Kids and money and class and ramblings about allowances

There’s been a resurgence recently in discussions on how to teach kids about money.  We can, of course, point you to our version of, “The Allowance Post,” from a couple of years ago.  DC mainly uses hir allowance to buy Christmas or Birthday gifts for DH (I am too lazy to nudge hir into crafts like DH does for my presents from DC), though ze did save up for a $15 lego game last fall.

Ze gets a pretty small allowance, 20 cents per year of age, which means $1/week.  We have no restrictions on how that money is used.  My allowance was 10 cents per year of age, again with no restrictions.  For the most part, I spent my entire allowance on candy every single week.

Growing up we did not have a lot of money.  We talked about money and trade-offs all the time and did not have a whole lot of things.  (Instead of stuff, the priority was our education.)  Very early on I learned that money is really important, that it can be a source of stress, that having it can make things a lot easier.  I learned how to shop for the best priced item (like looking at price per unit at the grocery store) because we had to.  DH’s childhood protected him more from monetary troubles, but when I was living in urban apartments, he was living in a rural trailer and his parents were working and going to school.

DH and I are firmly ensconced in upper-middle-classdom.  I LOVE it.  I never ever want to go back, and that’s probably why we’ve saved a bunch.  I love my a/c and my dryer and my dishwasher and not having to make choices between fancy cheese and daycamp.  Not having to completely freak out about the possibility of DH losing his job.

At the same time, there’s a worry that because we don’t have to make a whole lot of trade-offs, that DC may not be learning about money.  What do you do when you’re born upper-middle-class and don’t face the same kind of monetary trade-offs as a child that might be needed later as an adult just starting out?

But really, I’m not worried.  Ze seems to be picking up money lessons here and there anyway, and not just because, “Mommy studies money.”

For one thing, ze’s at a private school that has had money issues this past year.  Additionally, the teachers only make 23K/year.  So at school ze’s learning to be worried about money.  Ze came home one day almost in tears because hir textbook had been lost and it was *very expensive*.  I explained that that’s why I make the big bucks, so that we can replace things like textbooks without worrying about them.  (They found the textbook the next day– someone else had put it up on a high shelf.)

At the same time, we have long conversations at the grocery store about value.  Ze knows how to look for what’s the cheapest per unit, just like my father taught me, but ze gets an additional explanation when we don’t buy the cheapest item.  Why do we like it better, how is it better quality?  It’s important to know how to live frugally, because that gives options, but it’s also nice to be able to live an upper-middle-class lifestyle and to understand when trade-offs are worth it when you have enough money.  That’s a good reason to make money, I think.

We’re also planning on paying our kids’ full college tuition and board at the school of their choice.  More on that in our next deliberately controversial post, if I ever get around to writing it.

I think it’ll be ok.  We emphasize learning and education and understanding and hard work.  Ze seems to have picked up on those lessons.  It’s nice that ze can focus on these more intrinsic kinds of things– what ze wants to do to make his mark in the world, rather than omg I never want to have to worry about money.  That’s a luxury but it seems to be one that hasn’t hurt most of the folks I rub shoulders with who are second or third or more generation upper-middle-class.  Sure, there are some folks who never learned money lessons and are complete disasters, especially if their parents stop bailing them out… but for the most part being brought up upper-middle-class doesn’t seem to directly mean that a kid is going to spend more than they earn.  And it doesn’t seem to hurt in terms of getting opportunities that can lead to higher earning power later on.  Things my parents made huge sacrifices for, but we can just give our children while still eating fancy cheese on a regular basis.

Side note: When a colleague of mine, after reading the Slaughter article, said she didn’t have it all because even though she doesn’t have a spouse and kids taking up her time, she felt like she didn’t have time for everything she wanted to do, my response was that I have SO much more than my parents did.  I have to make so many fewer compromises than my mother did and so many fewer sacrifices than my parents, that I feel blessed and lucky and like I have more than I ever dreamed (not that I don’t think I should be getting a bigger salary!).  My colleague grew up in a higher SES, still middle class, but on the other side of it.  Will my children feel ennui more keenly because their childhoods (at least up to this point) are more charmed?

