“Working to help parents raise money-smart kids.”
Hello, friends!
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”
Thomas Jefferson was mostly on target when he wrote those words in the Declaration of Independence.
Of course, he did forget something.
Fireworks!
Oh…and women. 😉
The Art of Allowance Project is designed to help us help our kids pursue happiness. We cannot live a happy life, or perhaps you prefer “fulfilled,” without having some sense of money empowerment.
The Declaration of Independence, of course, did more than just signal the birth of a nation. It was a clarion call for ideals that might appeal to all mankind. In that all-encompassing spirit, I want to share with you some tips, techniques, strategies and ideas for all ages. We’ll begin with the younger kids, progress to teens and close this issue out with some final thoughts for us parents.
— 1 —
Our Goals Are Qualitative: In a world obsessed with KPIs, Key Performance Indicators, data like “session length,” “stickiness ratio” and “retention rate” can cloud our vision, causing us to miss the forest for the trees. In a data driven world, it’s easy to forget that not everything is about the daily distraction of eyeballs.
There’s a place for patience.
The Art of Allowance occupies this place.
While our program certainly has fun games for kids and gamified elements to entice return visits, our goal is straightforward, experience-oriented and qualitative. We’re here to help you raise money-smart, money-empowered kids. This takes time.
From a purely practical standpoint, that means establishing a way of giving them money experience early (typically with an allowance), running a consistent program and building from the core money-smart skills of setting and saving for goals, making money-smart choices and distinguishing between needs and wants.
Any long-term process will ebb and flow with waves of goal-saving activity followed by lulls in between. Robin Taub and I discussed these ups-and-downs with Kelly Mindell in this short clip.
Of course, throughout our journey, we’ll run headlong into voids of knowledge. And when we don’t have the answer to any particular nagging question that our young saver might ask us, we can follow the advice of PodPal, Gene Natali.
And if you’re ever stuck, please email me anytime with your questions. I’d love to help.
And, lastly, while we’re here to guide our burgeoning money mavens on our money-smart journeys, we can – and should – relinquish some control to allow them to learn and blossom. Here are two short, useful conversations I enjoyed with Robin Taub and Ellen Rogin about this important topic.
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Common Questions: The most common questions parents ask me about their tweens and teen kids include:
- What debit card should we use?
- How much more allowance should we give?
- How do we introduce investing?
Debit card options seem to grow with each passing week. It’s worth starting with your current credit union or bank to discover what options they have for tweens and teens.
From an Art of Allowance perspective, what matters most is that you can transition (or even start) from your physical Share, Save and Spend Smart jars to their digital analogs. We want our kids to continue to work on that core money-smart skill: make smart money choices.
We are, of course, always making choices, and the more mindful we can be about these choices, the better. When they accumulate money in their Spend Smart “jar,” we can nudge them to move some of that money into Save or Share.
In my book and this essay, I address how you can set up The Breakthrough Allowance, which follows the starter allowance of their school-age years.
Investing, of course, can seem overwhelmingly complex and difficult to master. Yet, I contend that it need not be complex for 99% (if not more) of us. While we tend to obsess about comparative returns, what we really want (and likely what our kids will really want) is consistent, positive, compounding returns over time.
Jessica Willis, PodPal and founder of Pocketnest, offers up a great idea to get your family started with investing.
Another PodPal, Chris Browning, Mr. Popcorn Finance, suggests we can push aside complexity and help our kids learn to embrace a long-term outlook with his mantra, “Boring is Better.”
And, of course, once our teens are making W-2 income at a job, we want to take Gene Natali’s advice and set up a Roth IRA.
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Trashing the Taboo: Let’s drop our obsession with KPIs in favor of conversation. I often joke that I could have named my book The Art of Starting a Money Conversation, although it doesn’t quite have the same ring as The Art of Allowance. 🤷🏻♂️
As a reader of this newsletter, I know you’re a maven of money conversations and a trasher of taboos. Just like Mr. Natali.
And as I mentioned above, conversations matter. A lot. While the importance of talking with our kids can get overlooked amidst the carnival of points, badges and leaderboards that aim to engage our kids’ eyeballs and claim to educate them, remember that experience is the best teacher.
Let’s all make a promise to each other to engage in one money conversation with our kids this holiday weekend. If you need some inspiration, listen to my conversation with PodPal Tom Henske about his new book, It Makes Total Cents: 12 Conversations to Change Your Child’s Financial Future, and find a conversation starter.
Who knows what fireworks you might ignite when you discuss how taxes work, reveal you’re launching an allowance or explain the power of compound interest? Good luck!
Whatever conversation you decide to have, don’t forget to enjoy this journey we’re on together!
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.
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