Bank of Dad – Will Your Kids Be A Client?

Posted by Guest Author on July 15, 2009

This is a guest post by Diane McDougall. Diane is a mom, professional accountant, and financial provider for her family of six. She and her husband made it possible for him to be a stay-at-home dad so that they can be an active, everyday part of their kid’s lives.

Bank of Dad

My dad’s favorite T-shirt, since my first year of college, says “Bank of Dad”. The T-shirt did not lie and my dad gifted and loaned me money on several occasions for big ticket purchases during my early twenties: new car down payment, exercise machine, graduation trip to Europe, and more.

His intentions were in my favor, but the lessons on saving and waiting were not being taught to me as a child or even in my early twenties. Fast forward 10 years. With a stepdaughter in her teens and three boys under the age of 7, I have been experimenting on how to teach them about financial prudence.

Teach Kids about Finance

I enjoy finding new, different, creative and fun ways to manage my household finances for today’s child rearing years, tomorrow’s college years and eventually retirement years. Here are a few ways I teach finances to my kids.

Allowance. My children earn money by completing their household chores, and then they save half and spend half at their discretion. I believe that a dollar earned is a harder dollar to spend. I rarely buy any extras for my kids and tell them to use their allowance. I have a flat rate I pay for each chore and I assign enough chores so that they earn approximately $1 per year of age. This has given my teen a perspective of the value of a $20 movie night with her friends that took her several weeks to save.

Participate in Spending on Budget. I tell my teen that I have $100 to spend today at the grocery store. She helps me keep a tab of the items (rounded up to the nearest dollar to account for sales tax and for simple addition) and keeps me updated on the tally as we shop.

Hobbies. My teen receives a list every other month listing the costs we pay for her swim team and band class activities. The amount adds up fast and gives her a perspective of the cost of extra activities. This list could also include cell phones, texting, trendy clothing (more than the jeans/t-shirt), I-pod music, auto insurance, etc… This list does not include her allowance expenditures as her allowance is her own money.

Credit card. Credit is a very useful tool which is easily disrespected by consumers. Teaching teens to use it wisely may prevent mistakes in their twenties. When my teen is driving age, I plan to start this learning process with a gasoline card.

What are your ideas for raising children to be financially smart?





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Comments to Bank of Dad – Will Your Kids Be A Client?

  1. I really enjoyed reading this article. I must say, I have not done a very good job of teaching my kids about finances. I have 2 older children 25 and 23 and thank goodness they did not get their finance habits from me.

    It is only in the last probably 5 years that my wife and I have been managing things the right way (budget, getting out of debt, etc.).

    I have a question for you. I still have a 15 and 13 year old at home and would love for you to share what chores you pay for and how much. My wife and I have not been able to figure out the best way to do this.

    Thanks again!

    Paul

  2. For my 13 year old, she gets 50 cents a star. This is a work in progress and changes:
    1. Do homework – 5 stars if all homework is turned in when I check online website (all or nothing for week)
    2. Laundry (her clothes) – 5 stars if laundry is put away the day after her laundry day (all or nothing for week)
    3. Clear dining table – 1 star per day
    4. Clean dishes/kitchen (3 days/wk) – 3 stars/day.. sometimes I give more for especially messy days
    5. Take out trash – 1 star per day
    6. Clean her bathroom – 3 stars (check her bathroom once a week for it to be clean (all or nothing)
    7. Help Daddy or Mommy – bonus stars… # of stars is our discretion for volunteering to help the family (from holding brother’s hand while shopping to helping in yard).
    For 13 years old— my goal is for her to get $13/wk ($6.50 to spend anyway she wants and $6.50 for bank account). She could get more if she did everything perfect every week, but 13 year olds tend to get lazy and forget. This has been a more positive experience than giving her the $13 and deducting for missed chores.

    Diane

  3. Great post, Diane! This is coincidentally the topic of our live chat tonight with Denise LaBuda. Hope you’ll come and continue the conversation about how to teach kids about money tonight at 9pm EDT!

    http://www.talkshoe.com/tc/51172

    Keith Morris

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