Did money lessons come through necessity when you were a child or did you have to learn them separately?  If you have kids, are you worried about how to teach them about money?  

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62 Responses to “Kids and money and class and ramblings about allowances”

  1. Alyssa Says:

    Unfortunately, I didn’t learn a lot about money management as a kid (grew up in upper-middle-class family). I got an allowance, but my parents would give me other money too or buy me things. I was a disaster in my late teens and early 20s. At one point, I had 50K in consumer debt (I didn’t have any debt from education or a car or anything). It was horrible. With DH’s help, I dug myself out and have been debt free for about 4 years now (consumer debt free – we have a mortgage). I definitely wish I had learned my lesson when it would have been $100’s of dollars, not 10’s of 1000’s. But, I definitely learned from that experience and we are extremely careful with our money (we never buy things on credit unless we can pay it off that month), even though we are upper-middle-class as well. I intend to do a better job with our child(ren).

    • nicoleandmaggie Says:

      What kinds of things are you going to do with your children?

      • Alyssa Says:

        Just seeing this now – sorry! I don’t know what our full game-plan will be, but one thing I want to instill in our child(ren) is they need to save to get the extras. So, for example, we’ll pay for their clothes, but set an amount we’re willing to pay – say $40 for jeans. If they want a more expensive pair, then they need to pay the difference.

        I want to give allowance and not put stipulations on it (but have other things in place like the example above). That way they can learn for themselves and not have us trying to shove specific plans on them (save X%,Y% to charity , etc..

        Honestly, that’s all I got at this point. Luckily, our son is just 1.5 years old, so we have a bit more time to figure it out. Luckily DH is amazing with money.

    • Anandi Raman Creath (@anandi) Says:

      Um, yeah, this could be me too, though fortunately my biggest debt was about $12K and I paid it off in about 18 months once I finally got a “real job” out of grad school. But it was terrifying to have that much debt as a 20something. My hubby is very fiscally conservative and got me on a better path, with saving money, etc. as well, long before we were even engaged and I’m forever grateful.

      I have no earthly idea how I’m going to teach my kids about money, but I think the first step will be to actually let them deal with it and have to make decisions about it. (My parents shielded me from a lot of it – I didn’t have an allowance or a bank account, and they just bought me what I needed and a lot of what I wanted.) To this day I have no idea how much $ my parents made/make, etc. It was not discussed.

      • nicoleandmaggie Says:

        DH had 10K of unsubsidized high interest student loan debt that didn’t concern him much but gave me plenty much anxiety. We paid it off rapidly, second in priority after we paid the short-term loan my mom gave us so we could rent an apartment before getting our stipends.

      • Anandi Raman Creath (@anandi) Says:

        Yeah, it wasn’t student loans for me. It was credit card debt, eating out and shopping when I couldn’t afford it. I still have those tendencies but fortunately my income has “caught up” and my opportunities to shop much are limited. AND fortunately I don’t have super-expensive tastes – I just like high quality stuff ala Nordstrom store brand etc.

  2. rented life Says:

    My husband essentially learned how to *not* do things by watching his parents and oldest sister make bad financial decisions. Because I’m the more financially aware one, we often have talks so I can explain things.

