“Mommy, I want that,” the little boy in front of me at the grocery store checkout line said while gently tugging on the hem of his mom’s shirt. He was gesturing to a small action figure – probably today’s equivalent of G.I. Joe – in one of the nearby displays. His mother was doing a good job of ignoring her son, but he was undeterred. “MOM-MY,” he started again, “I want that toy!”
His mother responded with stony silence. The little boy held his breath, turning bright red. I knew what was coming next: I’ve seen the documentaries about volcanoes on The Discovery Channel – I know when something’s about to blow its top.
“MOMMY, give me that toy RIGHT NOW!”
He finally had her attention – and everyone else’s in the store, for that matter. What he didn’t have, however, was the toy… or anything with which to buy it.
Our Kids Are Under-Educated About Money
Parents are expected to devote a copious amount of time to educating their children. They’re expected to teach them their ABCs and 123s; they’re expected to drill their addition, subtraction, and multiplication skills; they’re expected to show their children how to read. But many parents fall short – horribly short – when it comes to teaching their children about money: how to save it and how to spend it. After all, if we as a society were doing a better job of teaching the next generation about money, would we have:
- An average household credit card debt of $10,700?
- Total consumer debt of $2.5 trillion, nearly two-thirds of which is tied to revolving debt like credit cards?
- More than 800,000 homes repossessed in 2011?
Walk through any college campus during orientation week and you’ll see credit card companies plying their wares on unsuspecting – and uneducated – freshmen, many of whom learned calculus in high school, but failed to learn how to take care of their finances.
Is An Allowance The Answer?
When I was a kid, it seemed like all of my friends and I got a weekly allowance. Some of my friends had to do household chores in order to get their coveted cash. Others – and these were the kids of whom I was severely jealous – got their money no matter what.
On the surface, giving kids an allowance seems like an excellent opportunity to teach them the ins and outs of money. If that little boy in the grocery store had been given an allowance, he’d have been able to save up enough money to spend on that action figure he so desperately wanted. This would have avoided his meltdown, his mother’s embarrassment, and all the stares they got from their fellow shoppers. Problem solved.
Not so fast…
The Camp Against Allowances for Kids
The childhood allowance may seem like a no brainer, but some critics argue it really doesn’t force kids to use their brains in the first place.
Lewis Mandell, a SUNY Buffalo economics professor, is one of them. He tells Time Magazine’s Moneyland website that allowances for kids teaches them one of two lessons, neither of them good:
- By giving children an allowance tied to their chores, parents are essentially paying their children to do things they already should be doing. Does Dad get paid when he takes out the trash? Does Mom get paid for folding the laundry? No, and neither should Junior.
- By giving children an allowance without any strings attached, parents are teaching their children that money grows on trees – or, at least liberally appears at will from Mom or Dad’s wallet. This teaches children to be spoiled and entitled, without drawing parallels between hard work and making a living.
Mandell’s argument, at least on the surface, makes sense. He’s looking for kids who are contributing members of the family, who help around the house without financial implications, but out of their loyalty to the family unit. But withholding an allowance isn’t going to teach your kids anything about money either. What’s a helpless parent to do?
What Do You Think?
Since I don’t have kids yet, I haven’t had to cross this bridge. I have, however, seen my friends try to navigate this sticky situation with their children. One of them, espousing Mandell’s principles, has completely eschewed the idea of an allowance, much to the chagrin of his 9-year-old daughter. Another has gone in the exact opposite direction, doling out money whenever his 12-year-old son asks for just about anything.
What do you think is the best way to teach kids about money – not just to distinguish the differences between dimes and nickels, pennies and quarters – but to teach them about actual dollars and sense?
I want to know what you’re doing to educate your kids about personal finance. Leave a comment to tell me what’s working – and what isn’t – when it comes to teaching your kids the value of a dollar. I’ll be using your comments in a follow up post to explore the good, the bad, and the ugly of kids and money.