool that can help teach children about money and how it can be used.  I wish I had one of these when I was younger!  There are 3 “slots” for a kid’s money in the Moonjar…Share, Spend, Save.  The goal is to teach kids that money spent can’t be shared with others (like giving to your favorite cause) or saved (for a bigger goal like a car when you’re of driving age).  It’s a great way to have conversations with kids about money and that money doesn’t grow on trees, or come from the magical ATM, there has to be an actual source of funds behind the ATM.  Listening to the Moonjar podcast though, reminded me of something I did with my daughter a long time ago when the subject of “allowance” came up.  I wanted to do two things, respect her desire for an allowance and teach her a lesson about the real world.

I guess I should preface this by letting you know that I’m not a real big believer in the concept of an allowance for kids.  To me, it’s a reward for nothing.  Receiving money for nothing is not something I want my kids to become accustomed to.  It’s not how the world works and it can foster an entitlement mentality that I don’t want to see.  Maybe I really am the “mean dad” they think I am?  So, rather than an allowance, there’s a Chore Chart and when things get checked off the Chore Chart there are monetary rewards.  Cleaning a bathroom is WAY more highly rewarded than unloading the dishwasher, and with that I’m trying to teach that tough stuff is rewarded, and I’m trying to find someone else to clean the bathroom.

I remember when I first implemented this concept with my daughter when she was 6 or 7 years old, maybe I was a bit too ambitious with what I was trying to teach, but hey, all first time parents tend to go overboard a little bit.  She was very excited to have earned $10, and had all kinds of plans for the money.  When “payday” came, I handed her six $1 dollar bills.  She looked at me like I had 3 heads and said, “Dad, I thought it was supposed to be TEN dollars, and this is only SIX.”  At that moment, my “great teaching moment” (italics added to indicate sarcasm) had arrived.  Why did it go from $10 to $6?  She wanted answers.

I explained to her that “in the real world” we have to pay taxes and it makes sense to save at least 10% of your income.  So, I gave her a deposit slip for her savings account with an additional $1, and I thought that my teaching point (let’s start this whole concept of saving money fairly early in life…) had been made.  She was a bit happier to get that dollar, understood why it makes sense to save a portion, but she was very troubled by the taxation piece.  I wanted to say “Welcome to the club!!!” but resisted.  I explained that for adults, taxes paid for roads and bridges and good stuff like that, and for her, taxes paid for things like a roof and a bed and running water.  It was a good conversation and when it was over, I think she completely understood the point I was trying to make.  I didn’t want her to get a “real job” one day and be totally shocked when her paycheck is smaller than her hourly wage of X hours worked.  And yes, I did find a way to give her that extra $3 that I had “taxed” before so I got to teach her the stuff I wanted to teach, she got the money she had earned, and all was right in the world.

A funny postscript to that day:  She added the $3 in “taxes” to her $1 and deposited it in her savings account.  Fast forward to today, and she’s almost 16, and she has a thriving babysitting business as well as a pet care business (when friends/neighbors are on vacation she takes care of their pets and waters their plants, etc.) and tries to save over half of what she earns.  That very first day of “allowance” turned out to actually be a good teaching moment.  Who knew?

So, if it’s something a little bit silly like my conversation with my daughter, or a really cool teaching tool like the Moonjar, finding a way to have conversations with kids about money when they are young can instill some behaviors that should help them in the long term.  Now if only we could have this kind of conversation with Congress.

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