    In some ways I’m better off than my parents–mom never had a budget when she was my age, and she says if she did, if she had understood how to balance things and better plan, they’d probably be better off. We had allowances that we were allowed to spend as we wished, but it also meant that many extras were up to us kids to buy, with the goal of learning about how to wait and save. We didn’t have too many talks about money as kids, but when dad was laid off, I was aware of the stress. It’s my brother I worry about. While my parents paid for my housing in college, I have student loans. My brother has everything paid for–housing, tuition, groceries. He has no idea about financial hardships, making things work for him, etc. He is living practically free at mom and dad’s despite being able to afford rent. While I learned a lot the hard way (getting married at 21 meant I had to figure it all out myself financially without parental help). and I don’t wish him to struggle, seeing how much money he’s sitting on without getting that his older sister can’t do whatever she wants because she has debt and bills…well it’s maddening. (PLEASE say you’ll pay for both kids’ education, not just DC, ok? Because I’ll never forget the differences between me and my brother and his life being easier because of my parents’ choices.)

    • nicoleandmaggie Says:

      Oh, yes, of course we’ll pay for both kids education. DC plural! My parents ended up getting a huge windfall with my education because my college was extremely well-endowed, and because by chance I happened to be at the right place at the right time (doing summer research in a specific field that wasn’t already paid for by another scholarship), my entire senior year was free. My sister’s near-ivy was much more expensive but they still had money leftover from me after she was done. We’ll be talking about 529 plans and how we intend to save for DC2’s education I think in our August monthly mortgage update. There’s some potential pitfalls we’ll want to avoid long-term, but (to give away the punch line), they shouldn’t affect anything short-term.

  3. What Now? Says:

    I found it interesting and troubling this past week to observe my nieces’ relationship with money. They get what seems to me an overly hefty allowance ($5/week for the 8-year-old, $6 for the 11-year-old), although I like it that their allowance isn’t tied to their chores; they have daily/weekly chores that they do simply because they’re part of the family, not as a fee-for-service proposition. But they have all of this money saved, and they are so eager to spend it — it almost doesn’t seem to matter what they buy, as long as they’re buying something. I worry that the thrill of buying could lead in bad directions as they get older and have even more $$.

    I did have a talk with them one day about why D and I weren’t taking them out to restaurants as they wanted us to. I explained that different jobs got paid different amounts of money, and that I certainly loved being a school teacher but that it didn’t pay as much as, for example, their mom’s job (aeronautical engineer!). So D and I didn’t go out to restaurants much and that we wouldn’t be taking them out. I stressed that we weren’t poor at all — the younger one is learning about and distressed about poverty and homelessness — and had everything we needed but that we were careful about what we spent. Not sure how much it sank in or not.

    • nicoleandmaggie Says:

      DH had that same philosophy before we got married… if he had money he spent it. He liked (likes) looking for things to spend money on, rather than the way I would want things and then see if I had the money for them or not. (This is why he has an adult allowance: http://nicoleandmaggie.wordpress.com/2011/01/17/in-praise-of-dhs-adult-allowance/ . It works out really well for us.)

      I kind of like the smaller allowances because they force choices rather than making a person feel like they’re always flush (another reason I’m not sure that min wage jobs actually help money management skills in high school). Though a larger allowance makes sense if the kid is also responsible for some necessities like clothing, etc.

      I do wonder how much more freedom a person has to choose a less lucrative field of study/ career based on what they’re used to economically growing up.

      • rented life Says:

        We (when we can, other priorities first!) have done adult allowances too!

      • Calee Says:

        I had, in some senses, a HUGE allowance. Once I hit middle school, my dad helped me work out a budget that included everything from school supplies to clothes, to shampoo, to eating out after sports practice. We added a charitable gift on the top and divided the total amount by 12. I had to account for every penny I spent each month or I didn’t get the next month’s money. It was fantastic for building money management/appreciation habits in my upper middle class teenagerdom/ college years.

  4. bardiac Says:

    I’m not sure there’s anything controversial about wanting to pay for a kid’s college. I’m guessing a LOT of people would love to be able to help their kids (or pay fully), but don’t have the resources (or choose to use them in other ways first, since it takes most folks a long time to save for even a year of college). I’d even go so far as to guess that the occasional gruff “I won’t give a damned thing to put the kid through college” is more a cover for inability than a desire to teach the kid a lesson about responsible financial behavior by encouraging him/her to go into debt or skip college.

