Teach Your Kid to Fish
Many people like the idea of giving their kids an allowance for doing household chores. I am not one of those people.
Unless we make a universal allowance for everyone that pitches in to maintain the household. Then I’m all for it – I’ll make a killing. But until that day comes, I am firmly in the no allowance for chores camp. Here’s why.
Everyone in a family should have both the opportunity and the EXPECTATION to be a contributing member of that family (as appropriate for their age and ability of course). From a young age kids love to contribute, they love to feel like they are “part of it”. My 17 month old is constantly mimicking my cleaning, “helping” me with the laundry, wiping down counters, vacuuming, putting the lego’s in the bin etc. The best part, he absolutely loves it!
And he’s not alone, the majority of kids that age are like that, so why not involve them early and maintain it throughout their years at home. Sure, they may not exactly love it as they get older, but if it’s always been their reality, they’re going to buck the responsibility a whole lot less.
And if they really need a motivator to hold up their end of the household responsibilities, explain the concept of work before play. In our home, we like to use our very own WII dollar method to motivate our oldest to remember his chores. If he doesn’t do them, he doesn’t earn his WII dollars, and thereby choose to forgoe the privilege of screen time. The WII dollars have the added benefit of acting like a currency that he is wholly responsible for budgeting and managing.
Bottom line, chores need to be done and they shouldn’t be seen as an adult only domain that kids occasionally help out with. By giving kids an allowance, you’re essentially telling them “This is my responsibility, but I will pay you to do it for me”. Not a great lesson.
Instead, shift the responsibility to your kids. Have them own that responsibility, but find an appropriate consequence for if they shirk that responsibility. Teaching your kids that every member of the family has ownership in maintaining the cleanliness, orderliness and efficiency of the home will help them develop understanding for what it takes to make the home run.
I do get the argument most people make in favour of an allowance. That by giving kids an allowance it gives them an opportunity to earn money and subsequently manage their savings and spending habits early in life. I am entirely in agreement. Hands on money management is an essential building block to raising financially literate kids. After all, theory is great, but putting theory into practice is where the real lessons are learned.
So if you’re not providing an allowance for chores, how exactly do our kids earn that money?
The Budget Turnover
While many might argue that this could fall into the allowance department, it’s actually quite different. Specifically, you aren’t giving them money in exchange for work around the house, but rather for the things you are going to buy them anyway. For instance, if you plan to spend $200 on back to school supplies and clothing for your kid, consider handing that budget over to them to manage.
As their finance mentor, don’t just give them the cash and let them flounder, but guide them through the process, steadily increasing their independence as they learn. Go through all their current clothing/supplies with them, and together identify what they need for the upcoming year. Help them make a list of what they require, and establish a target budget for each spending category.
If they want something designer, help them understand that they’ll need to find savings in other categories to offset the greater expense.
Then actually take them shopping and show them how to deal hunt, but let them part with the cash themselves. Not only will it help them with their money management, it will help them understand the value of the items they are wearing, and the time and effort that goes into making those types of purchases.
All of which will go a long way in building a sense of ownership and responsibility for their belonging, helping to prevent items from being lost, poorly cared for, and the annoying complaints about what was bought.
This is also a wonderful time to teach them how to search for and purchase used items, helping them learn to stretch their budget and be a savvy consumer.
This approach can also be applied to simple purchases like movies or trips to the corner store. If you are a parent who coughs up cash for those types of things, give your kids a set amount per month and let them manage it accordingly. If they blow it on candy in the first week, they’ll learn some great lessons over the following three weeks when their friends are heading off without them.
This concept can work really well, so long as you are only turning over cash you would be spending anyway (this isn’t a free for all), AND you adhere to the underlying principle that the budget is the budget. If your kid blows their entire back to school budget on a new backpack and then has to wear last years clothes that barely fit, let that lesson play out.
DO NOT swoop and and “save the day” with more money. Trust me, your kid will survive having to wear some ill-fitting clothes, but the money management lessons that will be learned in the process are PRICELESS. Conversely, if you cave in and give them more money, that will also have a long-lasting impact on their perception of money and spending, and you will be prepping them to be an over-spender with loads of consumer debt.
The Young Entrepeneur
This approach is my personal favourite, but both methods can certainly be applied together, and in fact I would recommend doing so. While the first approach definitely provides added budget and spending development, as the old saying goes, give a man a fish and he eats for a night, teach a man to fish and he eats for a lifetime. The same is true of learning to build income sources. You can give your kids all the money you want, but they will run out and be back for more. Teach them to create their own income streams, and they will always be able to stand on their own two feet. So always teach your kids to fish.
Doing so early in life can provide them a compounding degree of advantages in terms of their money management, self-motivation, self-discipline, work ethic and overall understanding of business.
But it doesn’t just have to be setting up a lemonade stand on the corner. There are so many opportunities for kids to make money these days, even though many people argue the opposite. As early as 3, there are some pretty simple ways your child can start making their own income, and the opportunities only multiply as they get older. It may take some willingness and time on your part to facilitate these opportunities, but again, the lessons that stand to be learned by your kids, along with the empowerment and confidence they will build doing so, can’t be measured.
