“Working to help parents raise money-smart kids.”
Hello, friends,
Another Money-Smart Month is in the books!
During April I enjoyed hosting my Art of Allowance Academy short course with our friends at Patelco Credit Union and participating in a spirited “ask me anything” session with our partner Louisiana Federal Credit Union.
I also want to give a shout-out to our partner Service Credit Union for hosting two story time sessions with Clara J. Camel at the Children’s Museum of New Hampshire.
But now that May is here, the money-smart fun doesn’t have to end! Let’s keep the momentum going with this week’s “3 Ideas to Share & Save.”
— 1 —
Yes/And Thinking: Improv comedy offers interesting techniques for team building. Specifically, at a conference a few years ago, I learned about the “yes/and” concept. According to this method, a group sits in a circle, and the first person starts a story thread.
For example…
“Yesterday, I woke up on Mars.”
The only rule moving forward is to build on the previous participant’s prompt using the phrase “yes, and.” So the team works together to create a story. (In contrast to the less effective team-building strategy of “well, but.” 😂)
Then the next person adds a layer: “Yes, and that’s when I discovered I had no shoes.”
And the tale continues with person three: “Yes, and whoa! I have webbed feet! That makes it easier to walk on the dusty surface.”
“Yes, and that’s when I noticed a pink duck bill had replaced my nose!”
And on and on. It’s loads of fun to see where the story goes!
In the same light, it recently dawned on me that while allowance and chores are often thought about as in an either/or relationship, we might be better off thinking of the two as in a yes/and relationship.
Yes, I give my kids an allowance to help them learn to use money as a tool. And I give them opportunities to complete chores to discover that we often have to work to earn money.
I’ve seen and heard a fair amount of pushback on allowance systems recently. And I believe that pushback often misses a key point: Allowances and chores have different purposes. So they might be thought of as complimentary tools. Here’s a sneak peek of a video I recently recorded to help make that point:
— 2 —
Starting with Teens: During Louisiana Federal Credit Union’s Q&A session, which you can watch here, a parent asked how she can begin teaching her teen about money smarts if she’s yet to kick off a program.
I explained that the strategy depends on the particular child. If her teen already has a job, then she might even forgo an allowance and focus on developing good money habits with that income.
For example, you can introduce the concept of “paying yourself first,” a cornerstone habit of money empowerment. Because your teen is still living at home, you could require them to put money into a physical Save jar, a digital Save account or an existing savings account at your financial institution.
Better yet, you can follow Art of Allowance Podcast guest Gene Natali‘s advice to set up a Roth IRA for your kids. My wife and I used this tactic, and I highly recommend this approach for a number of reasons. Most importantly, you provide your kids with an investment account early and arm them with their most powerful ally, time.
And for teens who don’t have a job, I recommend utilizing our Breakthrough Allowance program and beginning with one or more of the suggested areas of spending responsibility: clothing, communication, gifts and food (at school or out with friends).
How much responsibility you think your teen can handle is the “art” in The Art of Allowance that you will need to determine. If you feel the threshold is low, then start with distributing an allowance for food or clothing only. Make your teen responsible for these expenses, and provide an appropriate allowance. To help, we’ve included a spreadsheet with suggested amounts in the Breakthrough Allowance link above.
Then layer additional responsibilities as you see fit. Also, remember the benefits of utilizing this system, including giving your teen the opportunity to learn about money through their own experiences. Most kids are much more responsible with money over which they have control. And what’s more, you can stop reaching into your pocket for every little expense. 🤑
— 3 —
Weave Your Money-Smart Tapestry: There is so much knowledge available to help us on our journeys. And my goal is to bring some of those learnings to you each week to help you build your own programs.
For today’s final idea, I’d like to weave three threads of wisdom that I hope will help you with your money-smart tapestry.
The first comes from Kevin Kelly, founding editor of WIRED magazine and real-life “most interesting man in the world” (an apt description I heard of him years ago).
I’ve just preordered his new book, Excellent Advice for Living. He shared the following nugget from it in his weekly newsletter, “Recomendo,” which I highly…er…recomendo. 😉
“Don’t aim to be the best. Be the only.”
-Kevin Kelly
This quote gets at our primary purpose. I wrote my book, The Art of Allowance, to help you raise money-smart kids because I wish I’d had a resource like it.
What’s more, Kelly’s statement hints at an important concept that informs my book. The particular system you develop will be the only one of its kind. Sure, The Art of Allowance provides a framework, but your family is different from my family. In turn, my family is different from your best friend’s family. And if we aren’t doing this job, then who will?
Our goal isn’t perfection. How could it be? Anyone who has come as far as my wife and I have with our kids, who are now 17 and 20, knows we only have so much control over how they will turn out. We just try our best to provide them with the guidance and experience they need to journey into adulthood.
Kelly’s advice pairs well with this truth from a writer who needs no introduction:
“In order to become excellent, you first have to be mediocre.”
-Ray Bradbury
Bradbury was talking about writing, but the same stance applies to our kids. Excellence, of course, is more a process than a state. Or perhaps it’s easier to think of it as a peak we can summit, only to discover that there are many more mountains to be climbed when we reach the top.
And whatever journey we take requires us to seek knowledge and acquire experiences. That knowledge may come from you, the parent, and those experiences are what you make available through your allowance system.
Finally, let us all remember:
“Learning is not memorizing information. Learning is changing our behavior.”
-David Senra, Founders Podcast
Our goal is not to deliver knowledge for its own sake, but rather to build new behaviors or change existing ones.
Taking a cue from Idea #1 above:
Yes, I think our “Good Money Habits” video on the importance of paying yourself first is useful and something I hope you share with your tween or teen.
And it’s the experience of actually seeing that Roth IRA money mentioned in Idea #2 that might help cement the behavior we hope our kids adopt.
As always, enjoy the journey!
John, Chief Mammal
P.S. Please consult with a financial or investment professional before engaging in any decisions that might affect your own financial well-being.
Like what you just read? You can sign up for the newsletter here.