    • nicoleandmaggie Says:

      Oh, I think you’ll be surprised at our next Deliberately Controversial Post, especially if we get any traffic from the PF community. Make the same statement there! It will fan flames. :)

      • Revanche Says:

        “if” you get any traffic from the PF community?
        Signed, Chopped Liver.
        ;)
        Yeah I dunno. I go back and forth a lot on this, surprisingly. I do want to. Whether or not I have convinced myself of the wisdom of one direction or the other is another thing. I need some distance, still, from my own path, first. And as luck would have it, I will have plenty, before we get there!

      • nicoleandmaggie Says:

        Our PF community traffic has been dropping compared to our academic and mommy traffic for various reasons. We always love to have you!

  5. gwinne Says:

    Interesting. My mom likes to talk about how we were “almost” on welfare when I was a kid and she was newly divorced. I was 4-7 during this era, before she remarried, and I remember not being able to buy certain things because we didn’t have the money, not going out to eat, etc. And then when I was older I was very aware that my father lived extravagantly compared to us; that didn’t strike me as problematic back then, but a fact of how different families have different amounts of money and spend differently.

    My sister and brother don’t remember that era of poverty and they spend very differently than I do as an adult (my sister is actually bankrupt, but that’s another story) despite growing up in the same household.

    I talk about money a lot with my daughter; they did an economics unit in second grade and that helped her hugely in terms of understanding monetary choices. She knows she can go to summer camp, but we can’t afford for her to go to more than one “expensive” camp, etc. She doesn’t get an allowance yet. I tried paying her for chores but that failed miserably. need to revisit, now that she’s 8.

    • nicoleandmaggie Says:

      This seems to be a pretty common story among families… I wonder how important remembering bad times in childhood when they were mixed is to one’s adult views on money. I vaguely remember some good times before my sister was born when my parents were both employed at the same time and things weren’t as stressed.

  6. graduate.living Says:

    As you say, my family was “firmly ensconced in upper-middle-classdom.” We shopped for clothes in spare time, and I never really thought about money as something to be worried about. If things were ever “tight” my parents never said anything about it. I also had my undergraduate education paid for, so even at the collegiate level I wasn’t bearing the financial burden that I could have been.

    That said, I have always been good with money, and it could be said of my sibling that she is a “miser” (she saves all her money for the latest expensive handbags, though…). My father is a banker, and both my sister and I had savings accounts from birth, checking accounts at 15 (and we had to learn to balance our check records) and credit cards at 18. I do think that this taught us both responsibility with our money – my dad was always very frank about how to be financially responsible – and we’ve both since come out OK (if you call my almost $20,000 student loans from grad school OK…)

  7. mareserinitatis Says:

    I grew up dirt poor, on welfare, in county housing, etc. I would like to say I’ve done a lot to learn about how to manage money. On the other hand, me being in school has been a continual drain on things, and we’re not feeling like we’ve been able to do the sorts of things we ought to do at our SES. However, I generally put the kids’ needs first, so I think they’ve been rather sheltered about the search for optimizing money management.

    Older son, now that he’s 16, will need to get a job, and I’m of the opinion that he gets to keep 1/3, 1/3 goes to pay for immediate needs (college classes, car insurance, etc.), and 1/3 goes into savings. I did not pay him to do household chores as I felt those need to be done without incentive (and we have a housekeeper, so it’s not like he has a whole bunch to do any more). I did pay him for ‘extras’, like mowing the lawn or things like that. I really have no idea how he’ll manage…

  8. chacha1 Says:

    I don’t remember getting any “official” money talks or lessons growing up. I certainly never learned anything about credit, because my parents were upper-midwesterly, Presbyterianish and for whatever other reasons were of the type that does without until they have cash. That said, they owned houses starting fairly early. Dad was one of those who bought small and traded up and up and up. He’s a red paper clip guy.

