Thursday, November 5, 2015

Adulting 10/26/15

Today Thomas and William practiced a little bit of adulting. While I took William and Michael into Payless for shoes, Thomas walked the short way to Target to shop for clothes.

Successful shopping expedition
After hunting about and finding the shoes and socks he wanted, William, for the first time, used his own debit card to buy his own purchases. The cashier was very patient as I walked William through the process of running his debit card through the machine, entering the PIN number, and handling his package and receipt and wallet to make way for the next customer. I don't usually think about it when I'm checking out, but there's a rhythm and flow to the checkout process, and I've got a particular routine that keeps me from being one of "those people" who hold everyone else up by being disorganized at checkout. William took his first step toward figuring out his routine today. Adulting.

Meanwhile, down at Target, Thomas selected his clothing, and checked out his purchases without adult supervision. He's had a little more practice, but this was the first time he's done his own clothes shopping all on his own. Adulting.

Teaching Kids About Money

I think most families wrestle with how to teach their kids about money -- how to earn it, how to handle it, budgeting, and all that. After some trial and error, we settled on letting the kids earn their own money based on work they do around the house and in other places. A set weekly allowance didn't seem quite right, but we still wanted them each to have their own money to manage, and have some control over how much money they earn. We rejected the idea of paying the kids in cash simply because we no longer live in a cash-and-carry economy, and I found an app called iAllowance that helps me keep track of chores and earnings. So, each of the kids basically accummulate credit that they can use when they want to purchase something. Although this system has some drawbacks (like the kids constantly asking me how much credit they have, and can they buy something using a household account, and keeping track of all the transactions), overall it works well for us.

When Thomas started working with David on handyman jobs, thus earning quite a bit more than he can earn doing household chores, I set him up with a PayPal student account, and he got his own debit card attached to his own account. This has worked great. One less kid asking how much credit he has and if he can use a household account for a purchase. Transferring funds into his account is almost instantaneous and can be done by text, which has come in handy a couple of times when he was away from home and needed emergency funds.

I'd been trying to figure out for a while how to get William set up with his own account, but it didn't seem practical with the relatively spare funds he earns doing chores. But I finally came upon the answer while talking to a friend about her kids, allowance, and the never-ending purchasing of clothes for them.

Clothing Allowance and Budgeting

One of the things my friend and I talked about was each child's unique taste in clothing, and how we ended up spending differently for each child. That was not just based on their taste, but also on their age (how quickly they grow out of things), and unique social situations (dating vs. Girl/Boy Scouts vs. theatre vs. sports, etc.). During that conversation I remembered reading about one family's solution, and it came to me how I could solve two problems at once, with an added bonus lesson thrown in.

A few days later, I sat down and looked at how much we typically spend per year on each kids' clothing, and worked out what I felt was a reasonable annual budget for clothing. I divided by twelve months, and viola, came up with a monthly clothing allowance for both Thomas and William. I talked to each of them about being in charge of their clothing purchases, explained the idea of the clothing allowance, and opened a PayPal student account for William. Now on the first of each month I transfer their clothing allowance into their respective accounts for them to manage as they see fit.

The added bonus lesson is about budgeting and planning ahead for expenditures. They get paid a set amount on the first of the month, and they decided how and when they'll spend it. Do they go get a pair of jeans or a couple of shirts this month, or save up for a few of months to get a jacket? Do they spend $60 on a cool shirt at a trendy shop so they can impress their friends, or spend the same amount at Target and get two or three shirts? Save up for several months to get a new, hip jacket, or hit the thrift store? And don't forget about socks and underwear!

Or, do they succumb to temptation and blow their entire monthly allowance on a video game?

Making Mistakes With a Safety Net

Another of our parenting philosophies has long been, "Let them make lots of mistakes while they still have the safety net of parents." Especially financial mistakes. Like making sure you have enough money in your bank account for groceries before you're in the checkout line. And keeping a reserve in your account for unforeseen expenses. And how being thrifty by habit can help you get the things you really need and/or want. And being persistent about stashing funds in a savings account. And not living on credit. All that stuff we are told we should do, but never had much practical experience with until we were out on our own. When our mistakes were with larger numbers and hurt longer.

So, that is one large aspect of our Great Parenting Experiment. How do you teach your kids about money management?

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