Here’s a couple ways to let your kids earn and manage their own money (with your oversight and guidance):
1 – Collect bottles. People have a disdain for this activity, but frankly I think it’s a model business for any young person. There are always bottles laying around on the ground, and picking them up and returning them for the deposit is not only helpful to our environment, it’s an easy way to make money with the start-up costs of just a pair of gloves and a garbage bag.
From as early as they can grasp the concept, this is a business you can let your kids participate in. All you have to be willing to do is go for a walk around your neighbourhood and let them run around picking up bottles. Then facilitate the ride to the bottle depot, show them how to sort the bottles, and let them walk out happily counting their quarter’s.
The dialogue this type of “business” can create is limitless. The social responsibility of recycling, removing trash from your neighbourhood, the expenses that are incurred to make it happen (garbage bags, gas to get to the bottle depot etc), and how to save and manage the money, to name just a few. Engaging in an endeavour like this with your kids will open their curiosity to money, and provide you endless starting points for these conversations.
And if your kid gets really ambitious about this one, they could buy a used bike and wagon and really start ramping up their collection ability.
Our oldest son has been doing this since he was 7, and we will definitely get his younger brother in on the action as soon as he’s able. Mike started it rolling when he was taking our oldest out for walks and they noticed how many bottles were just thrown on the side of the roads/paths. They decided to start picking them up, and it slowly transitioned to them also looking for bottles that people were putting out for recycling without collecting the deposit. Then they got really ambitious and advertised online that they would come and pick up bottles from people who didn’t want to deal with taking them back, but wanted them gone (you’d be surprised how many people fall under this category!).
In just two years, our son has earned nearly $3000.00 in income. Just from collecting bottles. Through discussions with his Dad, he decided to contribute all of the money earned to an investment account Mike had opened for him. So not only is he earning income, he is learning about how to invest that income as well. Now he’s a little older, we’ll be revisiting his saving’s allocations, guiding him to look at a three way split between saving, spending money, and contributing to a charity of his choice. All of which will bring on many more money conversations.
2 – Be A Dog Walker or Water Plants
There are countless dog owners around the majority of neighbourhoods, and the reality is that there are many times when people simply can’t get their dog out for as much exercise as they would like. If you like walking with your kids, let them build their own dog walking business. They can make signs, advertise, learn about building clientele, and manage their schedule. As they get older, they can do this independently.
This also gives your kids the opportunity to care for a pet, without you having to buy a pet! A huge cost savings for you all on its own.
Similarly there are always people going away on holidays, and if you have a garden of any kind it can be very frustrating to come home and find everything dying from lack of water. Your kid can easily make up some flyers and build a business around watering plants while neighbours are away. It can provide an excellent source of income, with minimal time commitment from you.
3 – Referree/Umpire/Timekeep
My brother, sister and I all did this when we were kids. As a family, we were often at the rink anyway, so why not make some money as well? We started when we were between the ages of 9-12, and it proved to be a great source of income. If your kid is already involved in a sport or activity they enjoy, find out what the requirements are for them to get involved in that sport in a way that provides them some income.
Generally any kids sporting group is screaming for kids to fill those positions. Not only is it a great source of income, it’s a big responsibility for a kid and quickly develops their confidence and ability to interact with the adult coaches and parents that attend the events. While some parents might balk at this suggestion for fear of crazy coaches and parents yelling at their kid, those experiences can actually be quite empowering. As young kids, my sister, brother and I kicked our fair share of parents out of the arena, and distributed penalties to teams who’s coaches behaviour was less than sportsmanlike. In hindsight, it taught me a lot about maintaining my composure in the face of confrontation and responsibility and professionalism as a whole.
4 – Self-Publish a Book
If your kid is an avid writer, help them learn how to self-publish their own creations online. With Amazon Kindle, self-publishing has never been easier to do.
Maybe they are also artistic enough to want to create their own title page image, or maybe they have a friend they can recruit to draw something for them, but there has never been a greater time to encourage kids writing creativity.
This provides the challenge of not only exercising the self-discipline to produce the content, they then need to identify creative marketing strategies to get people to buy their books.
5 – Design Your Own Clothes
Similar to self-publishing, through Amazon you can now easily create your own T-shirt designs and sell them online. The design is printed and shipped by Amazon, and couldn’t be simpler. Although there is a ton of competition in this space, if you have a kid who has some pretty fun ideas and some artistic flair, they could advertise their designs around their school or on social media and generate some decent revenue.
With next to no start-up investment it’s a pretty fun way to build your child’s entrepreneurial acumen.
Those are just a handful of ideas, but the options for your kids are only as limited as yours and their creativity. And just because your child isn’t coming up with their own idea’s and suggestions doesn’t mean you can’t provide them some encouragement and show them the way. Once they get the idea and see the money they can generate themselves, they’re more than likely to get pretty creative.
At the end of the day, even if your child doesn’t make income during a venture, the discussions, considerations and analysis the experience will provoke will more than compensate for the time invested, for you and for them.
Teaching your child how to develop their entrepreneurial spirit, generate unique income streams, and manage their money will give them more than a substantial edge in any future endeavours they pursue. It’s an investment that will pay dividends both now, and long into their future. As a parent, isn’t that a worthwhile investment?