    We went through a period of being seriously broke, if not “poor,” when Dad left a job and went back to school for his MBA. At that point we were living in a trailer park and Mom was paying most of the bills with a job as a secretary at the local college. But we had a double-wide trailer, and within three years it was moved to five acres in the woods, so … . I don’t remember ever feeling seriously deprived. They did a good job of keeping their money anxieties to themselves.

    I’d say the biggest difficulty for my sister & me in learning about money, as it relates to lifestyle, was that our parents were northerners in the Deep South, and between that cultural obstacle (a serious one) and our geographic obstacle (of being in the frickin’ woods miles from any families that we might have considered peers), we simply never saw how anyone else lived.

  9. First Gen American Says:

    We’re right there with you as well. I talk about money a lot to my kids. I am constantly telling them how much things cost. Just this morning my son asked to go back to Disney (and we were there this year), and I told him how much the whole trip cost in dollars and why that is the reason he’s only been 2 times since he’s been born.

    So, yes, my kids get a lot more than I ever did, but I still go to tag sales and talk about saving money all the time, so I’m hoping some of it sinks in. I think like anything, the best way for them to learn is by setting a good example. The older one doesn’t seem to like spending “his” money at all. Sometimes I’ll give him the option to use his own money if he really wants something and he’ll often forgo buying that item because when it’s coming from his wallet, usually he’d just prefer hanging onto the cash. I think some of it is just genetic.

  10. J Liedl Says:

    My money lessons came later – my father was very careful to not let any of us really see how much work went into getting money or managing it. Years in grad school gave me an inkling of how that wasn’t a very helpful attitude. I fortunately managed to come out with very little debt and straight into a good job. Even so, it wasn’t easy to learn how to manage money sensibly: I credit my in-laws for being a good influence. They’re extremely smart about their money and as well as helping us directly with a down payment on our house as well as with some key home repairs/upgrades, they’ve modeled very sensible attitudes toward money.

    My kids get more in some ways than I did and less than others. We didn’t have personal computers when I was a kid or cell phones or all that. Eldest has a part-time job, just as I did, and no allowance but we’ll pay for university tuition, books and board if she’s away from home. However, she knows to a penny what all of that costs and is out there searching scholarships as I write.

    Since the girls were able to understand money, I’ve made it clear how much things cost, especially costly good. When you think about a gadget how much that comes to as a percentage of our monthly budget, that becomes a bit more daunting. I don’t want to be a complete downer, but we talk about ongoing expenses such as cell phone bills and pet care, as well as smart strategies to prepare for these (like setting aside $100 a month to cover vet bills for our four animals so that when their check-ups and vaccinations come, we’re not surprised).

    • nicoleandmaggie Says:

      I think talking about money is important, no matter what economic income you’re bringing in. Maybe it’s even better if that talk doesn’t come with a side order of stress!

  11. femmefrugality Says:

    I don’t think it really requires too much work…especially this young. I like your allowance plan. And they’ll learn about basic money concepts through their own trial and error. When they’re a bit older, say high school age, you can start talking about IRAs, 401ks, investing, debt as it pertains to credit cards and student loans. I wouldn’t tell them what to do so much as teach them about how it works period. You know teenagers…not very good at taking advice. But they’ll be armed with information most young adults are oblivious to.

  12. Meredith Says:

    This is such a relevant post. My husband and I got married when we were very young, both and school and have very little money, so we learned very quickly about money management and budgeting. Things are better now (not awesome), but we are more stable and really want to our kids to know more about money than we did going into adulthood. I like the idea of having kids separate whatever they have into 3 bands–give, save and spend. But I’m still not sure at what age to actually start the allowance. Thanks for generating this discussion!

  13. Leigh Says:

    I actually got a pretty decent sized allowance. My parents gave me and my sibling $50 semimonthly (the 15th and the last business day of the month) starting when we were around 14 and they didn’t pay for anything after that, except if the entire family went out for a meal. I saved a good part of my allowance.

