Thursday, May 27th, 2010
Our philosophy (my wife’s and mine) was that we wanted to put money in our boys’ hands at a young age. So we gave them an allowance. $1.00 for every year of age per week. So when they were 5, they got $5.00 per week. When they were 15, they got $15.00 per week. And so on.
This was not simply their money to spend as they saw fit. Part of the requirement was they had to give 10% back to church. They had to save at least 10% for long-term savings. Then, with what was left over, they could decide whether they were going to spend it that week or set it aside in short-term savings to build money up for a bigger purchase.
That worked reasonably well while they were young. But as they got older, they kept coming to us saying, “I need new tennis shoes,” or, “Here’s a really cool video game”, or “I’ve got this birthday party to go to.” So over time, we upped their allowance, but made them responsible for buying their own clothes, gifts for all their friends’ birthday parties and going to the movies or out to eat with some friends. We still paid for some clothes for school, but if they wanted to get any wild and crazy must-have style clothing for kids, that was their nickel.
And here’s the beautiful lesson that came out of it. Soon after we instituted this new rule, Adam and his mom were shopping for a birthday gift for one of his friends. He had picked out, I think, a video game for about $25, or maybe $35. So he gets to the checkout stand with Annette, my wife, and she turns to him and says, “ I sure hope you remembered to bring your wallet, get it out and get ready to pay.“
And he was just shocked. He was mortified. So he thought about it for a moment and went and put the video game away. Instead, he purchased a $10.00 gift card from the video store. He decided that would be just fine for his friend.
That was his first lesson on the value of money. For some things, I think life really is the best teacher.
Tags: brian Fricke, certified financial planner, finance, financial advisor, Financial Management Concepts, financial planner, Financial planning, retirement, retirement planning, wealth management