    My parents (well my mom at the very least) were pretty frugal, sometimes to the point that I think she was cheap. We didn’t have a lot of money when I was little, but by the time I was in high school, they were definitely doing okay, as my dad’s career took off. I know that they didn’t even consider paying for a college education for either of us until (I think) I was in high school. I think that was the point at which they realized they could actually afford it.

    I knew that my parents paid off the mortgage quickly when bonuses started appearing from work and that paying off the mortgage was a good idea. I saw that buying new cars every few years wasn’t necessarily – my parents are going on almost 8 years with their car and are finally starting to think about saving up for their next one. They’d probably had the previous one for about that long too. I saw that you should always pay off your credit cards when they came due and if you hide money, you’re less likely to spend it. Even after my parents did have more money and even today where they’re not supporting any kids, my parents are still pretty frugal. I almost feel guilty admitting to my mom sometimes how much money I spend on some stuff. But I like nice jeans! And they actually fit! My time is worth something.

    My (younger) sibling didn’t see the same things I did. I think our personalities are different maybe? It helped that I preferred cheaper social things…

    My mom actually made a comment recently that I always liked nice things. But I’ve also always been good at saving money, which used to be to the detriment of things that I really wanted. I’m definitely making far more money now in my early twenties than my parents did then, but I don’t know if I’m making more money than they are now.

    • nicoleandmaggie Says:

      My father is super-frugal (crazy-super-frugal… literally a depression baby), but he has made the point many times that it is also important to buy nice things that will last. So my parents have a combination of cheap disposable stuff and really high quality stuff they’ve had for 20-40 years or more. It can be frugal to like nice things.

      • Rumpus Says:

        I’m a big fan of buying things that last. Objects that are built to last tend to be more elegant (because simple things tend to be easier to craft for longevity) and more comfortable (because things that last cost more, and so they have to be additionally enticing).

  14. A Says:

    I’ve been brought up in the secure knowledge that whenever I truly wanted something, there would be money to pay for it. On the other hand, I’ve never seen my parents spending money just because they had it. I don’t recall any direct attempt to teach me sensible monetary behaviour. I ended up feeling quite rich as a student, while living on the state mandated minimum income for students – I even saved a decent amount of money during that time, while most of my friends where struggling to get by with the same amount of money. As a postdoc now, I seem to be earning much more that I could manage to spend – there simply aren’t that many needs.

  15. Laura Vanderkam (@lvanderkam) Says:

    I’m definitely struggling with this question of what to teach my kids. It’s interesting that when we think of teaching kids to be good with money, we think in terms of not spending recklessly, comparing value, etc. Which is all good. But what about things like investing? My father-in-law was into the stock market long before most people were, and my husband grew up hearing about these things, and consequently has an easy familiarity with “FIFO” vs “LIFO” or hedging strategies, or what have you. It’s a different mindset than learning about money management from the perspective of coupons.

    • nicoleandmaggie Says:

      My father had us follow his Exxon stock every week in Investor’s Daily. Not the best example because it always did well (I think we started following after the Valdez), but I did learn about stock splits and value etc. Even how to read a Morningstar report. One is frugal and saves money so that one had money to invest, in the stock market as well as in children’s education.

      Fancy strategies, however, are over-rated. All people really need to know is some very basic stuff about stocks, risk, diversification, fees, etc… and really of that, it’s enough to know that Vanguard has the lowest fees and has a great target date index fund that will rebalance for you. If that ever changes people might need to know more, but not much more. The majority of people who try to beat the market fail. Matching the market at as low a cost as possible is the way to go.

      I do admit a fondness for QQQ(Q) (over, say DIA), but that’s about the extent of the gambling with stocks that I’ve gotten from my father. We’re all broad-based ETFs and Index funds over here.

      It’s easier to learn how to invest in long-term stocks the right way once a kid has all hir short-term financial ducks in order than it is to be that person who gambles away and loses all hir money in single stocks without a safe money emergency fund to fall back on (and lots of high interest debt). So basic money management is a precursor to market investing. You need to be able to put money in to get that employer match before you put money in the market.

  16. Comradde PhysioProffe Says:

    For the most part, I spent my entire allowance on candy every single week.

    Somehow I’m not surprised!

  17. Paying for college « FCIWYPSC Says:

    [...] older son. Tags: college, older son, tuition trackback Nicole and Maggie’s post about teaching kids money management led me onto a slightly divergent path.  I’m trying to figure out what to do about [...]

  18. Cloud Says:

    Ah, I’d like to have a smart, thoughtful comment, but I’m a bit brain-fried from my day. I will remember this post and come back to it, as we are also upper middle class thinking about how to teach our kids about money and class and all that.

    Also, you have reminded me that we meant to start giving an allowance when our daughter turned 5. That was back in April. Hmmmm.

  19. seedebtrun Says:

    I’m looking forward to your controversial post! Jeff and I plan to pay for our kids’ college educations as well. I will want some say in where they go and what they study, but I do hope to be able to pay for it entirely as I don’t want them to worry about how to afford their education. It will be difficult as our oldest is 11, so 7 years away from college age. We will get there, though! About the allowance; we are so much stricter about that! They have to do their chores to get paid! Period. Also….we give bonuses for extra work and improving their swimming times, since swimming is their “job” so to speak. Maybe one day, the *cough* bribery will make it so we have to pay less for college! Swimming scholarship? That’d be sweet!

    • nicoleandmaggie Says:

      I don’t really want much say, other than, they’re not going where I teach! Even if it is a top school and cheap. The kids just don’t learn any critical thinking skills, even in the honors program.

  20. Allison @Insomniac Lab Rat Says:

    I’d say I grew up in more a lower-middle-class family. Money was tight from time to time. We always had everything we needed, but not everything we wanted. My mom clipped coupons before it was cool, and we re-used everything we could. My husband grew up mostly the same way. I think we both have a pretty healthy view of money as a result.

    My best friend in college grew up firmly in the upper class. Her dad comes from money, and makes a LOT of money. I think her mom made a strong effort to not spoil the kids though, and they didn’t get every thing they wanted, only some of what they wanted (and the very nicest of everything they had). My friend doesn’t have any debt, and lives within her own means, even though she makes a small salary compared to what she’s used to from her parents. Maybe she’s just a freak of nature, though :)

    I’m certainly not an expert, but it seems like if you actually talk to your kids about money, and don’t give them every single thing they ever want, they’ve got a fighting chance at coming out financially responsible. That’s my hope for my theoretical future children, anyway, assuming we’re upper middle class by then. Maybe I’ve just biased my sample by making friends with other financially responsible people, though…

  21. Barbara Smith Says:

    My kids have been learning how to use their allowances responsibility through a website called KidsCash (www.kidsca.sh). They have to budget and they can save up for expensive items or buy things immediately in the Marketplace, like video games and iTunes cards. They can even donate some of their allowance or birthday money to charity, which I think sends a really great message.

  22. zenmoo Says:

    I grew up well -off. Money was not an issue at all (we had a live in housekeeper for much of my childhood, family holidays to Europe and luxury resorts in Asia). My siblings & I are all really sensible with money – which I mainly attribute to my father’s influence. He worked in finance and did things like argue the definition of ‘gross’ with me, required budgets to justify how much pocket money we’d get etc. I had to tell him how much various items (magazines, school lunches etc) cost and explain what I thought was reasonable before he would agree to an amount. Then it was up to me to manage the amount I had. If I wanted a new cassette, I’d have to forgo buying my lunch (vs the default packed lunch from home). Even as adults, when he gifted us all his share of his inheritance from his mother, he gave it to us all in the form of a mortgage (on a property with equity) ! ). We also all have slightly obsessive filing systems and a willingness to read the fine print of tax law, finance products and insurance. It pays off.

  23. becca Says:

    During the most formative years of my life my Mom worked a job that paid about the median family income, so we were pretty typical (albeit more stable than most).
    My parents paid me an allowance from an early age $0.25/week. I think originally they wanted to avoid my begging at the quarter machines in the grocery store. I had a savings account from about the time I could sign my name; I think the same time I got a library card (age 5). They talked about money a fair deal, and they once saved for a big vacation in my savings account so I could see the interest grow. I had to save up for some of the toys I wanted, but they’d cover half (or a bit more!) of the cost for me if I saved long enough. I was a good saver, compared to my friends.

    My Dad was very good at giving advice about how to spend money moderately, how to avoid conspicuous consumerism, and especially about not going into too much debt. He also helped me learn about credit scores in the general sense and helped me figure out good decisions to make to boost my score. In fact, I’m still on one of his cards, and it amuses me that it *helps* my score to have a card that’s in good standing since I was 9.
    However, when it comes to investing, my parents are incredibly risk-averse. My Dad used to work at a stock-market associated job, and I sometimes think that’s why they gave me the impression that a ridiculous proportion of the modern market was little better than casino gambling (albeit poker, and not craps; skill matters, just less than luck, but if you can go in with enough and you can quit while you’re ahead you can make money). They saved for my college education with old fashioned savings bonds, and I always knew my education was a priority for them, but there wouldn’t be enough to pay everything at a fancypants college (or enough for say, med school). My parents also never owned a house, and usually got to file the simple tax returns, so it wasn’t like there were as many big picture financial things to discuss with me.

    So I suppose I was very well educated at the “spend less/wisely” side of personal finance, but not so well in the “invest your money” side. I’m not worried about teaching my son the stuff I had good exposure to, but I’m still not sure how to work on teaching the investment side. It’s hard when I’m not sure I’m sold on the whole concept.

    • nicoleandmaggie Says:

      Hm… I suppose we could do some very basic money posts. There’s just some basic concepts… it doesn’t have to be that complicated. Short-term vs. Long-term, risk, diversification, and fees are really the important concepts.

      You want to have low risk for short-term investments– here you keep your money in savings accounts, CDs, the safest kinds of bonds.

      For long-term investments, the stock market is a pretty good option because even though it has massive short-term fluctuations, it’s pretty steady upward growth over a long period of time. Think of an oscillating sine curve with an upward slant. It’s pretty safe for retirement investing so long as two things are true:
      1. You’re diversified. This is really easy to do these days with a Vanguard Target-Date fund. But if you don’t have access to one of these, you can create something similar using index funds from wherever you’re investing. (The Bogleheads forum is helpful for doing this.)
      2. The place you’re using to invest and the funds you’re investing in have low fees. Again, Vanguard Target Date funds are the way to go.

      If you don’t have access to Vanguard and you’re an academic, TIAA-CREF is unlikely to cheat you. (Unlike, say, Ing… which isn’t cheating per se but does have really high fees).

      And really, if you just put your retirement money in a Vanguard Target Date fund, you will do better than MORE than 50% of people who try to do more complicated things! Not even half the people who try to beat the market actually do beat the market. If it were just random chance, 50% would beat the market. But they don’t.

  24. Carnival of Personal Finance - Independence Celebration 2012 Edition Says:

    [...] from Nicole and Maggie: Grumpy Rumblings of the Half Tenured presents Kids and money and class and ramblings about allowances, and says, “Nicole and Maggie ramble about how socioeconomic class affects what and how we [...]

  25. What the allowance does « Grumpy rumblings of the half-tenured Says:

    [...] talked about our families’ experiences with allowances before.  But here are some more meta thoughts on the [...]


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